Sarkozy, Merkel reject calls for orderly insolvency of Greece

**Berlin:**German Chancellor Angela Merkel andFrench President Nicolas Sarkozy have reaffirmed their supportfor Greece to remain in the euro zone and rejected calls foran “orderly insolvency” of the debt-laden nation.

The leaders, who held a telephone conference with GreekPrime Minister Georges Papandreou on last evening, said theywere convinced that Greece’s future is in the euro zone, agovernment spokesman said in Berlin.

Sarkozy and Merkel explained to Papandreou the importancefor his economy of the structural adjustment programme hisgovernment had agreed with its euro zone partners and theInternational Monetary Fund (IMF) in return for a 110 billioneuro financial rescue package agreed in May last year, the

spokesman said.A “strict and effective” implementation of the programme

is a prerequisite for releasing the next tranche of the aidpackage, they told Papandreou.

They also underlined that it is essential “more than everbefore” to fully implement the decisions of the euro zoneleaders on 21 July to ensure the stability of the euro zone.The euro zone heads of state and government had agreed atthat meeting to expand the group’s financial bailout fund from

the present level of 440 billion euros to around 750 billioneuros and to give new powers to the fund to buy sovereignbonds of cash-strapped member nations and to intervene muchearly to avert a debt crisis.

The Greek Prime Minister assured Sarkozy and Merkel thathis government is determined “to take all necessary measuresto fully implement its commitments”, the spokesman said in apress statement.

However, the proposed expansion of the European FinancialStability Facility (EFSF) is facing strong opposition inGermany, where a recent survey showed that more than 65 percent of the population are against the plan.Several members of Chancellor Merkel’s ChristianDemocratic Union and its coalition partners have threatened todeny the government their support when it comes up for votingin Parliament at the end of this month.

The talks between the three leaders came after a conflictwithin Germany’s centre-right coalition government over how todeal with the euro zone debt crisis escalated on Wednesday. Meanwhile, Philipp Roesler, economics minister andchairman of the Free Democratic Party (FDP), renewed his callfor an “orderly insolvency” of Greece, ignoring an appeal byChancellor Angela Merkel to her coalition partners on Tuesdayto end speculations about its future in the euro zone and toexercise caution in making comments about Greece.

Roesler, who is also the deputy chancellor, toldjournalists during a visit to Rome that he still considered aGreek default as an option to tackle its debt problems.He said he is quite pleased about the current debate overa possible insolvency, which showed that the people in Germanyand in other euro zone countries “want clarity and they arekeen to know how the euro zone and the European Union aredeveloping”.

Guido Westerwelle, the foreign minister and formerchairman of the FDP voiced his support for Roesler and saidthere should be no bar on discussions over various options.“We want a union of stability and not a union of debts,”

he said in Berlin.Westerwelle, however, insisted that the centre-right

coalition is not divided on how to solve the debt crisis.

A government spokesman rejected speculations about apossible collapse of the two-year-old coalition over the eurozone bailout and the Greek debt crisis and said the governmentis in agreement over the ways to strengthen the

competitiveness and stability in the euro zone. There is absolutely no reason to speculate that thepresent dispute among the coalition partners could lead to a

collapse of the government, the spokesman said.

PTI