Angela Merkel faces a defining moment in her political career as chorus of voices push for Greek debt relief
Germany is at last bowing to pressure as a chorus of countries and key institutions demand debt relief for Greece, a shift that could break the five-month stalemate and avert a potentially disastrous rupture of monetary union at this Sunday’s last-ditch summit.
In a highly significant move, the European Council has called on both sides to make major concessions, insisting that the creditor powers must do their part as the radical Syriza government puts forward a new raft of proposals on economic reforms before a deadline expires tonight.
“The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors,” said Donald Tusk, the European Council president.
This is the first time Europe’s institutions have acknowledged clearly that Greece’s public debt – 180pc of GDP – can never be repaid and that no lasting solution can be found until the boil is lanced.
Any such deal would give Greek premier Alexis Tspiras a prize to take back to the Greek people after they voted by 61pc to 39pc to reject austerity demands in a landslide referendum last weekend.
While he would still have to deliver on tough reforms and breach key red lines, a debt restructuring of sufficient scale would probably be enough to clinch a deal, and allow him to return to Athens as a conquering hero.
The Greek parliament is due to vote to ratify the measures on Friday.
Germany’s subtle shift in position comes as the United States, France, and Italy joined in a united call for debt relief, buttressed by a crescendo of emphatic statements by Christine Lagarde, the head of the International Monetary Fund.
The US has clearly lost patience with the Europeans is now bringing its huge diplomatic power to bear, fearing that mistakes in Greece could lead to a geostrategic fiasco and serious damage to the Nato alliance.
“Greece’s debt is not sustainable,” said Jacob Lew, the US Treasury Secretary. “I think it’s a mistake for the European economy, the global economy, to take the risks that are involved with an uncontrolled crisis in Greece,” he said.
Full article: Greek deal in sight as Germany bows to huge global pressure for debt relief (The Telegraph)