ATHENS: German Chancellor Angela Merkel has ruled out a “classic haircut” on Europe’s loans to Greece, but European law leaves sufficient wiggle room to work out other forms of debt restructuring if the political will is there.
Merkel is trapped between fierce domestic opposition to going soft on Athens, and growing international pressure to grant Greece debt restructuring if it delivers convincing reforms in a deal to keep the country in the euro zone.
The international pressure may be becoming overwhelming, with Germany’s closest ally France determined to do all its can to prevent a ‘Grexit’ and the International Monetary Fund (IMF) and United States pressing for debt relief as part of a deal.
“When a government really is determined to have its way, and political correctness is on its side and there is international pressure, they will always bend the rules,” said Gunnar Beck, a specialist on EU law at the SOAS, University of London.
