Greek bailout buffeted by politics

June 17, 2011 at 5:55 PM
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ATHENS, Greece, June 17 (UPI) -- German Chancellor Angela Merkel said Friday she is backing away from conditions her finance minister insisted on to help Greece with more international aid.

European leaders are struggling with the question of whether Greece should be entitled to the next tranche in the $155 billion rescue package created a year ago by the European Union and the International Monetary Fund.

In addition, leaders are debating how to assemble a second rescue loan for Greece, The New York Times reported Friday.

After a 2-hour meeting with French President Nicolas Sarkozy, Merkel said, "We would like to have a participation of private creditors on a voluntary basis," a reversal from Finance Minister Wolfgang Schauble's stance that banks share in the losses rather than have the European Union foot the bill for a Greek bailout.

It is estimated Greece requires an additional $84 billion. In Germany, footing the bill for budgeting errors and government generosity in Greece has proven unpopular.

In Greece, where protests continue in the streets of Athens, Prime Minister George Papandreou has assembled a new Cabinet in hopes of creating a coalition that will adopt a new round of austerity measures.

Papandreou named former Defense Minister Evangelos Venizelos as the next finance minister.

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