Merkel, Sarkozy in urgent call for Greece package

The leaders of France and Germany yesterday called for a new Greece rescue package to be worked out as quickly as possible, but gave no details on how voluntary private involvement would work.

“We need a solution as soon as possible so that we have clarity. We have been talking about this for the whole of May and June, discussing the same issues again and again without resolving them,” Ms Merkel said.

“Germany and France are determined at the upcoming EU summit to say that we want a quick solution,” Ms Merkel told reporters in Berlin after talks with Mr Sarkozy in Berlin and ahead of a working lunch.

Mr Sarkozy agreed, saying: “France and Germany want this new programme to be worked out as quickly as possible. There is no time to lose,” he said.

Both said that private investors should be involved in the new package on a voluntary basis.

“We want involvement of the private sector on a voluntary basis. I want to stress this. There is no legal basis so far for there being obligatory involvement,” Ms Merkel said.

“This must be worked out together with the ECB (European Central Bank) so that there are no contradictions with the ECB,” she said.

Ms Merkel heads a group of top eurozone economies that have been pressing for private investors to contribute up to a third of the second rescue package by accepting later repayment on their Greek bonds.

But Mr Sarkozy backs the European Central Bank and the European Commission, which want the private sector to contribute on a “voluntary” basis, hoping thereby to avoid any action that ratings agencies might deem a default and which would likely cause chaos throughout the eurozone. Both leaders steered clear yesterday of saying which way the final agreement would go.

“There will be meetings all next week. The sooner the technical details are worked out the better,” Mr Sarkozy said.

“The aim of today’s (yesterday) meeting was to set down the basic principles as precisely as possibly. Once these principles are worked out then the modalities for the package can follow very quickly.”

Both leaders also called for a full report on Greece’s finances by the “troika” Greece’s international creditors – the European Union, the International Monetary Fund and the ECB – to be presented as soon as possible.