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The official position [on] debt restructuring is unchanged - that Greece will continue to follow the programme. That's everybody's official position, and it is of course not true as we all [know]. But do not expect any sudden changes in the official position, also because of Merkel's respect for George Papandreou. Merkel in particular opposes any involuntary restructuring of Greek debt until mid-2013 because she has already publically excluded that possibility following the discussions in recent months. Any decision to the contrary could cause further uncertainty in the financial markets. To be clear: She is not actually afraid of a restructuring in the way the ECB is afraid of it. But Merkel is concerned about an adverse market reaction, which is why she gave the no default commitment until July 2013. She believes that she cannot easily go back on this date. In other words, there is also a credibility issue at stake here. She made a pledge to bondholders, which [she] is, as yet, unwilling to break. In the finance ministry, however, the position seems to be shifting. Among all the actors involved, the finance ministers, the European Commission, the ECB, and the IMF, there is now an open discussion about whether and how to restructure Greek debt. Many high-ranking experts in Berlin, but also in the parliamentary parties, are increasing convinced that Greece will not be able to service the high level of debt after the financial assistance programme expires.
To be clear: She is not actually afraid of a restructuring in the way the ECB is afraid of it. But Merkel is concerned about an adverse market reaction, which is why she gave the no default commitment until July 2013. She believes that she cannot easily go back on this date. In other words, there is also a credibility issue at stake here. She made a pledge to bondholders, which [she] is, as yet, unwilling to break.
In the finance ministry, however, the position seems to be shifting. Among all the actors involved, the finance ministers, the European Commission, the ECB, and the IMF, there is now an open discussion about whether and how to restructure Greek debt. Many high-ranking experts in Berlin, but also in the parliamentary parties, are increasing convinced that Greece will not be able to service the high level of debt after the financial assistance programme expires.
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