Angela Merkel rules out Greek bailout changes

Saturday 16 June 2012 22.03
German Chancellor Angela Merkel has ruled out renegotiating Greece's bailout
German Chancellor Angela Merkel has ruled out renegotiating Greece's bailout

German Chancellor Angela Merkel has ruled out renegotiating Greece's bailout and has warned that the new government must stick to the lending agreements.

Greeks will vote tomorrow for the second time in six weeks.

The election comes amid fears that the country could be forced out of the euro if it rejects the strict austerity measures taken in return for billions of euros in rescue loans.

Riding a wave of anger to rise from political obscurity to contender for power, leftist Syriza leader Alexis Tsipras, 37, is promising to reject the punishing terms of the €130bn bailout if he wins.

On the right, establishment heir and New Democracy leader Antonis Samaras, 61, says that would send Greece crashing out of the single currency and condemn it to even greater economic calamity.

With the election set to go down to the wire, European leaders weighed in today, urging Greeks to vote with their heads.

The bailout will not be renegotiated, warned Dr Merkel, whose country's wealth is vital to shoring up its weaker partners in the bloc.

"That's why it's so important that the Greek elections preferably lead to a result in which those that will form a future government say: 'yes, we will stick to the agreements'," Merkel told a party conference of the Christian Democrats.

Eurogroup head Jean-Claude Juncker said there would be serious consequences if Syriza secured victory.

"If the radical left wins - which cannot be ruled out - the consequences for the currency union are unforeseeable," Mr Juncker, head of the group of eurozone finance ministers, told Austrian paper Kurier.

"We will have to speak to any government. I can only warn everyone against leaving the currency union. The internal cohesion of the eurozone would be in danger."

Mr Tsipras says that Greece's lenders are bluffing when they threaten to turn off the funds if Athens reneges on the terms of the bailout - tax hikes, job losses and pay cuts that have helped condemn the country to record-breaking recession.