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Berlin plays down reports of a third aid package

A protester's dog wears a sign reading ‘Tax the wolves’ during a rally in front of a tax office in central Athens on Monday against high taxes and home foreclosures.

German officials appeared to give out conflicting messages about the country’s position on Greece on Monday with officials from both countries playing down reports about a new Greek loan package in the coming months, but expressing support for Athens’s reform efforts, while a top-ranking German official suggested that Greece would be more suited to support from the World Bank than the International Monetary Fund.

A government spokesman in Berlin was quick to rebuff reports in Der Spiegel over the weekend, according to which a third aid package of 10 or 20 billion euros could be extended to Greece in exchange for more economic reform commitments. “There is no new situation regarding Greece,” a spokesman said, and ruled out a debt haircut “categorically.”

Senior sources at the Greek Finance Ministry also reacted to the German press reports, noting that a funding gap in the Greek financial program was created due to decisions taken by eurozone officials. “We are open to any discussion about a package on the condition that there will be no more fiscal measures, only structural measures,” one official said.

The German Finance Ministry’s five-page “position paper,” revealed by Der Spiegel and seen by Kathimerini, clarifies that Berlin does not favor the release of further funding to Greece in the first half of this year, adding that a premature decision on releasing aid to Athens could undermine reform efforts. It also adds that Germany and its European partners should send messages of support for Greece ahead of May elections.

German Finance Minister Wolfgang Schaeuble expressed Berlin’s fears about Greece’s fragile political situation in an interview in Monday’s Wirtschaftswoche. “Greece is faced with a domestic situation which is anything but easy. It faces many difficulties,” he said, adding that a third loan program for Greece would be a “low-risk” move.

Germany’s Vice Chancellor Sigmar Gabriel was much harsher in comments on Monday during a discussion involving European Parliament President Martin Schulz, among others. “Greece’s case falls more within the remit of the World Bank than the International Monetary Fund as its state infrastructure is nonexistent,” he said. The World Bank usually deals only with developing countries while the IMF is one of Greece’s three official creditors, along with the European Commission and European Central Bank.

In Athens, Prime Minister Antonis Samaras and his coalition partner Evangelos Venizelos are said to have discussed the progress of Greece’s reform efforts, though the date of the troika envoys’ return to Athens remains unclear, as well as tactics for capitalizing on a series of positive economic indicators that Finance Minister Yannis Stournaras is to present in the coming days.

In a related development, a statement by German leftist party Die Linke, according to which Greek authorities should impose a one-off capital tax on wealthy citizens, prompted a clash between conservative New Democracy and leftist SYRIZA, with the former referring to “the marginalized allies” of SYRIZA leader Alexis Tsipras. The furor followed the statement by Die Linke’s vice president, Sahra Wagenknecht, in support of the Bundesbank’s proposal for a capital tax for rich Greeks and her opposition to a third aid package for Greeks.

ekathimerini.com , Monday February 3, 2014 (20:02)  
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