Merkel, Sarkozy propose separate account for bailout money

Only a few days after controversial German proposals to install a budget commissioner in Greece, French President Nicolas Sarkozy and German Chancellor Angela Merkel suggested on Monday that if Greece secures a new bailout, the money it receives should be paid into a special account from which bondholders will be paid directly.

The scheme proposed by the two leaders following talks in Paris echoes an earlier German suggestion for Greece to only be allowed access to the bailout money if it has first paid off its debts.

?I support, as the French president has, the idea that the necessary interest payments for the debt be paid into a separate account to make sure that Greece then consistently makes this money available,? Merkel said.

An unnamed French source told Reuters the idea was for funds from a planned second 130-billion-euro bailout program to be siphoned off to reassure bondholders that future payments were guaranteed.

The proposal was made amid growing pressure on Greece to conclude talks with the troika and sign up to further reforms and austerity measures.

?Greece?s leaders have made commitments and they must respect them scrupulously… Europe is a place where everyone has their rights and duties,? said Sarkozy. ?Time is running out, it needs to be concluded, it needs to be signed.?

Merkel said that both she and Sarkozy want Greece to stay in the euro. ?We refuse to [accept] a Greek bankruptcy. We can?t accept that,? she said.

The German chancellor expressed frustration at the fact that Greek political leaders had failed to agree on the terms of the next bailout. ?I honestly can?t understand how additional days will help. A lot is at stake for the entire eurozone,? she said.

?The truth is that we are already past the deadline,? said EU economic affairs spokesman Amadeu Altafaj Tardio. ?Decisions have to be taken and the ball is in the Greeks? court.?

Speaking at Humboldt University in Berlin, European Council President Herman Van Rompuy said Greece had a duty to the rest of the eurozone. ?We carry a common project, even if the choices are made nationally,? he said. ?Forgetting this in our actions undermines the common good.?