NEWS

Merkel to hold Greece crisis talks with German political leaders [Update]

German Chancellor Angela Merkel plans to inform her country’s political leaders about the growing crisis in Greece as preparations get under way to cope with the consequences of a possible exit from the euro.

Merkel will meet with policy chiefs Monday afternoon in Berlin, and then brief reporters after the gathering, Steffen Seibert, her chief spokesman, said in an e-mail.

The gathering follows discussions Sunday on how best to contain any potential contagion following the breakdown in talks with Greece over the weekend as the country’s bailout program is set to expire on Tuesday and payments to the IMF fall due the same day. Group of Seven finance ministry deputies discussed Sunday how the euro region would contain a possible Greek default, said German officials, who declined to be identified because the talks were private. Finance Minister Wolfgang Schaeuble also briefed senior lawmakers Sunday on the latest developments, officials said.

“The eurozone is now well equipped to ensure that the reckless actions of a government won’t damage the stability of the currency area as a whole,” Eckhardt Rehberg, budget spokesman for Merkel’s CDU bloc in parliament, said in an e- mailed statement. “The door for further talks is and remains open. But we can’t accept any behavior that undermines the long- term foundation of the eurozone.”

Euro-region finance chiefs on Saturday turned down Greek Prime Minister Alexis Tsipras’s request to extend the country’s aid program to allow the July 5 referendum to take place, and instead started making preparations to contain the fallout of an exit from the euro. The European Central Bank said on Sunday it will keep the emergency aid to Greece’s financial system intact.

Same offer

Greece won’t be offered a better deal after the July 5 referendum, Vice Chancellor Sigmar Gabriel said an interview published Sunday in newspaper Sueddeutsche Zeitung.

“Mr. Tsipras wants to accept all these offers only if Europe doesn’t link them to any conditions for reforms in Greece,” said Gabriel, chairman of the Social Democratic Party, Merkel’s coalition ally. “Europe won’t be able to accept this even after a referendum.”

German public coffers face losses of at least 80 billion euros ($89.3 billion) in the event of a Greek default, Christian Democrat lawmaker and European Affairs Committee chairman Gunter Krichbaum told the Leipziger Volkszeitung newspaper. The lower house of parliament may have to meet during summer recess to vote on measures related to Greece such as humanitarian aid, he said.

[Bloomberg]