Germany Urges Greece to Keep Pledges as Debt-Cut Talk Resurfaces

Greece must stick to the promises it made to obtain a second bailout by pressing ahead with efforts to make its economy more competitive and meet budget targets, German Foreign Minister Guido Westerwelle said before his departure to Athens today.

Germany wants Greece to know that it’s a reliable partner, Westerwelle’s ministry said in a statement. The Greek economy is bearing the first fruits of Prime Minister Antonis Samaras’s policy, it said.

German ministers are stepping up visits to Greece as Samaras struggles to fulfill the terms for the next payment of bailout aid. Westerwelle’s 24-hour trip will be followed up by a July 18 visit to Athens by Finance Minister Wolfgang Schaeuble. The visit is taking place amid speculation about a second Greek debt writedown, which German officials today rejected, and as the triumvirate of European Central Bank, European Union and International Monetary Fund that oversees euro-area bailouts reviews Greece’s reform progress.

Chancellor Angela Merkel said she doesn’t foresee a second debt cut for Greece in an interview with Sueddeutsche Zeitung published today. “I’m going on the premise that the debt sustainability still applies,” Merkel is cited as saying.

Recurring discussions about a debt cut aren’t helpful as they distract from necessary reform efforts undertaken by Greece, ECB Executive Board member Joerg Asmussen said in an interview with Die Welt.

Solidarity Symbol

“Despite progress, there’s still some way to go to conclude the review positively,” Asmussen is cited as saying.

Greek Development Minister Kostis Hatzidakis, in an interview with the same newspaper yesterday, said the country expects a “symbol of solidarity” from its European partners. Asked whether another debt cut could be such a symbol, he said: “If we’re reliable and surprise in a positive way, I’m sure that our partners will show their solidarity with Greece.”

Euro-area leaders including Schaeuble last year raised the prospect of Greece gaining a review of its bailout terms once the country was able to report a so-called primary budget surplus, meaning a surplus excluding interest payments on debt.

After a portion of Greek debt held by private investors was canceled in 2011, a second writedown of Greek debt is precluded from a prospective review, Schaeuble said on June 26.

Samaras will today join Chancellor Angela Merkel in a summit of European leaders in Berlin that’s addressing the continent’s soaring youth unemployment. The number of Greek youngsters without a job reached 59.2 percent in March compared with 7.6 percent in Germany May, the latest figures from Eurostat on July 1 show. Measures to tackle the jobless tally will include employment programs financed by loans from the European Investment Bank.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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