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Merkel Says There Should Be No Debt Reduction For Greece

German Chancellor Angela Merkel

German Chancellor Angela Merkel has said there should be no debt relief for Athens, a day after Greece's new finance minister announced he would no longer cooperate with the so-called troika of creditors.

Merkel told the Hamburger Abendblatt newspaper on January 31, "I do not envisage fresh debt cancellation. There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt."

The troika -- the European Commission, European Central Bank, and International Monetary Fund -- had agreed a 240-billion-euro ($270 billion) bailout with the previous Greek government in exchange for painful reforms.

At the start of 2012, Greece restructured its debt in a deal involving private creditors who took "haircuts" or wrote down parts of their holdings. This cut Greece's total debt burden by around 100 billion euros.

But it still has a debt of more than 315 billion euros, or 175 percent of its gross domestic product (GDP) -- a record for the European Union.

Merkel said, "Europe will continue to show its solidarity with Greece, as with other countries hard hit by the crisis if these countries carry out reforms and cost-saving measures."

She said that Greece should not give up the euro -- a statement echoed by the EU economic and financial affairs commissioner Pierre Moscovici, who told the BBC on January 31, "we will do everything" to prevent Greece leaving the eurozone.

Tense Press Conference

On January 30, the new Greek Finance Minister, Yanis Varoufakis, said at a tense press conference in Athens with eurozone chief Jeroen Dijsselbloem that Greece would no longer cooperate with the troika.

Varoufakis said Athens was willing to negotiate with its lenders but not with the troika auditors who he said were merely a "committee built on rotten foundations."

Because the latest talks have yet to be concluded, Greece still has to receive the last, 7.2 billion-euro batch of its loans from the eurozone.

But Varoufakis said his government would reject that tranche.

Varoufakis travels to Paris late January 31, bringing forward a European tour that was due to start in London on February 2, and will also include Rome. He is scheduled to meet French counterpart Michel Sapin late on January 31.

Varoufakis and his boss, radical leftist Prime Minister Alexis Tsipras are reaching out to France and Italy, whose center-left governments are most likely to sympathize with its intentions to ease painful reforms.

Tsipras will make his first visit abroad as premier on February 2, when he travels to Cyprus, and will then visit his Italian and French counterparts the following days.

But neither Tsipras nor Varoufakis have scheduled visits to Germany, which has contributed the largest part to Greece's huge bailout and where officials have already expressed outrage at the new Greek government's plans to renegotiate the rescue.

Based on reporting by Reuters, AFP, and BBC