As Greece races headlong into a snap election, Germany’s chancellor has warned the country that it must take responsibility for its debts.
At a keynote speech at the World Economic Forum, Merkel insisted that she wanted Greece to remain in the eurozone. But she also signalled that Germany would persist in its insistence that the Greek debts be repaid.
“Everything we have done politically has been about Greece remaining in the euro area,” she told Davos. She cited two principles that underpin the eurozone. “Showing solidarity, and continuing to show solidarity, along with the responsibility to shoulder one’s own risks,” she said.
Greece’s debts is now around 175% of GDP, a level which many experts believe is unsustainable. This is the highest of any EU country, followed by Portugal and Italy.
Germany’s head of state made it clear that she understood that the upcoming elections could reignite the debate over a possible Greek exit from the eurozone. The left-wing Syriza party, which says it will seek debt renegotiation, is gathering strong support in recent polls.
At the meeting, Finland’s leader, Alexander Stubb, said it would be “very hard for us to forgive any loans or restructure any debt at this moment.”
Stubb suggested Greece has three choices: to continue as things are; to endure a “continued period of instability” while discussing extensions to its existing borrowings; with the only other option being a “dirty exit” from the eurozone.
