- JULY 17, 2011, 1:15 P.M. ET
Merkel: Greek Default Not Goal, But Investors Must Contribute
BERLIN (Dow Jones)--German Chancellor Angela Merkel on Sunday said she isn't seeking a Greek default as a consequence of euro-zone efforts to prop up the country's battered economy, but that private-sector involvement in a new aid package is crucial.
"We're trying everything we can to prevent" a default, Merkel said. "But I say very clearly: A partnership with private investors shows that in Greece we have a unique problem because of the very, very high amount of debt."
Germany is insisting that investors "volunteer" to take part in a new Greek aid package, perhaps by accepting longer maturities on their existing Greek bonds. But the European Central Bank has criticized those efforts, fearing that if ratings agencies view the program as even a "selective" default, it could deeply unsettle financial markets.
Merkel also said that the European Union should create its own ratings agency to balance the appraisal of private agencies.
"I think that in the midterm, it's important that Europe has a rating agency, too," Merkel said.
Euro-zone leaders are preparing to meet in Brussels on Thursday to set the broad outlines for a new aid package for Greece. Merkel said the summit would only be worthwhile if leaders can agree to a concrete outline for that new program.
"I'll only travel there if there's going to be an outcome," Merkel said. "Naturally, that's still being worked on, and there's a lot to discuss...I've set my schedule so that I have time to travel there Thursday, and I think it's urgently necessary."
-By Patrick McGroarty, Dow Jones Newswires, +49(0)171 97 48 903;
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