Berlin plays down deal hopes

BRUSSELS – Germany is trying to dampen expectations for this Sunday?s European Union summit to come up with a complete solution to the eurozone debt crisis, while negotiations with private sector investors are heating up.

German Finance Minister Wolfgang Schaeuble said on Monday the eurozone leaders will adopt a five-point plan to tackle the crisis that will gradually lead to the creation of a ?fiscal union.?

However he predicted that ?we will not have a definitive solution this weekend,? while a spokesman for Chancellor Angela Merkel warned that any dreams of a solution by Monday will not come true.

Schaeuble insisted that the plan contains a considerably larger haircut to Greek debt that the private sector will need to accept.

The head of the Institute of International Finance (IIF), Charles Dallara, who represents the private sector in the negotiations, suggested that despite their opposition, private investors are willing to negotiate a change to the July agreement (for a 21 percent reduction of Greek debt), provided that a bigger haircut will take place in the context of a general package that will include the support of European banks, too.

?The [negotiation] will have to be on the basis of an open and transparent discussion about the Greek economic adjustment program and the associated issues of debt sustainability,? he told Reuters on Monday.