Germany’s Gabriel condemned Berlin’s handling of Greece in letter

German Foreign Minister Sigmar Gabriel criticised the German government's handling of Greece in a letter he wrote to Chancellor Angela Merkel last month, a newspaper reported on Thursday.

Handelsblatt newspaper said Gabriel – who swapped the Economy Ministry for the Foreign Ministry last week – had expressed his "great concern" about the talks on Greece's financial rescue and thought the government in Berlin should play a "more constructive role."

Germany wants the International Monetary Fund (IMF) to have a stake in Greece's bailout to give the rescue plan greater credibility, but also opposes granting Athens significant debt relief. The IMF says it will only join in if this rescue is the country's last and it includes significant debt relief.

Gabriel, a member of the Social Democrats (SPD) – the junior coalition partner to Merkel's conservatives – said the German Finance Ministry and the International Monetary Fund (IMF) seemed to have such diverging stances that reaching an agreement "at this time seems impossible."

Germany, Europe's largest economy, has opposed large-scale debt relief unless Greece completes wide-ranging reforms and keeps running budget surpluses of 3.5 percent for the medium-term after the end of the bailout program in 2018.

In the letter to Merkel, Gabriel proposed only requiring Greece to have a 3.5 percent primary budget surplus for the next three years, Handelsblatt said.

It reported that German Finance Minister Wolfgang Schaeuble, a member of Merkel's Christian Democrats (CDU), had replied in mid-January, saying that relaxing budget demands would lead to more calls for forgiving part of Greece's debt pile, which Germany is against.

[Reuters]