German government says it’s united on need to stabilize Greek economy

The German government said on Friday it remained united on the need to stabilize the Greek economy despite a report indicating divergent views between Chancellor Angela Merkel's conservatives and their Social Democratic coalition partners.

Spokeswoman Ulrike Demmer declined comment on a newspaper report that Foreign Minister Sigmar Gabriel had suggested easing a requirement for Athens to keep a 3.5 percent budget surplus in the medium-term. Demmer said Berlin's views remained unchanged.

"There is no change in the German government's policy," she told a regular government news conference. "The goal is to conclude the second program review."

Finance Minister Wolfgang Schaeuble, speaking at a separate event, signaled growing impatience with the process and said Greece must meet its commitments, or else it will end up in an impossible position.

"If Greece again and again does not do what it has committed to, eventually that will not work," Schaeuble told a business meeting in Saarbruecken in western Germany.

Reports of a rift within the German government come as the country gears up for a national election in September, with polls showing growing support for the Social Democrats, who have vowed to regain the leading role in the government.

Demmer declined to comment on a report in the Handelsblatt newspaper that Gabriel had criticized the German government's handling of Greece in a letter to Merkel last month and suggested easing the surplus requirement.

Gabriel, a Social Democrat, told Merkel the divergent views of Schaeuble's ministry and the International Monetary Fund (IMF) appeared to make reaching an agreement on another rescue plan impossible, the newspaper reported.

Germany, Europe's largest economy, wants the IMF to have a stake in Greece's bailout to give the rescue plan greater credibility, but opposes granting Athens the significant debt relief that the IMF is demanding.

Berlin 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.

Gabriel, who swapped into the foreign ministry from the economics ministry last week, had proposed that Greece only be required to keep a 3.5 percent budget surplus for three years, according to the newspaper.

A spokesman for Gabriel declined comment on "internal communications," adding, "We have a great interest in ensuring that the Greek program is successfully concluded … We all agree that we want to help Greece get back on its feet."

He said Athens had already implemented reforms in recent years, but it was clear that Greece had to meet its obligations under the bailout plans.

A spokesman for the economics ministry, which is still run by the Social Democrats, said it was important for Greece to have a "realistic, growth-oriented and sustainable perspective for its economic development".

[Reuters]