Merkel warns Greek bailout could still fail

GERMAN chancellor Angela Merkel yesterday admitted the eurozone’s latest plan to rescue Greece is risky and could fail, writes Ruth Sunderland.

‘There is no 100pc guarantee that the second bailout programme will succeed,’ she told the Bundestag ahead of a vote needed to approve the latest ¤130bn lifeboat for Greece, which is buckling under a debt burden of 160pc of its gdp.

Merkel said she had sympathy for those including her finance minister Wolfgang Schäuble who see Greece as a ‘bottomless pit’. But she added that the benefits of offering the aid outweighed the perils and said it would be ‘reckless’ of her to expose Germany and the rest of the eurozone to the incalculable consequences of a Greek default.

The vote passed with 496 of the 591 members of the Bundestag present approving the programme.

Continued support for Greece is becoming increasingly unpopular with voters as Germany will end up paying the lion’s share of the bill.

Arguments are also gaining ground that Greece would be better off outside the single currency bloc. Hans-peter Friedrich, the interior minister, over the weekend was quoted as saying that Greece’s chances of re-generating its economy would be higher if it left the eurozone.

In Greece, anti-german feeling has been aroused by proposals to appoint a commissioner to oversee Greece’s management of its finances.

It has been exacerbated by the prospect of German tax collectors arriving in the debt-ridden country to help battle against widespread tax evasion, under an EU and International Monetary Fund initiative.

Tax evasion in Greece is estimated at up to €6bn a year and the parliament in Athens must approve a number of actions to improve tax administration tomorrow.