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Rival accuses Merkel of deceit over eurozone bailouts

BERLIN -- Germany's main opposition leader Peer Steinbrueck accused Chancellor Angela Merkel of covering up the likelihood that German taxpayers will have to fund further eurozone bailouts due to a looming election.

Steinbrueck, who is lagging Merkel in the run-up to the Sept. 22 vote, was quoted by a German magazine on Saturday as saying a fresh writedown on Greek debt would mean losses for public creditors, in other words taxpayers.

“As such, the illusion about not being a union of joint liability would burst like a bubble — possibly even before the federal elections,” Steinbrueck told Wirtschaftswoche.

He added it could “not be excluded in any way” that other countries might need further financial help after the election.

Many debt experts believe Europe will have to write off some bailout loans to Greece if the country is to make a successful return to capital markets.

The International Monetary Fund said last month Athens may require additional debt relief as early as next year, although it did not specify what the relief might look like.

Merkel and her government have in recent weeks repeatedly ruled out a further writedown of Greek debt.

An open debate about loan losses could damage Merkel in the run-up to the vote. She is tipped to win a third term, in part because voters believe she has shielded them from such losses during a debt crisis that first erupted in Greece in late 2009.

Private owners of Greek debt were forced to swallow significant losses on their holdings last year, but European governments and the European Central Bank, which bought up Greek bonds at the height of the crisis, have refused to take a hit.

Germany has insisted a writedown of Greek debt held by eurozone governments would be illegal, although Finance Minister Wolfgang Schaeuble suggested late last year that such losses might be considered once Greece achieves a primary surplus.

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In this June 28 file picture, Social Democratic Party chancellor candidate Peer Steinbrueck speaks at a state party conference in Saarbruecken, Germany. (AP)

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