BERLIN (MNI) – The new financial aid program for Greece is to be
adopted at an extraordinary EU meeting on July 3, German Chancellor
Angela Merkel said Wednesday.

“The goal is to adopt the main features of the new Greek program at
an extraordinary meeting on July 3,” Merkel said at a public
parliamentary hearing here.

The talks with private investors about a voluntary participation in
the new rescue package for Greece will take place in the next days, the
Chancellor said. “It is important that a certain amount can be
quantified,” she stressed.

Merkel reckoned that the German government had always demanded only
a voluntary private sector involvement (PSI). This is the only way,
because “otherwise a credit event could be triggered, which has to be
avoided under all circumstances,” she warned.

Such a credit event would have incalculable consequences, the
Chancellor cautioned. “Nobody in the world knows who owns all the credit
default swaps [on Greek debt] and what it would mean if they would
become due,” she pointed out.

A credit event would have contagion effects on other Eurozone
countries, Merkel warned. “We cannot cope with such processes,” she

The Chancellor criticized demands by Germany’s opposition parties
for a marked haircut on Greek debt. “This would be dramatically wrong,”
she said.

Even a voluntary PSI “is supported only by very few [states] in
Europe,” the Chancellor said. In that regard it is “a big success” that
France is now backing a voluntary PSI, she said.

In other remarks, Merkel said there is currently no majority in the
European Union for the introduction of a financial transaction tax. “But
I will continue to lobby for it,” she said.

Commenting on the German economy, Merkel said that Germany will
have this year “above 3% growth.” The government’s standing forecast,
dating from April, is for only 2.6% growth in 2011.

–Berlin bureau: +49-30-22 62 05 80; email:

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