Germany and France broke their deadlock over a new bailout for Greece ahead of an emergency eurozone summit on Thursday aimed at saving the euro from the worst crisis in its 12-year history.

"/> Germany and France broke their deadlock over a new bailout for Greece ahead of an emergency eurozone summit on Thursday aimed at saving the euro from the worst crisis in its 12-year history.

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GREECE

Germany, France reach pre-euro summit deal

Germany and France broke their deadlock over a new bailout for Greece ahead of an emergency eurozone summit on Thursday aimed at saving the euro from the worst crisis in its 12-year history.

Germany, France reach pre-euro summit deal
Anna Tesar (File)

German Chancellor Angela Merkel and French President Nicolas Sarkozy, the eurozone’s key players, agreed on a “common position” after late-night talks in Berlin just hours before the summit in Brussels, the French president’s office said.

European Central Bank president Jean-Claude Trichet took part in the meeting.

Officials refused to provide any details but the Franco-German agreement will lay the groundwork for negotiations between the eurozone’s 17 leaders after weeks of debate over how to put a lid on the year-long debt crisis.

On the eve of the summit, the European Commission president Jose Manuel Barroso issued a dire warning that failure to find a solution could have global repercussions.

“Nobody should be under any illusion — the situation is very serious,” Barroso warned on Wednesday. “It requires a response. Otherwise the negative consequences will be felt in all corners of Europe and beyond.”

French Foreign Minister Alain Juppe also warned of the stakes involved: “We absolutely must find a solution in order to end international speculation and stabilise the eurozone… If this eurozone collapses it would be a disaster.”

Nervous financial markets are keenly awaiting the outcome of the summit following several tumultuous days, with debt crisis contagion threatening to engulf Italy and Spain, the eurozone’s third and fourth-largest economies.

Merkel had unsettled markets on Tuesday by downplaying expectations that the Brussels get-together would result in something “spectacular” to end Europe’s problems in one fell swoop.

“Today’s summit could provide the last chance for eurozone policymakers to get a grip on the region’s debt crisis,” said the research firm Capital Economics.

“Anything other than a very decisive response could see the situation become irretrievable,” it said.

The European Union and the IMF provided last year a 110-billion-euro bailout to Greece that has proved insufficient. Since then, Ireland and Portugal received their own multi-billion-euro rescues.

Berlin has been at odds with the ECB and Paris over Merkel’s demands for private investors to shoulder some of the bill for the second Greek rescue, which will be the eurozone’s fourth bailout.

There are concerns that any change to the terms of outstanding Greek sovereign bonds could prompt rating agencies to declare Athens in default, with potentially dramatic consequences.

Several options are now on the table, including a Greek bond swap to cut the country’s debt by 90 billion euros and a special bank tax to raise another 50 billion euros, said a source familiar with the discussions.

The swap plan would offer financial incentives to Greece’s private creditors, banks, insurers and other investors, in order to encourage them to exchange holdings maturing over the next eight years for new 30-year bonds.

The idea would be to give Athens time to revive its economy and clean up its public finances while reducing a debt mountain, which has reached 350 billion euros.

The new rescue package would also include loans from eurozone nations and the IMF to the tune of 71 billion euros, with longer maturities and more affordable interest rates, the source said.

On Wednesday, a senior panel advising the German government said it supported a bond buy-back, along with a substantial “haircut” on Greek debt. Merkel’s spokesman said only she had “taken note.”

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FRANCE

Germany to tighten Covid controls at French border

Germany on Sunday, February 28th, classed France's Covid-battered Moselle region as a high risk area for virus variants, triggering tougher entry requirements at the border between the two neighbours.

Germany to tighten Covid controls at French border
Image: Peter H/ Pixabay

France’s eastern Moselle region is now listed as an area “at particularly high risk of infection due to widespread occurrence of SARS-CoV-2 virus variants”, Germany’s Robert Koch Institute for disease control announced.

From Tuesday, March 2nd, cross-border travellers from Moselle will need to be able to show a recent negative coronavirus test.

Germany has already introduced tough checks at its borders with the Czech Republic and Austria’s Tyrol region, ignoring calls from Brussels to keep borders within the bloc open.

At those crossings, only Germans and non-German residents are allowed to enter, as well as cross-border commuters working in certain categories of jobs.

Every vehicle is stopped and occupants must produce a negative test that is less than 48 hours old.

The checks on the German side of the Moselle crossing are expected to be less strict, a German interior ministry spokesman told AFP.

Instead of systematic checks, police would randomly stop vehicles on the German side and ask drivers to show “a negative test and their online entry registration”, he said.

Germany has grown increasingly concerned in recent weeks about the rapid spread of new, more contagious strains of the coronavirus, especially those first detected in Britain and South Africa.

The coronavirus, including the more dangerous South African variant, is spreading faster in Moselle than elsewhere in France but French officials have pleaded with Berlin to avoid a full closure of the border.

The German classification “normally implies the extremely strict measure of a quasi-closure of borders”, France’s European Affairs minister Clement Beaune said Sunday.

“We don’t want that,” he said, adding that talks were ongoing with Berlin to find solutions for the roughly 16,000 commuters who cross from Moselle into Germany’s Saarland and Rhineland-Palatine states every day.

The German interior ministry spokesman said the two countries would discuss details of the border implications on Monday.

Asked why the French checks would not be as stringent as those along the Czech and Austrian frontiers, the spokesman said Saarland and Rhineland-Palatine had not requested border closures.

“And there is a good cooperation between the affected German and French regions,” he added.

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