Greek bailout talk ruffles German election


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BERLIN (AP) - Chancellor Angela Merkel's opponents are assailing her credibility after her finance minister said Greece will need a third bailout package _ injecting Europe's debt crisis for the first time into the campaign for next month's German elections.

Germany, Europe's biggest economy, has been a central player in the crisis. It's the biggest contributor to bailouts of struggling countries and has led an austerity-heavy response that is often criticized abroad.

But with Germans largely insulated by their own healthy economy and low unemployment, there's been little incentive for anyone to make Europe a big issue in the country's Sept. 22 elections.

Until this week.

In a speech to a campaign rally Tuesday, Finance Minister Wolfgang Schaeuble said that "there will have to be a program for Greece once again."

That was a small but significant departure from previous assertions that more help is likely _ but not inevitable _ once Greece's current bailout expires next year.

Schaeuble's comment was received gratefully by Merkel's center-left opponents, who have struggled all summer to land any blows on the popular conservative.

Merkel's predecessor, Gerhard Schroeder, suggested at a rally of his opposition Social Democrats that the governing coalition had tried to hide the inevitability of a new Greek bailout and said "Germany will have to pay for a Europe that is not as steady on its legs as we are."

His party demanded that Merkel say before the elections how much more aid Greece _ to which other European nations and the International Monetary Fund so far have committed 240 billion euros ($320 billion) in loans _ will need.

"Mrs. Merkel has pursued a strategy of hiding the whole issue of Europe as far as possible until the election on Sept. 22, keeping it out of the election campaign," said her challenger, Peer Steinbrueck.

Officials insisted Schaeuble was really saying nothing new. Merkel herself coolly said she was "a bit surprised" by the reaction _ asserting that "everyone knew what Schaeuble said about Greece." She also said that it would be clear only "in the middle of next year" how much more money Athens might need.

And she insisted that further aid won't take the form of a write-down on Greece's debt following a massive deal last year in which private sector creditors agreed to cut the value of their bond holdings.

That Greece's finances remain strained has long been an open secret, but many European politicians have avoided discussing an unpopular new bailout. It's unclear whether Schaeuble's comment was unplanned or whether the veteran minister calculated that, given widespread speculation Greece will need more aid, it was better to say so publicly sooner rather than later.

Schaeuble's Dutch counterpart, Jeroen Dijsselbloem, who leads meetings of the 17-nation eurozone's finance ministers, sent similar signals. In an interview Thursday with the newspaper Het Financieele Dagblad he said "the problems in Greece won't be solved in 2014, so something more will have to happen." The French government, however, has shied away from making such predictions.

One senior Merkel ally, conservative Bavarian governor Horst Seehofer, said Schaeuble's comments were "not very fortunate."

"There is no question of raising the prospect of aid ahead of time," Seehofer, who also faces a state election on Sept. 15, was quoted as telling the daily Sueddeutsche Zeitung. He suggested that the prospect of more aid could weaken Greece's motivation to make tough reforms and get its public finances in shape.

That insistence on other countries cutting their budget deficits and enacting painful economic reforms in exchange for help has been a cornerstone of Merkel's crisis management. She has benefited from perceptions that she has made the best of a bewildering situation, and while bailouts aren't popular at home, there's been no sign yet of voters punishing her.

She has resisted pressure from elsewhere in Europe to pool government debt, which would help financially weaker countries. The opposition is more open to the idea, but Merkel insisted again this week that "we must show solidarity to one another, but we must also say that everyone also has his own responsibility at home."

Recent polls show that Merkel's conservative Union bloc is easily the strongest party and that her current center-right coalition has a good chance of keeping its parliamentary majority. An upstart anti-euro party, Alternative for Germany, has made no significant impact yet.

Oskar Niedermayer, a political science professor at Berlin's Free University, said he doesn't expect any real negative impact on Merkel from the Greek aid issue so long as her party can hammer home the message that "it will be even more expensive for Germans" if the opposition gains power _ and that Schroeder's center-left government allowed Greece into the euro and helped loosen the currency's rules.

Still, if the issue remains in the headlines for the next month, some voters could switch to the anti-euro Alternative, he said _ not enough to win that party parliamentary seats, but possibly enough to deny Merkel's current coalition a majority.

Carsten Brzeski, an economist at ING in Brussels, said strong economic growth may mean that the flap goes away.

"As long as most Germans are not personally affected by the euro crisis, disgust about a possible third bailout package for Greece should ... abate quickly," he said.


(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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