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    Greek Debt Relief Driving 'Deep Rift' Between France & Germany

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    While German Finance Minister Wolfgang Schauble is sticking to his guns on Greek debt relief, other EU members, particularly France, want some form of debt cancellation for Greece, Der Spiegel reported.

    The issue of debt relief for Greece has deeply divided France, Germany and other EU member states ahead of a meeting of the Eurogroup of Eurozone finance ministers on Monday, Der Spiegel reported on Saturday.

    French Finance Minister Michel Sapin is in favor of some kind of debt relief for Greece, because he believes that the Greek government will not otherwise be able to get the Greek parliament to pass the creditors' austerity demands.

    Der Spiegel reports that Sapin's position is backed strongly by Portugal, but that German Finance Minister Schauble has the support of Finland and Austria.

    Schauble is demanding that Athens submit the first analysis of Greece's third program of financial aid, which was due in October 2015, and put in place more austerity measures before the Eurogroup considers a haircut of Greek debt.

    'Eurozone: Greek debt relief for Athens divides Germany and France,' Der Spiegel reported.

    ​In August 2015, amid the threat of a possible Grexit, the Greek government and the EU agreed to a third bailout program, worth up to €86 billion ($98 billion) in financial assistance to Greece up to 2018. 

    In return, Eurozone creditors demanded that Athens reform its pension system, labor and product markets and public sector, and put an EU-supervized program in place to privatize its public assets.

    A letter sent from the IMF last Thursday to the 19 Eurogroup ministers, asking them to immediately begin negotiations to grant debt relief for Greece, has also added to tension ahead of Monday's meeting.

    According to the Financial Times, IMF chief Christine Lagarde told the Eurogroup that Greece requires less austerity in order to meet its creditors' demands, and in particular argued that the EU's target for Greece to achieve a primary surplus of 3.5 percent of GDP by 2018 is unrealistic and should be reduced to 1.5 percent.

    In July Athens faces €3.5 billion in debt repayments that it needs an instalment of bailout aid to pay. Despite their disagreements, EU officials are anxious to wrap up an agreement before the UK's Brexit campaign reaches full swing, ahead of the referendum on June 23, FT reported.

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    European Union, International Monetary Fund, bailout, Eurozone, Germany, Greece
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