Steinbrueck: Haircut of Greek debt 'inevitable'

Greece is already bankrupt and a debt haircut is inevitable, former German finance minister Peer Steinbrueck told Austrian reporters here on Friday, repeating what he said during a lecture held in Vienna on Thursday night.

    "The only question is 'how' and 'when'," emphasised Steinbrueck, who is currently Germany's most popular politician and the strongest contender among Social Democrats for the post of chancellor in the next elections.

    Steinbrueck noted that all sides were currently discussing a 50 percent haircut of Greece's 350 billion euro state debt, after which the country will have to be helped to get the real economy back on its feet.

    He predicted that Greece will be unable to return to borrowing on the market for the next five to eight years in order to finance itself on reasonable terms and stressed that there were sufficient resources on a European level to help Greece. If these proved insufficient, the issue of imposing a tax on financial transactions will have to be re-examined, he added.

    Steinbrueck warned that the current succession of bailout packages was "not a solution" and called for more decisive action before support for them ran out and there was a mass swing among European voters toward right-wing, chauvinist parties.

    He emphasised that the next steps of the rescue efforts had to be implemented without obstacles and that it was necessary for Slovakia's Parliament to vote for extension of the EFSF, followed by the disbursement of the next tranche of loans to Greece from the first bailout package and then, by next February, to implement the EU permanent financial stability mechanism that was the greatest obstacle.

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