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Germany's Merkel meets Greece PM over debt bailout tensions

German Chancellor Angela Merkel met Greece Prime Minister George Papandreou in Berlin today in an attempt to calm debt bailout tensions between Europe's economic powerhouse and the heavily indebted Mediterranean country.

By David FrancisCorrespondent / March 5, 2010

German Chancellor Angela Merkel and Greek Prime Minister George Papandreou hold a joint news conference in Berlin Friday to discuss a potential debt bailout for Greece.

Herbert Knosowski/AP

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Berlin

German Chancellor Angela Merkel met her Greek counterpart George Papandreou here tonight to discuss Greece’s financial crisis, as tensions rise over whether Germany will provide crucial support to an EU bailout for the heavily indebted Mediterranean country.

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Speaking with Mr. Papandreou by her side, Merkel said the two leaders have a "very good understanding of each other" and added: "Greece and Germany will work together toward a further modernization of Greece."

But Merkel’s show of solidarity is unlikely to quell growing anger in Greece over Germany’s refusal to send Athens a financial lifeline, and the German public’s disdain for Greek workers protesting over wage cuts. Despite pleas from Greece, Merkel has publicly dismissed talk of a bailout, and said before tonight’s meeting that a financial rescue plan would not be discussed.

IN PICTURES: Top 10 things Greece can sell to pay off its debt

After the meeting, Merkel told reporters that Europe, in consultation with the US, will fight speculators who are pushing down the value of the euro. Her comments were a criticism of traders who are betting that the euro will fail and sinking its value to the lowest level since May 2009.

Greece seeks EU assurances of bailout; Germany doesn't budge

Ever since Greece admitted the size of its debt – nearly 13 percent of its annual gross domestic product, or four times the amount EU budget rules allow – it has sought some reassurance from the European Union that a bailout would come if necessary. Germany, as the EU’s largest economy, is expected to shoulder most of the financial burden if a bailout does occur.

Merkel has steadfastly refused to offer financial support. Polls show that more than 70 percent of the German public opposes any financial assistance for Greece.

"The German reflex is to spend less and save more to prevent crisis," says Ansgar Belke, research director for international economics at the German Institute for Economic Research in Berlin. "Mediterranean EU members like Greece expect to be able to depend on German savings."

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