German line hardens after Greeks reject bailout terms

The German government signaled a tough line toward Greece on Monday, saying it saw no basis for new bailout negotiations and insisting it was up to Athens to move swiftly if it wanted to preserve its place in the eurozone.

With opinion toward Greece hardening in Germany's ruling coalition after the landslide rejection of European bailout terms in a Sunday referendum, Chancellor Angela Merkel said she expected Athens to quickly roll out reform plans and her spokesman indirectly raised the prospect of a Greek exit from the bloc.

Merkel said the Greek government needed to put some proposals on the table this week, especially as the requirements to start negotiating about a concrete aid program from the eurozone's bailout fund were not currently present.

"It will be important tomorrow that the Greek prime minister tells us how things should proceed and what precise suggestions he can submit to us for a medium-term program that will lead Greece to prosperity and growth again," Merkel said in Paris, where she met French President Francois Hollande to agree a common stance on Greece.

She said the door was still open for negotiations but "time is of the essence" and for the euro zone to keep its single currency all countries needed to shoulder responsibility as well as showing solidarity.

Merkel's spokesman said it was up to Athens to act so that it could remain in the currency bloc, and Vice Chancellor Sigmar Gabriel went further by saying the Greek government needed to improve on its previous proposals.

"If Greece wants to stay in the euro, the Greek government must quickly make a substantive offer that goes beyond its willingness thus far," said Gabriel, leader of the Social Democrats (SPD), junior partner in Germany's ruling coalition.

"For the Greek population, life will get even more difficult in the coming days and weeks. The definitive insolvency of the country now is an imminent threat," added Gabriel.

The increasingly strong rhetoric from the center-left SPD leader, along with the uncompromising stance of Merkel's own conservatives, leaves the chancellor little room for maneuver in any new talks with Greek Prime Minister Alexis Tsipras.

Pressed on what concessions Berlin might be willing to make to Tsipras, a finance ministry spokesman dismissed the idea of a debt restructuring sought by Athens and favored by the International Monetary Fund (IMF).

Merkel spoke by phone with Tsipras, who agreed to present a new proposal for an aid-for-reforms deal at aEuropean Union summit on Tuesday, a Greek government official said.

The rhetoric out of Paris, Madrid and other capitals was more conciliatory towards Greece on Monday morning, with French finance minister Michel Sapin saying a Greek debt writedown should not be considered taboo.

German have officials acknowledged privately that Berlin and Paris have sent out conflicting signals in recent days that it is important to get the eurozone's two biggest countries back on the same page.

Gabriel said the two countries needed to regain voters' belief in their capacity to deliver results: "Beyond all issues around Greece, it would be good if Germany and France would sit down again to think about stronger cooperation," he said.

BOXED IN

Finance minister Wolfgang Schaeuble said the German government and outgoing Greek finance minister Yanis Varoufakis had held differing views on many issues but the path ahead would not necessarily be easy for his successor in Athens.

"Anyone who succeeds him will be in a situation where it is not easy to find a solution with his colleagues in the Eurogroup to his country's problems, which are not simple," Schaeuble said after meeting with his French and Polish counterparts in Warsaw.

Government spokesman Steffen Seibert played down the impact of the resignation of Varoufakis, whose fiery language has alienated the Germans and many of their euro partners. He said that Greek policy positions were more important than personnel.

Merkel, who has worked hard behind the scenes to avoid a Greek exit, finds herself boxed in following the referendum by the increasingly hard line taken by her conservative allies and the SPD.

"I don't see a strengthened negotiating position for Greece. Just the opposite," said Carsten Schneider, finance expert and deputy SPD parliamentary floor leader. "It is a position that has strengthened the radical powers inGreece and made it much, much harder for Europe to accommodate them."

Reflecting a shift in the political mood in Germany, Schaeuble, who has become a hate-figure in Greece, saw his popularity at home surge to a new high last week, according to an opinion poll.