Germany touts Greek change of heart ahead of key bailout vote

(BERLIN) - German Chancellor Angela Merkel and her hardline Finance Minister Wolfgang Schaeuble on Sunday hailed a dramatic change in Greece's approach to its debt crisis ahead of a key parliamentary vote in Berlin on a fresh bailout.

Before German MPs are asked to approve a third rescue package for the debt-mired eurozone partner on Wednesday, Merkel said Athens' new willingness to embrace reforms was down in part to Berlin's -- and in particular Schaeuble's -- unyielding stance.

"It doesn't help if we are all nice to each other and in three or four years everything is worse than it already is today," she told ZDF public television.

Merkel said Greece's leftist government had changed its approach "thanks to the tough stance of many countries but also Wolfgang Schaeuble and the German government".

Athens now "sees that the country can only get back on its feet if it really reforms."

She said eurozone partners would now be watching to see "whether the intensity of this work continues", adding that further Greek measures were necessary "if we want to see the light at the end of the tunnel".

Schaeuble, who has driven a hard bargain with Athens throughout the crisis, called an agreement reached Friday among the eurozone finance ministers "responsible" and "in keeping with the commitments made at a euro summit in July".

"After truly arduous negotiations, they understand now in Greece that the country cannot get around real and far-reaching reforms," he told the mass-market Bild am Sonntag newspaper.

He said that the eurozone countries would be keeping close watch to ensure that the reforms-for-aid deal "is implemented point-by-point" in Greece.

As Europe's biggest economy and contributor to Greek aid, Germany plays a key role in the emergency package approved by eurozone finance ministers worth up to 86 billion euros ($96 billion).

- Scale of revolt -

MPs from the Bundestag lower house of parliament will be called back from the summer recess to vote on the bailout.

Analysts say approval is almost certain, given that Merkel's governing coalition of conservatives and Social Democrats has 504 of the assembly's 631 seats.

The main interest is in the scale of any revolt by deputies in Merkel's conservative bloc, they say.

On July 17, the Bundestag was recalled from its summer break for a first vote on giving the green light to start negotiations on the bailout.

It was opposed by 60 of the 311 legislators in Merkel's bloc, seen as a blow to the popular chancellor on her 61st birthday.

Schaeuble, who has repeatedly taken a more sceptical line than Merkel during the crisis and even floated a temporary exit for Greece from the eurozone, enjoys an approval rating of around 70 percent among Germans.

Merkel's chief whip in parliament saw himself forced to threaten conservative MPs with sanctions should they fail to toe the party line this time around.

An EU source reported that Merkel and Schaeuble, whose complex decade-long partnership in government is a source of fascination for Germany watchers, had "major differences" over the terms of the Greek rescue last week.

The finance ministry argued for a bridging loan for Greece to cover a 3.4 billion euro repayment due to the European Central Bank on Thursday rather than sign off on what it saw as a hasty deal with Athens.

In the end, Schaeuble allies argued that they had wrested significant concessions from Greece on issues such as privatisations.

Schaeuble's interview Sunday backing the package, as well as positive comments made at the eurozone ministers' meeting in Brussels on Friday, marked a show of support for the chancellor against any backbench rebellion during Wednesday's vote.

A report in the conservative Frankfurter Allgemeine Sonntagszeitung cited sources from Merkel's parliamentary group as saying that it was unlikely the "No" camp would draw significantly more than 60 votes this time.