Merkel stands firm in Greek vote countdown

Germany's Angela Merkel firmly warned against half-baked responses to Europe's crisis Friday as France sought to dispel any idea that moves were afoot to isolate her days before a fateful Greek vote. Lamenting a "lack of confidence" among eurozone leaders, Merkel said the debt crisis could only be addressed by tackling its root causes but said Germany was unconvinced by quick fixes. She warned the danger of hasty proposals such as eurobonds -- pooling debt in Europe -- or introducing a fund for bank deposit guarantees only papered over the divergences between countries. "Whoever masks that, ends up in mediocrity. Mediocrity must not become the standard," Merkel warned to applause, addressing members of Germany's federation of family-run businesses. With the threat of a Greek euro exit hanging over Sunday's poll and global leaders heading to Mexico for a G20 summit from Monday, Merkel faces pressure for Europe's de facto paymaster to forge a solution to the more than two-year crisis. But she is also under fire over her unwavering stance on strict budget consolidation as the way to tackle the turmoil, especially since Berlin's key EU ally, France, has pushed for a growth-led strategy under its new president. French Prime Minister Jean-Marc Ayrault however seemed at pains Friday to cool any perception of a ganging-up against Merkel, telling Europe 1 radio that this was "absolutely not" the case. France and Germany should work "hand-in-hand for a solution to pull Europe out of crisis," he said after criticising Germany a day earlier when he urged Berlin not to "let itself go with simplistic formulas". An Elysee source said however that regardless of what was said, a "real convergence" existed between Paris and Berlin. "The Germans support reaching an agreement with ambitious results" at an end-of-June EU summit, the source added. Meanwhile German central bank chief Jens Weidmann stirred a debate on the strings attached to Spain's June 9 deal for up to 100 billion euros ($126 billion) to save stricken banks. Madrid should face "broad" conditions, not just conditions on its financial sector, in exchange for the aid, he told Friday's El Pais daily, warning that questions about the deal's terms were "eroding" commitment by other bailed-out eurozone nations to the terms of their accords. Greece, which along with Portugal and Ireland has received an international credit lifeline, returns to the polls Sunday for its second election in six weeks. The vote will be watched closely around the world as all the top candidates are now calling for renegotiation of Greece's bailout deal despite warnings that the country must toe the line or leave the euro. European leaders and in particular Merkel have said the terms must stand but officials privately say there is some wiggle room and a willingness to meet Greece's need to restart economic growth after five years of recession. "The terms of the compromise, which is to be signed between now and September, would add another two years on the target for fiscal consolidation," a former adviser to former prime minister Lucas Papademos told AFP on condition of anonymity. Greece is currently on its second international bailout loan of 130 billion euros and conducted earlier this year a 107-billion-euro private debt write-off.