MUNICH (Reuters) – European powers Germany and Britain urged Egypt on Saturday to change leaders rapidly but take its time holding elections, saying traditions of tolerance and fairness had to be built to make democracy work.

German Chancellor Angela Merkel, British Prime Minister David Cameron and European Council President Herman van Rompuy reiterated demands for a rapid “transition” — a phrase that has become a diplomatic codeword for the resignation of President Hosni Mubarak after 30 years of military-backed autocracy.

But they said caution would be needed in the aftermath.

“I don’t believe that we solve the world’s problems by flicking a switch and holding an election … Egypt is a classic case in point,” Cameron told a security conference in Munich.

“I think a very quick election at the start of a process of democratization would be wrong,” Merkel told the same meeting, citing her own experiences as an East German pro-democracy activist at the time of the 1989 collapse of the Berlin Wall.

“If there is an election first, new structures (of political dialogue and decision-making) don’t have a chance to develop.”

Mubarak, who has pledged to step down in September, said on Thursday he believed Egypt would descend into chaos if he were to give in to almost two weeks of demands by an unprecedented popular revolt that he quit immediately.

BERLIN (Reuters) – Germany’s resistance to expanding a euro zone bailout fund and easing Greece’s debt burden seems to be softening as it scents a grand bargain in which European states would commit to tough German-style economic reforms.

Berlin officials still insist in public there is no need to increase the size of the European Financial Stability Facility (EFSF), and reject the possibility that Greece may be forced into some form of debt restructuring.

But in private they are setting out the negotiating position for what Berlin sees as a package deal to be agreed in March, ranging from altering the terms of Greek debt to ambitious reforms of European pay and pensions.

Senior German officials tell Reuters the government is now actively discussing practical options for expanding the role of the EFSF to alleviate Greece’s debt dilemma.

One option would be to empower the fund to lend Greece money to buy back its own bonds in the market at a discount.

“But we have different opinions in the government. Some want it, some don’t,” said one official, who asked not to be named.

In a sign of Berlin’s evolving position, Finance Minister Wolfgang Schaeuble repeatedly declined in a weekend television interview to rule out the possibility that Greece might need to reschedule its debt.

BERLIN, Jan 21 (Reuters) – Germany said on Friday it would consider the option of getting euro zone countries who do not have an ‘AAA’ credit rating to help boost the capacity of the European Financial Stability Facility (EFSF) by injecting cash.

Europe is discussing ways to beef up the rescue fund, which has a headline value of 440 billion euros ($595 billion) but an effective lending capacity estimated at just 225 billion euros because of the need to secure a triple-A credit rating.

The challenge for European leaders is to boost it without raising the headline sum, which would be difficult to sell politically to Germany’s parliament and public in particular.

Germany also wants any extra burden not just to be borne by the bigger economies like it and France. Finance Minister Wolfgang Schaeuble has said Brussels should “prevent the impression it is only putting pressure on the triple A-rated countries and not on those countries who have perhaps contributed more to the creation of the crisis”.

Asked about the cash injection option, Chancellor Angela Merkel’s spokesman Steffen Seibert told reporters it had long been Berlin’s view “that it’s not right that the financial burden of the rescue fund is restricted to a few countries”.

“If (the cash injection proposal) is submitted, it will be assessed,” Seibert added.

One senior German parliamentarian from the ruling coalition said a cash injection was already “one of many options in play. It is being considered, but no decision has been taken”.

BRUSSELS/BERLIN (Reuters) – Euro zone ministers are considering whether the bloc’s rescue fund could buy back the bonds of troubled member states, a source said on Thursday, and debt-ridden Portugal said it supported the proposal.

Berlin and Athens insisted Greece, the first to succumb in the currency bloc’s debt crisis, needed no help with debt repayments.

Under the proposal being discussed, the European Financial Stability Facility — set up after Greece was bailed out last year — would be able to conduct buy-back operations of bonds of a distressed country, which could help stabilise its debt market, one euro zone source told Reuters.

The changes would be part of a wider package of new measures that the euro zone is expected to announce by mid-March as it tries to draw a line under the sovereign debt crisis, which has forced Greece and Ireland to seek EU and IMF financial help.

“It was one of the options more seriously considered. Some people were quite pushing this,” the source with knowledge of Monday’s euro zone finance ministers meeting said.

Portuguese Finance Minister Fernando Teixeira dos Santos backed widening the remit of the 440 billion euros EFSF to include potential purchases of government bonds and said its size should be increased.

The plan tallies with reports in two German publications this week.

BERLIN, Jan 20 (Reuters) – Greece and euro zone paymaster Germany tried to fend off talk on Thursday that Athens needed help with debt repayments via a buyback with European funding that could face stiff opposition in national parliaments.

A German paper said euro zone nations were mulling a plan to enable Greece and Ireland to write off some of their debt burden using the European Financial Stability Facility, set up after the Greek bailout as a safety net for others who hit trouble.

The Financial Times Deutschland said euro zone finance ministers, who met on Monday, discussed a plan for the bloc’s rescue fund to buy bonds from these states or give them favourable loans for repurchasing debt.

It was not clear under the plan whether bondholders would be paid the face value of the debt or not, leaving open the crucial question of whether investors faced a “haircut”.

It is also unclear whether European parliaments would accept changes in rules binding the 440 billion euros fund, whose real lending capacity is much lower because of its complex loan guarantee system.

German Chancellor Angela Merkel’s conservatives looked set to oppose any attempt to use the EFSF to buy up Greek debt, which would have to be approved by national parliaments first, said a senior lawmaker from her Christian Democratic Union.

“I do not see a quick willingness for a purchase of state debt by the EFSF,” Hans Michelbach told Reuters. [ID:nWEA2811]

BERLIN (Reuters) – Germany is not opposed in principle to beefing up the euro zone crisis fund but would only agree to changes on its own terms, wary of a backlash from voters in seven state elections this year.

For Berlin, being cast as the European bully — accused of holding out on Greece and Ireland, rejecting calls for joint euro bonds and pushing Portugal to seek a bailout — is the price to pay for having the muscle to call the shots.

But while Germany has repeatedly rejected in public calls to extend the 440 billion euro (373 billion pounds) European Financial Stability Facility, the government has been discussing the possibility with its partners behind the scenes.

This has led to divergent media reports around Europe over the intentions of Angela Merkel’s centre-right government, which shoulders the biggest burden in the euro zone rescue schemes.

Hence the Financial Times’ headline on Thursday was “Berlin backs wider fund role”, while the Frankfurter Allgemeine Zeitung said “Merkel criticises proposals to widen the euro rescue scheme”, a line echoed by several other German newspapers.

German leaders have repeatedly stated that no extra funding is needed but also insist that the biggest economy in the bloc will “do what is necessary” to protect the euro.

On Wednesday evening, Finance Minister Wolfgang Schaeuble said the euro zone nations were working on a “comprehensive package” to solve the bloc’s debt crisis.

BERLIN (Reuters) – Germany is not opposed in principle to beefing up the euro zone crisis fund but would only agree to changes on its own terms, wary of a backlash from voters in seven state elections this year.

For Berlin, being cast as the European bully — accused of holding out on Greece and Ireland, rejecting calls for joint euro bonds and pushing Portugal to seek a bailout — is the price to pay for having the muscle to call the shots.

But while Germany has repeatedly rejected in public calls to extend the 440 billion euro (370 billion pounds) European Financial Stability Facility, the government has been discussing the possibility with its partners behind the scenes.

This has led to divergent media reports around Europe over the intentions of Angela Merkel’s centre-right government, which shoulders the biggest burden in the euro zone rescue schemes.

Hence the Financial Times’ headline on Thursday was “Berlin backs wider fund role,” while the Frankfurter Allgemeine Zeitung said “Merkel criticises proposals to widen the euro rescue scheme,” a line echoed by several other German newspapers.

German leaders have repeatedly stated that no extra funding is needed but also insist that the biggest economy in the bloc will “do what is necessary” to protect the euro.

On Wednesday evening, Finance Minister Wolfgang Schaeuble said the euro zone nations were working on a “comprehensive package” to solve the bloc’s debt crisis.

BERLIN, Jan 7 (Reuters) – Angela Merkel’s Free Democrat (FDP) allies took a drubbing in a poll on Friday portraying them as Germany’s most dishonest party while leader Guido Westerwelle got poor reviews for a speech attempting to revive his fortunes.

The poll underlined what a liability the pro-business FDP has become for Merkel, with support for her conservatives on the rise thanks to the strength of the German economy but Westerwelle’s party at its lowest in over 11 years.

The German chancellor did not comment on Thursday’s speech by the unpopular Westerwelle — her deputy and foreign minister – which was seen as a desperate attempt to rally flagging support for the junior partner in Merkel’s centre-right coalition.

While the mass circulation Bild hailed “General Guido” as a fighter, the Sueddeutsche Zeitung called it “clowning instead of clarity” and the Financial Times Deutschland thought it “absurd” that Westerwelle did not address calls for him to resign.

“The performance of Westerwelle…bordered on denial of reality. Nobody discussed the loss of confidence among voters and the life-threatening opinion poll levels,” wrote the FTD.

While Merkel’s Christian Democrats and their Bavarian sister party, the CSU, rose 4 points in the DeutschlandTrend poll to 36 percent — their best performance in nine months — the FDP hit 4 percent, which would not be enough to enter parliament.

Discontent bubbled on among party rebels who last month urged 49-year-old Westerwelle to resign. Joerg-Uwe Hahn, FDP leader in Hesse state, told reporters: “That can’t have been everything. It must have just been the first part of the speech.”

BERLIN (Reuters) – Angela Merkel’s ruling coalition has rallied round Free Democrat leader Guido Westerwelle as he fights for his political life, but Germany’s unpopular foreign minister may only fend off party rebels for a few more months.

The FDP’s support is sinking so fast that after one poll gave it an approval rating of just 3 percent, a party leader in Baden-Wuerttemberg state, Ulrich Goll, joked that he was waiting for the first poll to appear giving the FDP zero percent.

The government led by Merkel’s conservative Christian Democrats risks being destabilized by the unpopularity of the FDP, whose commitment to tax cuts — and inability to deliver them in the financial crisis — has alienated many Germans.

The center-right faces a major political test with seven state elections this year and risks losing Baden-Wuerttemberg which the conservatives have held for nearly 60 years.

Merkel and the leader of her Christian Democrats’ Bavarian sister party, Horst Seehofer, are reported to have held secret crisis talks with Westerwelle, urging him to “hang on” and face down rebels at an FDP conference this week in Stuttgart.

A measure of the gravity of the situation is that Seehofer, whose Christian Social Union (CSU) usually bickers with the FDP in the coalition, came out strongly in support of Westerwelle, calling him “one of the leading lights of liberalism.”

“The problem at the moment is the situation of the liberals. I hope the FDP stabilizes,” Seehofer told Sueddeutsche Zeitung newspaper, adding that its woes were “bad for the coalition.”

BRUSSELS/BERLIN (Reuters) – European leaders sought to paper over deep divisions on how best to resolve the debt crisis ahead of a summit on Thursday, and Spain and Portugal came under renewed pressure to get their finances in order.

German Chancellor Angela Merkel said she had settled a dispute with Jean-Claude Juncker, the chairman of the Eurogroup of countries, over the idea of issuing euro area bonds, but differences still looked likely to arise at the summit.

“Jean-Claude Juncker and I had a long telephone conversation and cleared up the issue a while ago,” Merkel said in an interview with Germany’s Bild newspaper published on Thursday. “With so much at stake, the emotions sometimes get involved.”

Juncker, who is a strong advocate of issuing so-called E-bonds, which Merkel says are unnecessary and would dent Germany’s credit standing, also said the disagreement was resolved, but has hinted he could raise the proposal anyway.

He said he regretted “dissonances in public” which had given financial markets more cause for concern, and said he was focused on trying to achieve unity ahead of the two-day summit, as well as getting Spain and Portugal to improve their finances.

“They would do well… to present in detail structural reforms to be introduced beyond the plans of consolidation already announced,” he told Corriere della Sera.

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