BERLIN — German Chancellor Angela Merkel sought Tuesday to calm market fears that Greece is heading for a chaotic default as Europe struggles to contain a crippling financial crisis.
Merkel rejected the notion that a Greek bankruptcy — a possibility raised a day earlier by her deputy that spooked markets — would provide a quick solution to the eurozone debt crisis.
She argued that Europe instead needs to stick to its efforts to cut budget deficits and improve its competitiveness, and that resolving the crisis would be "a very long, step-by-step process."
Her comments came ahead of a teleconference today with French President Nicolas Sarkozy and Greek Prime Minister George Papandreou.
Fears of an imminent Greek default pushed interest rates on the country's 10-year government bonds up Tuesday to a new record of over 24 percent, although Merkel sounded optimistic regarding Greece's chances of getting the next batch of bailout cash from the so-called troika — the European Commission, the European Central Bank and the International Monetary Fund.
Representatives from the three organizations are due back in Athens soon. Meanwhile, President Barack Obama urged European leaders to take a more forceful approach to the continent's debt problems.
"They have taken some steps to slow the crisis but not solve the crisis," Obama told a group of Spanish-speaking journalists Tuesday. "We will continue to see weaknesses in the world economy so long as this issue does not get resolved."
EU states want control over national borders
BRUSSELS — Germany, France and Spain warned the European Union's head office Tuesday not to meddle in how they manage their borders, insisting it's a question of state sovereignty.
The warnings came even as the bloc's member nations debate how to tackle issues such as illegal immigration and crime.
The three-country statement came as the EU Commission prepared to present plans Friday to better manage the Schengen zone of borderless travel through much of Europe.
The Schengen Agreement governing the zone is a legally binding treaty; 25 countries are currently members of the Schengen visa-free zone.