Merkel says she wants Greece to stay in the euro zone

Greek Prime Minister Antonis Samaras and German Chancellor Angela Merkel address a joint news conference in Berlin September 23, 2014. REUTERS/Fabrizio Bensch/Files

By Noah Barkin and Kylie MacLellan BERLIN/LONDON (Reuters) - Germany's Angela Merkel played down the chances of a Greek exit from the euro zone on Wednesday, but made clear she expected Athens to stick to the terms of its international bailouts after this month's election. The chancellor addressed the issue for the first time since a German magazine said at the weekend her government had shifted its stance and was ready to accept a "Grexit" if Athens failed to meet its commitments under EU/IMF rescue packages totalling 240 billion euros. The leader of the left-wing Syriza party, Alexis Tsipras, has pledged to reverse reforms and secure debt forgiveness from Greece's partners if he wins the election. Syriza currently holds a narrow lead over the centre-right New Democracy party of Prime Minister Antonis Samaras. "I as German chancellor, and also the German government, have always pursued a policy of Greece staying in the euro zone," Merkel told a joint news conference with British Prime Minister David Cameron. She said she had "no doubts whatsoever" that the Greek situation would be brought to a "successful conclusion", but stressed Athens needed to continue to respect its commitments if it wanted its partners to show solidarity. German officials, speaking on condition of anonymity, told Reuters on Wednesday scenarios, including a possible Greek exit, were being examined by technical experts in the government. As they plan for a possible clash with a new Greek government over bailout terms, they are also exploring a political compromise with the Syriza leader should he take power after the Jan. 25 election. The officials say they view the chances of a so-called "Grexit" as extremely slim and express confidence the euro zone could clinch a deal with Tsipras if he wins and is able to bring together a ruling coalition, which is far from certain. "ACCEPTABLE COMPROMISE" "He needs to win first and then form a coalition. It will take a while," one senior official said. "This is not about the survival of the euro zone, but finding a politically acceptable compromise." Joerg Asmussen, a deputy labour minister and former member of the European Central Bank's executive board who had extensive dealings with Greece at the height of the euro zone crisis, knows Tsipras and has kept in touch with him, people familiar with the matter said. Although any formal negotiations with Tsipras are seen as premature before the outcome of the election is clear, there is a sense in both Berlin and Brussels that if he wins, a deal would be possible. Outright debt forgiveness is being ruled out, but an extension of Greece's EU loans beyond 30 years appears to be an option EU partners could accept. "I don't think Syriza would become a kamikaze party if they come to power," said one euro zone official. "They understand they cannot be completely crazy and have to take into account the realities of life." Some figures in Berlin, including senior members of Merkel's conservative party like Michael Fuchs, have taken a hard line, but others say a Greek exit would set a dangerous precedent. European Parliament President Martin Schulz, a German Social Democrat, criticised "irresponsible speculation" about an exit. He said it created the impression Greeks could not decide their own fate at the ballot box and could end up pushing them towards radical forces. (Reporting by Erik Kirschbaum in Berlin and Jan Strupczewski in Brussels; editing by Andrew Roche)