Updated | Merkel positive on support on Libya, flexible Muscat against Greek haircut

Joseph Muscat arrives in Berlin for meeting with German Chancellor

Prime Minister Joseph Muscat said he has received a "positive responsiveness" from German Chancellor Angela Merkel on the prospect of a UN mandate for a unity government in Libya to prevent the country from becoming a failed state.

Merkel said that Germany would do everything to see that Libya, currently in the grips of a civil conflict, would not become a failed state, expressing support for a United Nations mandate inside the North African country.

Muscat said his visit in Berlin today was also about nudging EU players into giving importance to the southern Mediterranean.

“Germany is one of the countries that has taken the lead, morally… our role here is to nudge all crucial EU players on the importance on the [Libyan] issue. It’s not the only issue, but neither is Ukraine,” Muscat said of Germany's major security headache on the Eastern border of the EU.

The Maltese prime minister said that it was important to have Libya become a safe port of call. He said the effects of a failed state would see an increase in migratory pressure, endangered supplies of crude oil, and a rise in terrorism.

“The EU cannot be seen as that Europe that failed to read the signs of the times during the Arab spring, and now as that Europe that turns to action only when Libya becomes a failed state. There’s a window of opportunity and that window of opportunity is now.”

On her part, Chancellor Merkel was eager to point out that Germany was also engaged in the security challenge posed by Russia and the threat to Ukraine.

But she said that her country had to look at other “possible conflict areas in the southern rim of the EU… because we know the migratory flows there. We have to combat the root causes of flight and ensure the stability of countries like Libya.”

Also high on the agenda was Greece’s demands for debt relief, something that Muscat ruled out outright.

“We are against a debt haircut,” Muscat said of Greece’s new government’s demands to halve its €315 billion debt. Greece’s and Germany’s finance ministers will meet Thursday.

“We are committed to the rules. We want the Eurozone to be synonymous with discipline rather than rigidity, against a lax attitude but in favour of flexibility. We have to stick to the rules, but we don’t need to over-regulate.”

Muscat, whose centre-left government is part of the more ‘growth oriented’ member states that have railed against austerity, said that Europe will have to take stock of the situation and not burden economies with excessive regulation.

Greece remains in deep recession despite six years of spending cuts, with debt increasing from 104% to 174% of gross domestic product.

On her part, Merkel took a more diplomatic stance ahead of a meeting between Greek finance minister Yanis Varoufakis and Wolfgang Schauble. “We are waiting for their concrete proposals. For many years, Germany pursued a political course to do everything for Greece to remain part of the euro area. We won’t stray from this path, and we respect the choice of the Greek people,” she said of the election of radical left-wing party Syriza to power.

Greece’s new prime minister Alexis Tsipras wants to stop austerity cuts imposed by the EU’s ‘Troika’ of bailout monitors.

Malta remains the least exposed to Greek debt, but with €174 million in EFSF guarantees and bilateral loans it is also the highest exposed in terms of GDP.

“We are totally against a haircut and we don’t budge from that position. We are in favour of discussing the current terms.

“But are people have also voted for parties with a different mandate. And our allegiance is to that mandate. Rules must be abided and reforms done, but one can discuss timing for debt repayment and debt swaps.”

Prime Minister Joseph Muscat was welcomed with military honours by Angela Merkel at the Chancellory, where both leaders inspected the guard of honour of the Federal Armed Forces before heading for official talks.

This was the first meeting between Merkel and the Labour prime minister. She had last met his predecessor Lawrence Gonzi, like her hailing from the EPP family of Christian-democrats, in early 2013 in the run-up to the Maltese general elections.

Muscat was accompanied by foreign minister George Vella and Labour MP Silvio Schembri.

The delegation later met members of the Geman-Maltese parliamentary friendship group, one of 54 bilateral and multilateral ‘friendship’ groups formed on a cross-party basis. In comments he gave to the press, Muscat said that the attack on the Corinthia Tripoli hotel spurred member states to the attention of the terrorist infiltration inside Libya. “My appeal to the media is to be wary of speculation,” Muscat said of rumours on other internet news media of attacks on the island. “We have no intelligence on any imminent threat.”

Muscat will also address the Friedrich Ebert Stiftung in the evening.