Allianz Group is a global financial services provider. It has a customer base of 76 million people and offers products in the areas of insurance, asset management and banking. Its chief economist Michael Heise heads the Economic Research and Corporate Development department and is among other things responsible for the group's financial market surveys.

DW: More money for Greece - this has been the anti-crisis recipe over the past few years. But this rescue mechanism has so far failed. Has Europe picked the wrong strategy after all?

Michael Heine: I don't think we have the wrong strategy. It's certainly true that more rescue funds alone cannot resolve Greece's problems. But the rescue money is being handed out with rigid conditions attached.

Greece is being required to implement reforms in order to tap into the money. It's those reforms which can eventually get Greece back on a sound footing. Unfortunately, there's been quite a delay in enacting some of the measures.

But isn't it exactly those rigid conditions attached which could nip growth in the bud? How can you possibly wriggle out of the current crisis by applying such a strategy?

We've got a strong recession in Greece - one that's even stronger than expected. And this recession is preventing the country from meeting its budgetary targets. The process of cutting the public deficit is behind schedule.

You can still say recession is to blame for this, and that's why it's probably counter-productive to call for even more spending cuts or tax hikes. But what we need to call for are structural reforms, which are indispensable in the long term. And there too Greece hasn't really made big strides, if you think about public administration, tax collection or asset privatization. And I believe it does make sense to ratchet up the pressure a bit.

What's also been discussed is a haircut for Greece. But it's not clear yet what exactly this haircut will embrace. Why does it take so long to reach agreement?

That's a very difficult question. Quite naturally, the banks are not willing to accept very big figures, because many of them don't have a sound capital base yet.

And more losses through the purchase of more Greek bonds would increase the bank's equity capital requirements and with it may force them to resort to state aid.

That's why there's a good deal of reluctance now to agree to a haircut of over 70 percent. And you have to consider that everything remains based on a voluntary agreement. The final accord must have the backing of as many banks and insurers as possible. And that's why negotiations have been so protracted.

Interview: Sandra Bernd / hg
Editor: Michael Lawton