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Germany gives Greek bailout the green light

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The German parliament has given the green light to talks on a third bailout package for Greece, as pressure mounts on the country to concede debt relief for Greece.

The majority of lawmakers approved starting negotiations over a third, 86-billion-euro ($94 billion) bailout program for Greece, despite doubts among some politicians over whether Greece will remain committed to reforms.

A total of 439 members of parliament voted in favor of negotiations on Friday, while 119 voted against.

Ahead of the vote, German Chancellor Angela Merkel urged lawmakers to back negotiations, saying the alternative was chaos.

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Christoph Schmidt, an economist who advises Merkel (known as one of her "wise men"), said the vote was a step towards Greece getting the bailout.

"The Bundestag will send that signal most likely today and then we have to take it step by step," Schmidt, who is chairman of the German Council of Economic Experts, told CNBC Europe's "Squawk Box" Friday.

"I think (we will) come out of this situation with a third package supporting Greece and trying to help them implement all the conditions that will help them to become a viable market economy."

German doubts

Not everyone in Germany -- the euro zone member that has lent the most to Greece – is happy about the prospect of giving more aid to Greece after five months of political wranglings with the country's leftwing government over reforms.

German Finance Minister Wolfgang Scheauble, for instance, has been a vocal critic of Greece's reluctance to adhere to strict austerity measures. He told German radio on Thursday that he still believed a temporary exit from the euro zone – or Grexit – could have been a better option.

Economist Schmidt said it was natural to be skeptical over Greece, given the government's recent rejection of austerity and reforms. Last week, however, Greek Prime Minister Alexis Tsipras appeared to do a dramatic U-turn and capitulated to demands for reforms in order to prevent imminent bankruptcy and an exit from the euro zone.

Greece got a boost from the European Central Bank (ECB) on Thursday when the euro zone's central bank agreed to raise emergency liquidity assistance (ELA) for Greek banks. This could see lenders in the country -- which have been closed for over two weeks -- reopen on Monday. The country is also expected to get a 7 billion euro bridging loan from Europe to tide it over before a bailout is finalized.

The debt bugbear

Despite lenders' apparent readiness to give Greece more aid, the country's debt level is still a major bugbear. There are growing calls for a debt haircut to enable the country to return to growth, which not everyone is happy about.

Germany remains opposed to any such move, fearing it could set a precedent for other indebted euro nations. Schaeuble told Deutschlandfunk radio Thursday that a debt haircut would be incompatible with the country's membership of the euro.

Economist Christoph Schmidt agreed, telling CNBC that an outright debt haircut was "simply impossible."

However, in a meeting with the German and French finance ministers on Thursday, U.S. Treasury Secretary Jack Lew "underscored the importance of achieving debt sustainability in the upcoming negotiations," according to the Treasury Department.

Meanwhile, Christine Lagarde, managing director of the International Monetary Fund (IMF), told French radio on Friday that debt relief was needed to make the Greek agreement viable, Reuters reported. She said that a significant extension of Greek debt maturities and reimbursement deadlines could be enough, however.

Bob Parker, senior advisor at Credit Suisse, agreed, telling CNBC that there was no other option for Greece.

"Greece has debt in excess of 320 billion euros – that is close to 200 percent of GDP," he said.

"Yes, the maturities have been extended and interest rates have been cut, but unless Greece can get very serious access to capital markets, I think Christine Lagarde is absolutely right, over the long-term, there will be have to be haircuts and debt reductions for Greece."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld