German politicians pressure Greece

Senior German politicians stepped up the pressure on Greece to stick to its reforms before the Greek prime minister visits Berlin this week and made clear that there was no appetite in the German parliament for a third aid package.

Greek leader Antonis Samaras, facing mounting social and political discontent at home, is expected to ask for a two-year extension to the deadline international lenders have set when he meets the leaders of Germany and France this week.

Greece, in its fifth year of recession, has fallen behind on its targets and will probably need to make €14 billion in cuts rather than a previously expected €11.5 billion over the next two years to meet terms for international aid, according to Germany's Der Spiegel magazine. But more than two years after Greece won its first bailout, patience is wearing thin in Germany, Greece's biggest lender, where Mr Samaras meets Chancellor Angela Merkel on Friday.

"It is not responsible to throw money into a bottomless pit," finance minister Wolfgang Schauble said on Saturday at a government open day in Berlin.

Norbert Barthle and Michael Meister, both senior politicians in Dr Merkel's Christian Democrat party (CDU), told Tagesspiegel's Monday edition that there would be no third aid package for Greece while Volker Kauder, head of the conservatives in parliament, said Greece must stick to what it had agreed.

Mr Kauder told Spiegel that Athens, which has not achieved the budget cuts and privatisations it promised in March to secure a second, €130 billion bailout, must honour its agreements.

"There is no room for manoeuvre there, neither in terms of the time frame nor in terms of the substance because that would be another breach of the agreements," he was quoted as saying.

Mr Kauder added that he saw little chance of a third aid package for Greece finding support in Germany's ruling coalition even though Greek insolvency would cost Germany dear: "There cannot always be new programmes or moderated conditions. The Greeks must at some point answer the question: Are we going to make an effort or are we going to leave the euro?"

But despite growing calls in Germany for a Greek exit, 45 of 64 economists polled by Reuters in August expect Greece to still be in the currency area in 12 months' time, compared with 35 of 64 economists in a similar poll in May.

The chairman of the euro finance ministers' group said yesterday that Greece would not leave the euro zone unless the country "totally refuses" to fulfil any of its reform targets.

"It will not happen, unless Greece were to violate all requirements and not to stick to any agreement," Eurogroup president Jean-Claude Juncker was quoted as saying in Austria's Tiroler Tageszeitung newspaper.

European Energy Commissioner Guenther Oettinger said the euro zone should keep Greece on board if at all possible and warned against the unknown consequences of a Greek exit in an interview with Germany's Frankfurter Allgemeine Sonntagszeitung.

But resistance to giving Athens any leeway extends to the Free Democrats (FDP), the junior partner in Dr Merkel's coalition.

Inspectors from the International Monetary Fund, the European Commission and the European Central Bank - known as the troika - are due back in Greece in September.

Reuters