Germany insists Greece must stick to austerity terms

Thu, Aug 16, 2012, 01:00

THE GERMAN government stuck to its insistence yesterday that Greece must comply with the reform and austerity conditions agreed in its €130 billion rescue package, but Berlin did not flatly reject any extension of the debt-repayment terms it faces.

Angela Merkel, the German chancellor, will meet Antonis Samaras, the Greek prime minister, for bilateral talks in Berlin next week, at which “everything can be put on the table”, according to Steffen Seibert, the chancellor’s spokesman.

However, he stressed that Germany’s attitude, which was the same as the European position, was based on Greek fulfilment of the memorandum of understanding agreed by Athens with the European Commission, the European Central Bank and the International Monetary Fund.

At the same time, Guido Westerwelle, Germany’s foreign minister and former vice-chancellor, suggested the timescale of the rescue plan could be reconsidered, partly to allow for time lost in the two recent Greek election campaigns.

They were both reacting after the publication in the Financial Times of a Greek proposal for a two-year extension of its austerity programme, which Mr Samaras is expected to present to Ms Merkel when they meet on August 24th.

The official German government position is that nothing can be decided until the troika of officials from the European Commission, the ECB and IMF have completed their report on both progress and slippage in the Greek reform programme next month or possibly later.

Ms Merkel’s firm public position comes against a background of a vigorous political debate in Germany in which the subject of a possible Greek exit from the euro zone has been actively canvassed.

Leading politicians in her centre-right coalition say the prospects of getting more money for Greece approved in the­Bundestag are very slim.

In an interview with Spiegel magazine Mr Westerwelle said that “no substantial changes” in the reform programme would be acceptable.

The chancellor has not spoken out against calls for Greece to give up the common currency. The strongest of those have come from the Bavaria-based Christian Social Union, sister party of Ms Merkel’s Christian Democratic Union.

Philipp Rösler, the vice-chancellor, economy minister and leader of the liberal Free Democrats, the other junior partner in the coalition, said the idea of a Greek exit had “lost its terror” for him. – (Copyright The Financial Times Limited 2012)