Merkel, Hollande united on Greece

Thu, Aug 23, 2012, 01:00

German chancellor Angela Merkel and French president François Hollande presented a united front towards Greece today by telling Athens it should not expect leeway on its bailout agreement unless it sticks to tough reform targets.

The German and French leaders met in Berlin to fine-tune their message to Prime Minister Antonis Samaras, who begins a charm offensive in Berlin and Paris this week in the hope of persuading Europe's big powers that Greece deserves patience.

Dr Merkel stuck to her policy of deferring to a report due in September on Athens's progress by the "troika" of international lenders before discussing flexibility on the bailout terms, but said it was vital "that we all stay true to our commitments".

"But we will, and I will, encourage Greece to continue on its path to reform, which has demanded a lot of the Greek people," she told reporters before a dinner with Mr Hollande set to be dominated by Greece.

"We want, I want, Greece to be in the euro zone, it's a desire we have expressed since the start of the crisis. It's up to the Greeks to make the effort that is essential for that goal to be met," said France's Socialist president, standing alongside Dr Merkel.

Mr Samaras has given interviews to German media stressing that while Athens may seek more time to meet the targets, it is not asking for more money.

But German finance minister Wolfgang Schaeuble and others seemed unconvinced. "More time is not a solution to the problems," Mr Schaeuble said, addressing Mr Samaras's hopes that his country might be given four years instead of two to push through painful economic reforms, to alleviate the impact on the Greek people.

Mr Schaeuble said more time could also mean "more money" and Europe's help for Greece had already "gone to the limits of what is economically viable".

Dr Merkel receives Mr Samaras tomorrow, and Mr Hollande receives him on Saturday, at a moment of rare optimism on financial markets that the European Union - especially the European Central Bank - is poised for decisive action on the euro zone debt crisis.

The ECB has attempted to dampen talk that it could come to the aid of euro states like Spain and Italy by capping spreads on their bonds. On Greece, Mr Samaras is hoping creditors will let him spread out painful economic reforms over four years instead of two to soften their impact on the population.

"All we want is a bit of 'air to breathe' to get the economy running and to increase state income. More time does not automatically mean more money," Mr Samaras told the German daily Bild in an interview ahead of his visit.

In a country that is tiring of funding repeated bailout requests from its weaker euro zone partners, German officials defer questions about giving Athens more latitude to the results of the troika mission by the EU, ECB and International Monetary Fund, which are due in September.

The centre-left French government is careful to strike a balance between Mr Hollande's preference for growth measures over austerity and the recognition that Athens must reign in public spending as a condition for international aid.

Eurogroup chief Jean-Claude Juncker said Greece was staring at its "last chance" to avoid bankruptcy, but a decision to grant more time would depend on the findings of thy troika.

"As far as the immediate future is concerned the ball is in the Greek court," Mr Juncker said during a visit to Athens. "In fact this is the last chance and Greek citizens have to know this."

Reuters

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