Debate about Greek exit fuels tensions with Athens

GERMAN CHANCELLOR Angela Merkel insisted yesterday she is “deeply convinced” the new Greek government will make every effort to remain in the euro zone.

Dr Merkel’s remarks, at a joint press conference with Greek prime minister Antonis Samaras, came hours after a close aide floated the idea of a Greek departure.

Germany’s finance ministry meanwhile has confirmed reports yesterday that it has set up a working group to study the possible fallout of a Greek exit.

“I want that Greece remains part of the euro zone and I know of no one in government who doesn’t want this,” said Dr Merkel at a press conference following talks with Mr Samaras. “Honouring commitments and meeting expectations will lead to credibility returning to the whole of the euro zone.” The Greek prime minister expected no concessions on his inaugural visit to Berlin yesterday, and left empty-handed for talks in Paris today.

He will discuss with French president François Hollande today how to get the Greek economy growing again.

“Greece needs one thing: a chance for growth. If we manage that, I am convinced this will be a signal that Europe is capable of solving its problems and moving forward,” he said in Berlin. “We don’t want more help – we have already received the means – we need time to reach as much as possible of our goal as possible.”

Dr Merkel’s political allies have dismissed the idea of more time or money for Athens. Finance minister Wolfgang Schäuble told German radio that “more time implies . . . more money”.

In office since June, Mr Samaras said he was anxious for a new start with euro zone partners but, after missed reform targets from Athens, he conceded “actions speak louder than words”.

Hours before he met Dr Merkel, the parliamentary party leader of her Christian Democrats (CDU), Volker Kauder, told German television that a Greek exit would “not be a problem for the euro” because the bloc now had adequate instruments to prevent the spread of market contagion.

A clearly irritated Greek leader said such remarks were deeply demoralising for the Greek people after five years in economic crisis.

“Toxic declarations, regardless of where they come from, can only have a negative effect and have to end,” he said.

The crisis cacophony in Berlin continued before and after his visit yesterday, when the German finance ministry confirmed reports that a working group exists inside to calculate the cost of a Greek departure.

“Colleagues are making calculations about the financial consequences and considering how a domino effect on other euro member states might be prevented,” the Financial Times Deutschland reported. The 10-man group was set up a year ago, confirmed a ministry spokesman, saying the government had to be prepared for all scenarios including “improbable ones”.

Such speculation drew further ire from Mr Samaras. He told reporters in Berlin such talk was undermining his government’s efforts to privatise state assets in line with EU/International Monetary Fund programme targets.

“Is there any businessman who will invest euro if he knows he will get drachmas back?” he asked.

Greece has raised the prospect of extending the duration of its programmes by two years to 2016. Other options floated including front-loading aid payments, lower interest rates or extending maturities on loans.

Slovenia’s economics minister Tomas Malatinsky said the euro zone would eventually need an exit mechanism. Asked if Greece would be the first to use it, he said: “One should never bury anyone prematurely when he still has a chance to do good works.”