Germany and France promise to help Greece stay in euro zone

FRANCE AND Germany have promised “additional growth measures” to ensure Greece remains within the euro zone.

On his inaugural visit to Berlin, French president François Hollande said he felt a “responsibility” to offer a “sign” of hope to Greek voters, as the euro fell to a four-month low on the collapse of talks in Athens.

“The Greeks should know that, through growth measures and supporting economic activities, we will move in their direction to ensure they stay in the euro zone,” said Mr Hollande after talks with Chancellor Angela Merkel.

The German leader insisted the agreed reforms could not be altered but she too offered the prospect of unspecified growth measures.

“It is my expectation and wish that Greece can remain in the euro,” she said. “We stand ready, whenever Greece wants. Additional measures for growth can be analysed, if and when requested.” Following rained-out festivities in Paris, Mr Hollande arrived 75 minutes late for his inaugural visit to Berlin after his aircraft was struck by lightning. After just hours in office, Mr Hollande was confronted with the first real test of his promised growth agenda: the announcement of fresh elections in Greece after a nine-day political deadlock failed to produce a new government.

A final round of talks, chaired by the Greek president, Karolos Papoulias, ended in failure yesterday as political leaders refused to budge from their established positions.

The main sticking point was the insistence by Pasok, New Democracy and the Democratic Left that the Radical Left Coalition (Syriza), the second largest party since the May 6th poll, enter coalition. But Syriza, likely to top any new poll, insisted it could not support a government that would honour the country’s bailout agreements with the troika.

“We resisted in every way,” said Alexis Tsipras, Syriza leader. “We made the decision to not betray your hopes and your expectations.”

Despite conciliatory tones in Berlin last night, others took a harder line, linking the looming poll to Greece’s future in the currency union. “If Greece – and this is the will of the great majority – wants to stay in the euro, then they have to accept the conditions otherwise it isn’t possible,” said German finance minister Wolfgang Schäuble in Brussels. “No responsible candidate can hide that from the electorate.”

German foreign minister Guido Westerwelle added: “What’s at stake is the Greek people’s commitment to Europe and the euro.”

Amid financial market turbulence, IMF chief Christine Lagarde said it was important to be technically prepared for the possibility of Greece leaving the euro zone. But she warned that such a move would be “quite messy”, with risks to growth, trade and financial markets.

While Greek talks were falling apart in Athens, Mr Hollande showed his predecessor, Nicolas Sarkozy, to the door of the Élysée Palace in Paris.

Mr Hollande promised in his inaugural speech to “bring justice back to France, open up a new path in Europe, contribute to world peace and preserve the planet”.

He made a veiled swipe at the departed Mr Sarkozy, saying he would run a “dignified”, “simple” and “sober” presidency.

Mr Hollande then travelled up the Champs-Élysées in an open-top car, braving heavy rain to wave at onlookers and lay a wreath at the Tomb of the Unknown Soldier.

Mr Hollande is France’s first left-wing president in 17 years and only the second in the history of the Fifth Republic, founded in 1958.

The new president announced as his prime minister Jean-Marc Ayrault. A 62-year-old ally and parliamentary head of the Socialist Party Mr Ayrault is known as a low-key consensus builder and a German speaker.

The rest of Mr Hollande’s government – expected to include as many women and men – should be unveiled today.

Tomorrow the French president flies to the US to meet President Barack Obama and attend G8 and Nato summits.