FRENCH PRESIDENT Nicolas Sarkozy will meet German chancellor Angela Merkel in the coming days after Paris received assurances from Greece that it will deliver on its commitments in return for European aid.
Speaking after a meeting with Greek prime minister George Papandreou in Paris yesterday, Mr Sarkozy said support for Athens was a “moral obligation” for Europe.
He said he would travel to Germany in the coming days to co-ordinate the next steps for the Franco-German axis that “has ensured the protection of Europe” during the debt crisis.
Mr Papandreou, Mr Sarkozy said, had assured him of the “total determination of the Greek government to scrupulously implement all commitments that Greece has given.
“The failure of Greece would be the failure of all of Europe,” Mr Sarkozy said. “Remember in 2008, when the US let Lehman Brothers fail, the global financial system paid the price. For both economic reasons and moral reasons, we can’t let Greece fail.” There was “no credible alternative” to rescuing Athens, he added.
Mr Sarkozy acknowledged how Greek people had suffered in the past few years but said it was imperative for Greece to fulfil the conditions needed for the release of its second bailout. “Reforms in Greece have been delayed for too long,” he said.
The Greek leader called the meeting “very constructive” and invited his European partners to send observers to verify first-hand his country’s commitment to meeting its economic reform goals. “I told President Sarkozy that any country which wants to can send experts to see what we are doing, [and] the sacrifices the Greek people are making to change their country,” he said.
Mr Papandreou was on a European tour, having met with Dr Merkel on Tuesday, to drum up support for Greece.
He has stressed the importance of the EU’s July 21st agreement, under which Greece was granted its second bailout, and insists Athens will meet its debt and deficit targets. Earlier this week, Mr Sarkozy said he would discuss details of a new Franco-German approach to solving the sovereign debt crisis following Germany’s parliamentary vote on Thursday that approved new powers for the euro zone’s €440 billion bailout fund.
The plan received fresh impetus from Austria, which became the 14th of 17 euro zone members to approve the funds, leaving Slovakia, Malta and the Netherlands as the only countries yet to approve it.
Despite several rounds of stringent austerity measures, doubts are still hanging over Greece’s ability to honour its debt payments on time and many analysts are now convinced that a partial default is inevitable.
France is one of the largest contributors to the rescue fund, while its banks are heavily exposed to sovereign debt from Greece, Italy and Spain.
Worries about that exposure has led to a steep decline in the share prices of the country’s major banks this year, though the government insists the institutions would be positioned to cope with any Greek default.