Merkel urges Greece to maintain austerity as way to stay in euro

German Chancellor Angela Merkel (left) speaks with Greek Prime Minister Antonis Samaras (right) (Source: Bloomberg) German Chancellor Angela Merkel (left) speaks with Greek Prime Minister Antonis Samaras (right) (Source: Bloomberg)

German Chancellor Angela Merkel used her first visit to Greece in five years to maintain pressure on Greek Prime Minister Antonis Samaras to meet austerity pledges, proclaiming her desire to keep the country in the euro.

The two leaders stood side by side at a press conference as protesters massed outside the Parliament building in a capital city on virtual lockdown. Merkel has become the face of austerity in a country suffering a fifth year of recession, which many Greeks blame on German-led conditions attached to emergency loans.

“I want Greece to remain in the euro,” Merkel told reporters today halfway through her six-hour visit. “A lot has been done, much remains to be done.”

At stake is Greece’s membership in the 17-nation euro and the payment of 31 billion euros ($40 billion) from bailout commitments first made in 2010. Since then, the debt crisis has frustrated policy makers and stunted the region’s economy. Spain is considering asking for help and Cyprus is in talks for a lifeline, following Ireland, Portugal and Spanish lenders.

“Merkel is on a carrot and stick exercise: Show support and hope for the plight of Greeks with the reminder that there has to be a quid pro quo,” Ralph Brinkhaus, a lawmaker from her Christian Democratic Union and a member of parliament’s finance committee, said in an interview today. “Merkel’s primary constituency is Germany, not Greece: she knows what millions of voters back home expect her to say.”

Athens Protests

Athens was the scene of protests on and around its main Syntagma Square as thousands of Greek citizens vent frustration over Merkel’s perceived role in the country’s economic misery. Some 7,000 police were deployed in the capital, with some firing tear gas. Merkel’s destinations are cordoned off.

Merkel’s trip to Athens, her first since July 2007, reciprocated a visit by Samaras to Berlin in August this year and underscored her desire to silence the calls from her own coalition to kick Greece out of the currency union.

“Merkel’s visit to Greece first of all proves that we are breaking an international isolation that existed to now. And this was due to our mistakes as well. The political power and image of a country corresponds to its credibility.”

Merkel has softened her tone on Greece since Samaras’s election earlier this year. He formed a coalition after beating back a challenge by parties that advocated tearing up the terms of Greece’s rescues and calling the bluff of the so-called troika of international creditors -- the IMF, the European Central Bank and European Commission -- at the risk of triggering global meltdown in financial markets.

Calling Greece a friend contrasts with the threat she delivered in November 2011, when former Prime Minister George Papandreou proposed a referendum on austerity measures. She said the ballot, subsequently rescinded, “will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?”

Bloomberg News

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome