Merkel’s Greek Visit Sends Signal

German chancellor’s trip to Athens points to her support for keeping Greece in eurozone.

German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro.

Merkel’s visit to the Greek capital Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency region.

“The meeting could mark the turning point to the Greek crisis,” said Constantinos Zouzoulas, an analyst at Axia Ventures Group, a brokerage in Athens. “This is a very significant development for Greece ahead of crucial decisions by the euro zone for the country.”

Merkel’s demand for budget cuts in return for a pair of bailout packages has stoked public resentment, with the German chancellor depicted in some Greek media and on protestors’ placards wearing jackboots and an SS uniform because of her insistence on austerity.

Both bailouts and the biggest debt write-off in history have so far failed to halt Greece’s slide into a fifth year of recession. The slump has driven unemployment toward 25 percent, as lawmakers from Merkel’s coalition suggested it was time for Greece to quit the euro for the greater good of the currency.

“We want to help Greece stabilize within the euro zone,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin today as he announced the trip, saying that is the main message Germany can give to Greece. “We do this by contributing massively to the rescue programs Greece I and Greece II.”

He said Merkel’s trip reciprocated a visit by Samaras to Berlin in August.

Greece’s ability to stabilize and stay in the euro “will only be possible if Greece makes great efforts of its own,” Seibert said. “We see that under the Samaras government there’s a strengthened reform effort and we want to support that.” The full program for the trip has yet to be completed, he said, describing the visit as “normal.”

Merkel has shifted her tone on Greece since Samaras’s election earlier this year, slapping down domestic and European critics who advocate Greece’s exit from the euro. She said during his Berlin visit that Germany will stand behind his government as it strives to overhaul the economy.

“I want Greece to stay in the euro zone and that’s what I’m working for,” Merkel said on Aug. 24, adding that she is “deeply convinced” he will make every effort to solve Greece’s problems. The goal of austerity measures is to help Greece reach “the light at the end of the tunnel.”

 

2011 Message

That contrasts with a 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.”

Samaras, who formed a governing coalition with two rival parties after winning the country’s second set of elections this year, is trying to convince Greece’s creditors that his government has done enough to secure its next bailout payment. He echoed Merkel’s language on the need for a sign of hope for the Greek people in an interview published today in German newspaper Handelsblatt.

With Greek unemployment rising and living standards down by more than a third in five years, “Greek democracy stands before what is perhaps its greatest challenge,” Samaras said. If his government were to fall, “chaos awaits,” he said. “The people know this government is Greece’s last chance.”



Bloomberg News

Page 2 of 2

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

Comments

Advertisement. Closing in 15 seconds.