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You are here: Home News French News Merkel backs Sarkozy, both pile pressure on Greece
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06/02/2012Merkel backs Sarkozy, both pile pressure on Greece

Europe piled pressure on struggling Greece to get its debt in order on Monday, as France and Germany put on a show of harmony and the IMF warned that the eurozone crisis could even hit powerhouse China.

Chancellor Angela Merkel flew to Paris to back up her ally President Nicolas Sarkozy in his struggle for re-election and urge Greece to act quickly to agree a deal with public and private creditors to clean up its finances.

"The Greeks gave us undertakings," Sarkozy said. "They should respect them scrupulously. There's no choice."

In Washington, the IMF warned that an escalation of Europe's debt crisis could slash China's economic growth in half this year, urging Beijing to prepare stimulus measures to head off any risk if exports fall.

A small bite would be taken out of Europe's daunting debt mountain if Athens strikes a deal with its private lenders on a deal to write off 100 billion euros ($130 billion) and with Europe to impose deeper austerity measures.

But, with Greek Prime Minister Lucas Papademos in cliff-hanger talks with European Union and IMF officials and coalition partners, the country's main two unions called a 24-hour general strike for Tuesday.

Labour leaders argue that the public sector cuts being demanded by Greece's international partners amount to the country's "pending death" and they demand a return to fiscal sovereignty for the ailing eurozone member.

Sarkozy, Merkel and Brussels alike urged a quick resolution to the crisis, with the French and German leaders warning that no further European aid would come Athens' way until an agreement is reached.

Beyond this, they said that part of the already agreed aid package could be paid into a blocked account that would be used only to pay interest on Greek debt, preventing Athens from allocating it to general state expenditure.

Papademos met officials from the EU, European Central Bank and International Monetary Fund around midday and was supposed to see the heads of the Greek socialist, conservative, and far-right parties, the premier's office said.

But the second meeting was delayed and "will very probably be held on Tuesday," a Greek government source told AFP, adding: "The negotiations continue, there are still questions to address."

The delay risked angering European leaders.

"The truth is that we are already past the deadline," said Amadeu Altafaj, a spokesman for EU commissioner Olli Rehn."The ball is in the Greeks' court."

Greece is also trying to wrap up three weeks of negotiations with private banks to avoid a historic default in mid-March that could disrupt the 17-nation eurozone and possibly hobble a global economic recovery.

Meanwhile, Merkel and the bulk of the German cabinet descended on Paris on a mission to strengthen Sarkozy's reforming resolve and kick-start his struggling re-election campaign.

That the pair should chair what was 14th joint Franco-German cabinet session was not unusual but the joint television interview that they were to give afterwards was billed as an unprecedented cross-border endorsement.

France and Germany were once seen as the twin motor of the European Union but Paris is now clearly the junior partner, its economy lagging behind, and Sarkozy has turned to his fellow right-wing leader for ideas.

Sarkozy trails Socialist challenger Francois Hollande in the opinion polls, less than 80 days before the election, and Merkel fears a new left-wing French administration would oppose from her austerity plans.

Specifically, Hollande has said he will seek to re-negotiate the hard-won eurozone "fiscal compact" that Merkel sees as essential to binding the single currency bloc together behind her deficit-cutting agenda.

Sarkozy, smarting from France's loss of its top AAA credit rating, now cites Germany's success almost daily to justify his own policies, drawing inspiration from both Merkel and her centre-left predecessor Gerhard Schroeder.

Paris and Berlin are seeking measures to prevent future crises and restart growth, while keeping a close eye on Greece and other weaker Mediterranean countries in case any backsliding on austerity measures spooks the markets.

Monday's talks concentrated on ways of harmonising corporate tax rates across the Rhine and on plans for a new financial transactions tax.

Both support the idea of such a tax -- mocked as "madness" by their British colleague Prime Minister David Cameron, who fears it would drive finance houses out of Europe -- but differences remain.

Sarkozy is so determined to burnish his credentials as a reformer in the twilight of his first term that he vowed France will go it alone with a 0.1 percent tax by August. Merkel still hopes for a joint European measure.

Meanwhile, the debt crisis claimed another victim on the periphery of the European economy when Romania's centre-right Prime Minister Emil Boc resigned after days of street protests against his government.

burs-dc/bmm


© 2012 AFP


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