Greek PM faces Merkel in Berlin as debt fears mount

23rd March 2015, Comments 0 comments

Greek Prime Minister Alexis Tsipras arrived in Berlin on Monday expected to tout new reform plans after warning it would be impossible to service his country's crushing debt without fresh EU cash.

With tensions between Europe's paymaster and ailing Athens running high, a smiling German Chancellor Angela Merkel, 60, welcomed the 40-year-old Tsipras -- as usual without a necktie -- with military honours at her imposing glass-and-steel chancellery.

Merkel's spokesman Steffen Seibert earlier dashed hopes of a breakthrough during Tsipras's first official visit, saying the leaders would not negotiate on a settlement for Greece's debt emergency as this was "not a bilateral" issue but one for the eurozone as a whole.

Rather, the meeting is intended to build back confidence after a corrosive exchange of recriminations that have left Berlin and Athens resentful and wary.

The working dinner would "of course" cover Tsipras's plans for reforms, Seibert said.

"Tsipras has potentially his last chance to convince German Chancellor Merkel that he will ultimately do what it takes to keep Greece in the euro," analyst Christian Schulz at Berenberg Bank said.

"If he fails to inspire any kind of trust in Berlin, securing the necessary funds to keep going, let alone the inevitable third bail-out in July, will be a fantasy."

Conscious of the high stakes, however, Tsipras warned Merkel in a letter that without EU help, Athens would have to choose between paying off loans and maintaining crucial social spending.

Greek government spokesman Gabriel Sakellaridis confirmed a Financial Times report about the missive dated March 15.

"This is not a threat, it is reality," Sakellaridis told Mega TV, adding that Tsipras had sent a similar letter to French President Francois Hollande and European Commission chief Jean-Claude Juncker.

"The letter said nothing less and nothing more than what we have said since last week... that liquidity is tight and that political initiatives must be taken."

- Turning the screw -

Tsipras, who was to meet members of Germany's leftist opposition on Tuesday, has blamed Merkel's insistence on tough austerity over the last five years for Greece's "humanitarian crisis" of poverty and mass unemployment.

Merkel, under pressure from her own conservatives, says that if Greece wants more bailout loans, the biggest share of which is financed by Germany, it must uphold its commitments on reforms and spending cuts.

Greece's creditors agreed in February to extend its 240-billion euro ($260-billion) bailout by four months in exchange for promises of further reforms.

At an EU summit last week, Athens lobbied Brussels to release vital funds left in the bailout package to help it make payments to creditors in the coming days, and avoid bankruptcy and a possible exit from the euro.

Instead, the EU offered two billion euros in unused development funds to Greece after Tsipras vowed to clarify reform pledges demanded by the country's creditors. But that money isn't going into government coffers.

Turning the screw another notch, Spain's conservative economy minister Luis de Guindos told Monday's Financial Times that fresh aid would not flow to Athens unless it pushes through all of its proposed reforms.

This contradicts a statement by Tsipras that funds would begin to be disbursed as soon as a new list of reforms is presented.

Meanwhile German taxpayers have grown increasingly frustrated with attacks from Greece, where both Merkel and her exacting finance minister Wolfgang Schaeuble have been caricatured as Nazis.

A poll this month said more than half of Germans believe Greece should leave the eurozone.

As tensions have flared, bitter historical memories have resurfaced, with Tsipras's government reviving reparation claims for the Nazi occupation of Greece in World War II.

Foreign Minister Nikos Kotzias told the German daily Sueddeutsche Zeitung after talks in Berlin Sunday with his counterpart Frank-Walter Steinmeier that a Greco-German committee of experts could be set up to look into the thorny question.

However, Steinmeier's spokesman told reporters Monday that the working group would not focus on war reparations, reiterating that Berlin considered the matter "politically and legally settled".

© 2015 AFP

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