Merkel, Hollande to discuss Greece's euro fate

23rd August 2012, Comments 0 comments

Angela Merkel and Francois Hollande will discuss debt-wracked Greece later Thursday after Athens' plea for more time to implement crucial but painful reforms to safeguard its eurozone membership.

The German chancellor and French president will seek to align their positions on Greece's fiscal difficulties before they hold separate meetings with Greek Prime Minister Antonis Samaras later this week.

Merkel and Hollande have both pointed to receiving a progress report due next month by Greece's international auditors on its efforts so far to get its recession-hit economy moving again before making any decisions.

But the German leader, who has again topped the Forbes list of the world's most powerful women, has insisted time and again that Greece stick to what it signed up to and says Europe's credibility is at stake.

She will receive Samaras Friday before he meets Hollande in Paris Saturday.

Her finance minister hammered home that message in a German radio interview Thursday, warning that giving Greece more time to implement structural reforms and spending cuts would not solve its problems.

"More time is not a solution to the problems," Wolfgang Schaeuble told SWR radio.

"More time would, in case of doubt, mean more money" and the eurozone had already gone to its very limits in hammering out a rescue package with Athens last year, he argued.

"I go into the talks this week aware that we must ensure that every partner fulfills their obligations -- that Germany, France and all the other countries fulfill their obligations," Merkel said on a visit to Moldova Wednesday.

"What Europe needs is credibility in all political questions," Merkel added.

After meeting Samaras Wednesday, Eurogroup chief Jean-Claude Juncker insisted Greece's place was in the 17-nation eurozone but urged its government to redouble reform efforts to secure continued EU-IMF financial aid.

Samaras told the German daily Bild Wednesday that Greece needed "a little breathing space" to make spending cuts and reforms that are a condition for the next tranche of a 130-billion-euro ($161-billion) rescue package.

In return for the 31.5 billion-euro installment, Athens has committed to a 11.5 billion-euro package of spending cuts for 2013 and 2014, a period that Samaras wants to extend by two years.

"As regards the lengthening of the adjustment period, it will depend on the findings of the troika mission," Juncker said referring to experts from the European Commission, European Central Bank and International Monetary Fund.

In another German newspaper interview Thursday, the Greek leader pledged that his country would repay the aid it has received to keep it afloat and would fulfil its commitments.

Merkel, who is entering the countdown to elections by October 2013, faces resistance at home to granting Greece yet more aid after nearly three years of the eurozone lurching from one crisis to another.

But at the helm of Europe's effective paymaster, she has been under intense pressure to chart decisive action to shake off the debt crisis, inspire confidence in the markets and keep the bloc intact.

"It is about Europe as a whole this week, this is the spirit that guides me in my talks with the French president," Merkel said Wednesday.

Her relations with the new French president got off to a strained start as Merkel's insistance on austerity to fight the euro crisis was at odds with the Hollande's emphasis on more growth.

Ulrike Guerot, a political scientist at the European Council of Foreign Relations, said the meeting between Merkel and Hollande would be closely watched ahead of key decisions next month.

"The markets want to know if visions are the same in Berlin and Paris," she said.

Both leaders are due to give a statement without taking questions at around 1700 GMT before a working dinner.

© 2012 AFP

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