Greece: Merkel's euro headache returns

 
German Chancellor Angela Merkel speaks at a youth union convention in Rostock, 5 October  It will be Angela Merkel's first visit since the bailouts

The moment will be watched closely. On Tuesday the German Chancellor, Angela Merkel, will visit Athens. It will be her first visit to Greece since the crisis erupted nearly three years ago.

She is regarded by many Greeks as the author of austerity. She is held responsible for demanding that Greece make swingeing cuts in exchange for the two bailouts it has received. The German flag has been burnt at demonstrations and one paper has dressed Angela Merkel in a Nazi uniform.

The visit will spark protests. The Prime Minister, Antonis Samaras, says "we will receive her as befits the leader of a great power and friendly country".

The unions see it differently. They have called demonstrations against what they call the "neo-liberal policies of Mrs Merkel and the EU's core leadership". The radical leftist party Syriza is planning a rally against the visit. A right-wing party intends to go to the German embassy to protest the "transformation of our country into a German protectorate".

The meeting is a gamble. If there is chaos it will only underline for the German public that Greece is a lost cause. Angela Merkel, however, is making a calculation. She is signalling that she wants Greece to stay in the eurozone. She has silenced German politicians who in early summer were saying a Greek exit held no fears for them.

"This is symbolically very important," says Carsten Brzeski, senior European economist at ING. "It points clearly to the fact that Merkel is not going to drop Greece, even though things are not going well for them."

Talks between the Greek goverment and the so-called troika - debt inspectors from the EU, IMF and ECB - are continuing. Greece has to find 13bn euros (£10.5bn; $17bn) in savings to qualify for a 31bn loan.

The Greek finance minister says "there are differences that have not been settled". Without the loan Greece will run out of money by the end of November.

Today the troika will be in Luxembourg for the meeting of eurozone finance ministers. They will deliver an update. The crucial decisions lie ahead, probably later in October. Chancellor Merkel's instinct is for a fudge. But here's the problem. Greece's public debt is 346bn euros, 179% of GDP. It is heading into the sixth year of recession. There is no way it can reach the targets set for it.

Sooner or later the big questions will have to be answered. Does Greece need a further restructuring of its debt as the IMF is hinting, or even a third bailout?

In the meantime the Greek prime minister is warning that conditions in Greece are similar to those in the Weimar Republic in Germany in the 1930s. Plenty for Chancellor Merkel to think about.

 
Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    0

    Comment number 250.

    @ powermeerkat.

    Why the anti-Macedonian attack? The UK recognises Macedonia and the BBC is British.

    Strange how you are so uninformed as to not recognise the country to the north of Greece. It smacks of immature Greek ultra-nationalism.

    But, then again, Greeks have been found in breech of international law, EU legislation and Euro zone regulations.

    Your open racism is sad more than shocking.

  • rate this
    0

    Comment number 249.

    "invest in Macedonia. It's like Greece, but without Greeks."



    There's no such country as Macedonia. Due to Greek pressure there only a 'territorial entity called FYROM".

    "Where are you from?

    - FYROM!

    - But, you know, I mean where from?

    - FYROM!

    - You're pulling my leg, right?

    - No, I'm not. I'm from FYROM.

    - Oh, sweet Jesus! Not yet another stand-up comedian! :-(

  • rate this
    +1

    Comment number 248.

    Angela: "germany gave US and Russia, people (germans as sclaves),raw materials,machines,know-how etc."
    ++++


    I assume you meant 'slaves'.

    Can you clarify what Germans were slaving for US after WWII, and what machines/raw materials have been ever transfered to U$A?"

    Considering US had at that time a quite superior technology&industry?

    [with von Braun being indebted to Robert Goddard?]

  • rate this
    0

    Comment number 247.

    austriacus: "Your interest in the Polish contribution to defeating the Turks makes me assume that the ancestor You mentioned may have been Polish."

    He was a (lowly) officer in Hussaria in that battle:paying from his own pocket for his (heavy) horses, armor, pages, etc., as was the custom.

    The motto in those days being: "Honor, Duty, Country".

    [Ah, snows of yesteryears]

  • rate this
    +1

    Comment number 246.

    "Merkel is responsible... she has chosen to sell Greece German submarines whilst imposing massive loans on them!"


    If I offered you today a G. Ford class aircraft carrier, complete with a SuperHornet wing, would you buy it, even if I offered a big discount without asking yourself :
    1. do I really need it?
    2. can I really afford it?
    I could try to sell it, but you wouldn't have to buy it

 

Comments 5 of 250

 

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