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, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    +2

    Comment number 210.

    If the Greeks ask Angela Merkel for German reparations now, this will be their psychological masterpiece.
    I am looking forward to the effect on German public opinion.

  • rate this
    +2

    Comment number 209.

    I really can´t see anything positive coming out of this visit.

    -- there is too much risk that Greeks make their situation within the EU much worse.

    Thousands are demonstrating -- tonight

    ´Hitlers daughter --get out of Greece´

    ` No 4th Reich´

    ´get out you ´easy woman´

    `Angela you are not welcome´

    -- and all because they didn´t and still do not want to pay taxes ?

  • rate this
    0

    Comment number 208.

    193 Quietoak

    -Germany stopped its aggression and atrocities after WWll

    The rebirth of German patriotism over the past few years and your pseudo-Teutonic superiority complex are clear signs of German friendliness and respect to fellow countries :)

  • rate this
    0

    Comment number 207.

    @203:
    Do not fall to nationalistic or racist arguments.

    Germany (the united one) is the successor state of the Third Recih.
    As simple as that.
    The same way the Third Hellenic Republic (the current one) is the successor of the previous ones and Greece has to pay debts made before 1974.
    Funny how Greece is following the rules and Germany is not.
    Contrary to the usual stereotypes for their people.

  • rate this
    +3

    Comment number 206.

    http://www.guardian.co.uk/commentisfree/2011/jun/21/germany-greece-greek-debt-crisis

    (an exert)"Germany owes Greece a debt
    Germany's ducking of the war reparations issue makes its attitude to the current Greek debt crisis somewhat hypocritical"

    Personally speaking, I don't think I'd be very happy about the planned visit of Angela Merkel if I were a Greek citizen.

  • Comment number 205.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -1

    Comment number 204.

    #203: ' Since Austria was part of the Reich, I wonder why the Austrians aren't mentioned re reparations...nor the Italians'
    Because the Austrians are clever enough to avoid provocations barring Maria Fechtel (Minister of Finance) at times....
    As a matter of fact, Italy paid some sort of reparations, even if small, in the '50s & 60's, e.g. in the form of hydroelectric dams

  • rate this
    -1

    Comment number 203.

    Since Austria was part of the Reich, I wonder why the Austrians aren't mentioned re reparations- nor the Italians for that matter since they started by invading Greece in October 1940 and were part of the Axis occupation force.

  • rate this
    0

    Comment number 202.

    194.
    Crystal Ball
    2 Hours ago

    @116.margaret howard
    "French Gov. economist & consultant Jacques Delpla states Germany owes Greece 575 bln euros from WW2 obligations."
    Interesting, that sum would wipe out Greece's national debt and spare financial enslavement.

  • rate this
    0

    Comment number 201.

    Huge security measures.The metro stations shut, city is closed off, no cars, even parked ones, allowed within 100 meters of where her car will pass. No pedestrians either. Barricades, snipers, 7000 police and soldiers in an area of less than 4sq km. Public gathering is forbidden, so much for free speech, all this, and its expense, for a 7 hr visit to a ghost town? Why? Trying to spark a riot? ??

  • rate this
    +3

    Comment number 200.

    193.
    quietoaktree
    1 Hour ago

    #188 kane

    "--Germany stopped its aggression and atrocities after WWll"
    Nope! The Allies stopped German aggression, complicity wasn't required.

    "--Britain continued --"
    Good triumphed over evil.

    "two different times of reference and situations"
    Garbling nonsense.

  • rate this
    +2

    Comment number 199.

    Re post 11.
    isn't really EU / IMF giving money to Greece to repay German creditorst, then as everyone knows austerity will fail and Greece can default on its loans to EU/ IMF and German banks are saved. The Germans are not stupid they know how to run an economy and are not stupid Eton tofffs

  • rate this
    +1

    Comment number 198.

    The Euro Crisis Explained To Grannies: For a very simple (and funny) explanation for the euro crisis, just write on your search engine: wordpress blog The euro crisis explained to grannies

  • rate this
    -1

    Comment number 197.

    189 frenchderek

    "margaret, it's more than oil: there's gold (and lots of other precious metals) in them thar hills (of Afghanistan)"

    So no doubt another 19th cent style gold rush. I hope the Afghans will have more luck in fighting for their rights to a share than the Indians had in the US and unlike them live to tell the tale.

    The poppy harvests too are thriving!

  • Comment number 196.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -1

    Comment number 195.

    #186,Howard:You recite anti-Greek mantras & dismiss WWII reparations on a legalistic basis. What about the 1943 loan:are Greek loans different to German ones? Btw, most Greeks would perhaps not refer to such issues if some Germans,and not only, did not speak arrogantly about the 'money' they borrow & lend to Greece (with profit) all the time..But they & you like lecturing on an ethical (!) basis..

  • rate this
    0

    Comment number 194.

    @116.margaret howard

    If you must correct everyone marge, please make sure you have the knowledge.
    =
    French Gov. economist & consultant Jacques Delpla states Germany owes Greece 575 bln euros from WW2 obligations. Dr. Albrecht Ritschl (economic historian) warned Germany it could face renewed and JUSTIFIED demands for WWII reparations (Der Spiegel, June 21, 2011, Guardian.co.uk, June 21, 2011).

  • rate this
    -5

    Comment number 193.

    #188 kane

    --Germany stopped its aggression and atrocities after WWll

    --Britain continued -- two different times of reference and situations

  • rate this
    0

    Comment number 192.

    @191
    There are many reasons why reparations are not to be paid (the reunification terms, Marshall plan etc).

    I wonder though what is the reason for the debt.
    Germany took a loan from Greece in the beginning of the war.
    How come this is not to be paid back?

    (this procedure would be very useful for Greece, eliminating most of the Greek debt)

  • rate this
    +2

    Comment number 191.

    @181
    Germany will just refer to Greece agreeing with the 1990 treaty which amongst other things stipulated 'no more reparations'.

    There is zero legal basis for this in whatever kind of international law you can bring up.

 

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