Angela Merkel's Greek gamble

 
Protester outside Greek parliament Protesters with banners saying "Merkel out!" have been gathering ahead of her visit

The centre of Athens will be locked down today. Nearly 7,000 police have been deployed. The square opposite the Greek parliament - the forum for many a protest - has been declared off limits.

Public gatherings have been banned in other parts of the capital. A visit by the German chancellor has led to the biggest security operation in memory.

Greek Prime Minister Antonis Samaras promises to receive her as the leader of a great and friendly country. The streets might be less welcoming. Already a banner has appeared outside parliament in German calling on Mrs Angela not to whine. "We have nothing left in the cupboard to give," it reads.

Chancellor Merkel has gambled that the visit will demonstrate she intends to stand behind the Greeks. It is a way of silencing those in her own coalition who say the country is a bottomless pit.

The country needs another loan from the second bailout fund by the end of November or it will run out of money. The troika of the EU, the IMF and the ECB is in negotiation with Athens over finding another 13bn euros (£10.5bn, $16.8bn) in savings. Greece has been given until 18 October to agree the cuts and tax increases.

Expect a short-term fudge. Somehow or other Greece will be judged to be on the right path. Already the international lenders are considering giving Greece two more years to reach the target for reducing the deficit.

The head of the eurogroup Jean-Claude Juncker says substantial progress has been made in recent weeks and days but a crunch is coming and the IMF may deliver it.

Despite two bailouts and private investors accepting losses on their Greek holdings, Greek debt continues to rise. It stands at 346bn euros or 179% of GDP. The IMF believes that figure could reach 182% by next year.

The agreed target is for Greek debt to be brought down to 120% of GDP by 2020. Almost no-one believes that is now possible. That is a problem for the IMF. Its rules dictate that it can only continue lending if the programme is sustainable.

The IMF doubts that it is. Officials are suggesting another write-down will be necessary. This time, however, it can't be private investors that will take a hit. It will be national governments and perhaps the ECB. That would be very sensitive. Others are talking of a third bailout that would struggle to get passed in the German parliament.

So Chancellor Merkel may well be supportive of Greece today but it cannot but be a gesture. The Greek economy has shrunk by 23% in five years. Further cuts are on the way.

The deficit this year will be higher than announced. The problem of Greece, which has hung over Europe for three years, is far from solved despite the official launch of the eurozone's new bailout fund on Monday.

 
Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    0

    Comment number 301.

    300.
    quietoaktree
    "austriacus has really shown persistence --way above ´the call of duty"
    That doesn't surmount to much of an appraisal seeing as @296 you can't even work out which of DM or I introduced the word 'donation' into the discussion.
    Is it really expecting too much to expect you to read the text to keep up to date with the discussion?

  • rate this
    0

    Comment number 300.

    MH

    -- The ignoring of reality and then the accompanying ´fairy tale´ arguments based on dreams and denial --is very disturbing.

    austriacus has really shown persistence --way above ´the call of duty

    "and rely on fuel allowances etc to heat their homes and make ends meet.

    --especially bad as the UK (Scotlands) oil covers 90% and gas 60% of UK needs.

  • rate this
    0

    Comment number 299.

    297 QOT

    Many pensioners here will have to rely on charities when this government takes away various allowances to make up the huge losses incurred by their bankster friends in the city.

    Our old get nearly the lowest pensions in Europe and rely on fuel allowances etc to heat their homes and make ends meet.

    There will be real hardships especiallly as their meagre savings earn no interest

  • rate this
    0

    Comment number 298.

    265 DM

    You forget the EU myths your paper loves so much
    Here are a few

    Balti mix to be renamed Mumbai mix
    Barmaids must cover up cleavage
    UK sausages to be renamed
    Abandon firemens' poles
    Corgis to be banned
    British Yoghurt to be renamed

    Force decimal on us despite the fact the country decided on decimalisation in 1972, a year before joining the EU.

    Bring on the 300 yards wall

  • rate this
    0

    Comment number 297.

    kane #294


    http://www.bbc.co.uk/news/uk-politics-17661011

    -- at least some charities in Spain are helping --was that the reason for the link ?

  • rate this
    0

    Comment number 296.

    kane

    #291 was the request for assistance.

    -- Dmr-- appears to have mentioned the contributions (#282) and not yourself ?

    -- why did you claim it as yours ?

  • rate this
    0

    Comment number 295.

    @293
    M. Claudius:
    Evening Song

    The moon has been arising,
    the stars in golden guising
    adorn the heavens bright.
    The woods stand still in shadows,
    and from the meads and meadows
    lift whitish mists into the night.

    The world in stillness clouded
    and soft in twilight shrouded,
    so peaceful and so fair.
    Just like a chamber waiting,
    where you can rest abating
    the daytime's mis'ry and despair.

  • rate this
    0

    Comment number 294.

    #290
    All donations gratefully received at present as well.
    http://www.bbc.co.uk/news/world-19892976

    #293
    If you say so.

  • rate this
    0

    Comment number 293.

    If the UK takes any EU rights from its citizens --as is planned.

    UK citizens must have the possibility to take the UK to the respective European court.

  • rate this
    0

    Comment number 292.

    290.
    austriacus
    "It is getting better and better:"
    No need to throw the toys out of the pram all of a sudden.
    http://www.thefreedictionary.com/donate

    "We live on different planets."
    You may have trouble proving that.

    "Cameron is seemingly very proud"
    Yes, the EU try to extract £50 billion from the UK economy and Cameron said "no". I see no reason to be anything other than proud.

  • rate this
    0

    Comment number 291.

    kane

    "it was about being heard within the EU for the money that we donate."

    -- please assist --I cannot find that statement in any of your contributions today

  • rate this
    0

    Comment number 290.

    @288
    "it was about being heard within the EU for the money that we donate."

    It is getting better and better:
    the British contribution to the EU is a DONATION

    We live on different planets.

    Cameron is seemingly very proud of what he did to the 25 countries regarding the fiscal pact, because he mentioned it again in his speech at the Tory conference.

  • rate this
    0

    Comment number 289.

    #286 kane

    " But surely in a fair society you would expect some anti EU rhetoric inside any parliamentary system given the turn of events."

    --from the beginning is not "given the turn of events"

    --you are trying to make your own history --and wasting everybodys time with it !

  • rate this
    0

    Comment number 288.

    287.
    austriacus
    In fairness, the UK would have lost a substantial amount of money and it's hugely debatable as to whether any EU leader truly believed that treaty would be signed when drafted.
    I think Germany receives as much criticism on here as the UK. But the question was not about the rhetoric on this blog, it was about being heard within the EU for the money that we donate.

  • rate this
    0

    Comment number 287.

    @282
    "I think being the second biggest net contributor to the EU, our views should be taken into account. The EU is happy to take UK taxpayers money. They should have the respect to listen to our voice"

    We listened when Cameron forced 25 Countries to create a fiscal treaty outside the EU treaty
    Germany is the biggest net contributor. Do You see much respect for her from the British bloggers here?

  • rate this
    0

    Comment number 286.

    281.# 284
    austriacus
    Most people I know in Southern Europe have become as skeptical of the EU as the people in the UK. I believe that opinions have changed dramatically over the last few years and the UK is no longer viewed as being so anti-European as it once was. But surely in a fair society you would expect some anti EU rhetoric inside any parliamentary system given the turn of events.

  • rate this
    0

    Comment number 285.

    #283 Dmr

    "I think being the second biggest net recipient from the EU, our views should be taken into account. Greece is happy to take EU taxpayers money. They should have the respect to listen to our voice

    --not much difference in logic--but 1st 3rd and 4th with fewer opt-outs--- cry less.

  • rate this
    0

    Comment number 284.

    @280
    Dear Mr. Kane,
    I gave this link because I cannot reproduce the hundreds of instances, when Bill Cash reminded the Government in the House of Commons of getting powers back from the EU. Do You think I do not know the Tory backbenchers?

    And Cameron ( during his Tory conf. speech ) indeed displayed his dismay with sitting in endless EU meetings.

    The Greeks would say: "Cameron raus"

  • rate this
    0

    Comment number 283.

    Hague

    ".....that the government wanted the opportunity to negotiate a "better relationship" between the UK and Brussels, which would include the return of some powers, before asking the British people to vote on the changes."

    http://www.bbc.co.uk/news/uk-politics-18810566

  • rate this
    0

    Comment number 282.

    I think being the second biggest net contributor to the EU, our views should be taken into account. The EU is happy to take UK taxpayers money. They should have the respect to listen to our voice.

 

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