critical.montages at gmail.com
Thu May 17 18:00:01 BST 2012
What if Merde doesn't come up with anything better than keeping Greece
on life support? What would SYRIZA do then? And do you want to back
that as a junior partner in a "united front" with SYRIZA?
Last updated: May 17, 2012 8:35 am
Greeks urged to run poll as vote on euro
By Peter Spiegel in Brussels
Senior European leaders are attempting to turn Greece’s repeat
national election next month into a referendum on the country’s
membership of the euro, a high-stakes political gamble that officials
believe can win back voters disillusioned by the tough bailout
conditions but eager to stay in the single currency.
José Manuel Barroso, president of the European Commission, made the
choice clear on Wednesday, telling Greek voters the €174bn rescue
programme would not be changed and that remaining in the eurozone was
now in their hands.
“We want Greece to remain part of our family, of the European Union,
and of the euro,” Mr Barroso said at a hastily convened news
conference. “This being said, the ultimate resolve to stay in the euro
area must come from Greece itself.”
The stark message echoed points made by Angela Merkel, the German
chancellor, and François Hollande, the new French president, after
their first meeting in Berlin on Tuesday night. Both leaders said
Greece’s election next month would be a referendum on euro membership.
Senior European officials said the position was agreed after meetings
this week, including a lunch on Monday between Mr Barroso and other
heads of EU institutions, including Mario Draghi, president of the
European Central Bank, Herman Van Rompuy, president of the European
Council, and Jean-Claude Juncker, head of the group of eurozone
finance ministers. It was also discussed at Monday night’s meeting of
Mr Juncker’s eurogroup.
“The next election is going to be a sort of referendum election,” said
one eurozone finance minister. “We are going to convey very clearly to
the Greek people that if there is no stable government to implement
the conditions of the programme then we are going to have difficulties
and are going to have to adopt plan B.”
Greece’s non-political caretaker government will be led until
elections on June 17 by Panagiotis Pikrammenos, president of the
council of state, the country’s highest legal body. The decision was
taken on Wednesday at a meeting of the Greek president with six
parties that won seats in parliament.
But late on Wednesday night Alexis Tsipras, leader of the anti-bailout
leftwing Syriza coalition, which came second in the May 6 election and
is leading the opinion polls ahead of the June vote, maintained that
European governments would not dare force Greece out of the euro for
fear that would kill the currency union.
“Merkel now realises that if she takes the risk of sending Greece
packing, the next day she herself will have to leave the euro,’’ he
told state NET TV, the Associated Press reported.
He added that if creditors cut Greece’s loan lifeline, Athens will
stop its debt repayments.
“Our intention is not to take unilateral action, unless we are forced
to do so. If they don’t give us the instalments, we won’t pay the loan
sharks,’’ he said. “Our top priority is to pay salaries and pensions
and support a collapsing society.’’
Although the austerity measures imposed by the bailout are unpopular,
opinion polls continue to show that about three out of four Greeks
want to remain in the euro, giving European leaders a strong card to
play. The leaders’ strategy is similar to that taken in November when
George Papandreou, then Greek prime minister, surprised European
counterparts by proposing a national referendum on the just-agreed
second Greek bailout.
Ms Merkel and Nicolas Sarkozy, then the French president, quickly made
clear at a meeting in Cannes that any Greek referendum would have to
be on euro membership and not the bailout. The referendum was scrapped
and Mr Papandreou was forced from office.
Mr Barroso said that while the EU was ready to work with Greece to
turn round its collapsing economy, any new government in Athens would
have to stick to commitments in the bailout programme, noting that the
political commitment to support Greece from 16 other democratically
elected governments must also be respected.
“We are fully aware that the present situation is asking a lot of the
Greek people and many sacrifices,” Mr Barroso said. “There is no other
alternative that has less pain and less difficulties. The programme
offers solidarity in exchange for reforms, support in exchange for
reform, access to finance that would not exist under any other
circumstance. There is no easier way.”
The warning is particularly pointed coming from Mr Barroso, who as
head of the EU’s executive branch is guardian of EU treaties and seen
as one of the leaders most committed to keeping Greece in the single
May 15, 2012 10:18 pm
Merkel and Hollande spell out Greek fear
By Quentin Peel in Berlin
The leaders of France and Germany on Tuesday joined forces to urge
Greece to reaffirm its commitment to membership of the eurozone, after
François Hollande flew to Berlin for talks with Angela Merkel, German
chancellor, within hours of being installed as French president.
Both spelt out their concern that Greece should remain a full member
of the common European currency, while promising to consider new
measures to revive economic growth in the country. But they also
agreed that Athens must carry out the austerity programme it has
agreed with the European Union and the International Monetary Fund.
The Greek crisis emerged as the most urgent item on the Franco-German
agenda, although both leaders insisted their meeting was primarily
intended as a chance to get to know each other.
“We want Greece to stay in the euro,” Ms Merkel said. “We know that
the majority of people in Greece see that.”
The Greek government had also agreed on a rescue programme with the
IMF and the EU after lengthy negotiations, she said. “I believe that
memorandum must be respected.”
“We have to respect that there will be new elections in Greece,” she
added. “We will make it clear that we want Greece to remain in the
eurozone, and that is what the citizens are voting on.”
That meant fulfilling the commitments in the EU and IMF programme, she
said, but added: “We will also give proposals to Greece to encourage
Mr Hollande went further, saying that “I hope that we can say to the
Greeks that Europe is ready to add measures to help growth and support
economic activity, so that there is a return to growth in Greece.”
Both leaders pledged to maintain the intimate Franco-German
partnership with celebrations to mark the 50th anniversary of the 1963
Elysée treaty which launched their special relationship. They glossed
over their political differences which saw Ms Merkel openly backing
Nicolas Sarkozy, the conservative incumbent, against Mr Hollande, his
socialist challenger in the French presidential election.
Mr Hollande said political rivalry had not undermined the relationship
in the past, but he stuck to his constant theme in his election
campaign that Europe had to focus on reviving economic growth, as well
as reducing public debt and budget deficits, which Ms Merkel insists
is a “precondition for sustainable growth”.
Pressed on the question of whether he was determined to renegotiate
the German-inspired “fiscal pact” intended to reinforce budget
discipline throughout the eurozone, Mr Hollande said he wanted the
concept of growth not merely mentioned, but really “pronounced” in the
“I want to see how this can be legally implemented,” he said. “I am
pleased the French presidential campaign allowed us to put growth back
at the centre of the debate.”
Ms Merkel defended her belief that the common currency was “not just a
monetary project, but a political project”. It meant that the member
states of the eurozone shared a common responsibility. “People who
have a common currency will never fight a war against each other,” she
Ms Merkel said European leaders had been working on growth plans at
their summit meetings in January and March, and would finalise them in
June. They were intended to work alongside the fiscal pact to
reinforce budget discipline.
She said that the two leaders had agreed to discuss all their ideas on
measures to boost growth before the June summit, in order to reach a
May 16, 2012
Softening, Merkel Says She Is Open to Stimulus for Greece
By NICHOLAS KULISH and MELISSA EDDY
BERLIN — Chancellor Angela Merkel of Germany said Wednesday that she
was ready to discuss stimulus programs to get the Greek economy
growing again and that she was committed to keeping Greece in the euro
zone, signaling a softer approach toward the struggling country.
The fierce rhetorical salvos out of Germany in the past week gave way
to conciliatory gestures by Ms. Merkel, who throughout the crisis has
shown a propensity for managing through brinkmanship. “I have the
will, the determination to keep Greece in the euro zone,” she said in
an interview on CNBC on Wednesday, in what appeared to be an attempt
to relax an increasingly tense situation.
If Greek officials are looking for “stimulus to be pursued for growth
in the euro zone, which we could pursue in the interest of Greece,
we’re open for this,” Ms. Merkel said. “Germany is open for this.”
Europe was shaken anew this week by the chaos in Greece, where a bank
run threatened to hasten the country’s exit from the euro and
jeopardize the Continent’s financial stability. While the impact of a
country’s leaving the euro is hard to predict, economists fear the
crisis could spread to much larger countries like Spain and Italy if
financial markets bid up borrowing rates to unsustainable levels.
Ms. Merkel is preparing to head to Camp David in Maryland for the
Group of 8 meeting beginning on Friday, and she is likely to be
pressed there by the leaders of other industrial nations, in
particular by President Obama, to find a way to quell the turmoil. On
Tuesday night she met for the first time with France’s newly
inaugurated president, François Hollande, who campaigned on the need
for more growth-promoting policies.
In recent days Ms. Merkel has signaled a growing openness to
additional growth measures as long as they do not interfere with the
fiscal compact to cut deficits in the euro zone in the long run. “On
the one hand we have the pillar of sound fiscal policy, and the second
pillar will then be the growth component,” Ms. Merkel said in the CNBC
That support could come in the form of money from existing European
Union funds that would be redirected for use by crisis countries, said
Fabian Zuleeg, the chief economist with the European Policy Center.
That approach had been championed by Mr. Hollande.
But it will take more than technical adjustments to calm the growing
political opposition to austerity in Greece, Spain and other hard-hit
countries in the euro zone’s periphery, Mr. Zuleeg added. “We need to
put together a package that looks convincing. It can’t just be
rhetoric; it has to have some real elements to it,” he said. “The real
element that certainly has to be in there is money.”
Ms. Merkel’s comments punctuated a day in which all sides — from
European policy makers in Brussels to political operatives in Athens,
where a caretaker government was named on Wednesday — began gearing up
for a second Greek election, scheduled for June 17. The political
establishment in Greece and elsewhere is seeking to describe the vote
as a referendum on membership in the euro, which a large majority of
Greeks say they support, even as they also demand a renegotiation of
the terms of their bailout agreement.
Speaking at an event in Frankfurt on Wednesday, Mario Draghi, the
president of the European Central Bank, made a plea for having Greece
remain in the euro zone. “I want to state that our strong preference
is that Greece will continue to stay in the euro area,” Mr. Draghi
German officials have been boasting recently about the ability of the
euro zone to handle a Greek exit. Though aimed at reining in Greece’s
left-wing parties and their goal of renegotiating the bailout deal,
the talk also unsettled markets and had the potential of turning into
a self-fulfilling prophecy. The perils of brinkmanship in an unstable
environment were on full display on Wednesday as the news emerged that
Greeks had pulled nearly $900 million in savings from banks in the
days after the May 6 elections, prompting fears of an uncontrollable
The tough talk about Greece’s departure from the euro has resulted in
growing qualms among the Greek public that their money could be
converted to a new, significantly weaker currency — such as a
reintroduced drachma — shrinking the value of hard-earned nest eggs.
The more likely this possibility appears, the more Greeks have an
incentive to put their money in bank accounts abroad.
With the continuing instability, the rest of Europe would remain “in
limbo” waiting for Greek elections, said Holger Schmieding, chief
economist at Berenberg Bank in London, “which for financial markets
means one thing: volatility.”
He added, “We are exactly in the situation where the rumors or the
expectations could trigger a downward spiral.”
Mr. Schmieding said that Ms. Merkel and Mr. Hollande were prepared to
make concessions, but had to focus the rest of their energy on
preparing to control contagion and cushion the brunt of the impact in
the event of a Greek departure.
The high stakes of the second trip to the polls for Greek voters were
apparent on Wednesday. “The Greek people should know what they are
voting about,” said Guido Westerwelle, Germany’s foreign minister, in
a statement on Wednesday. “It is not about party politics, but about
Greece’s future in Europe and the euro. We hope and at the same time
also expect that everyone in a decision-making role in Greece is aware
of their responsibilities.”
Ms. Merkel has proved time and again how adept she is at shifting with
changing circumstances. “There is a realignment under way, and one
thing we know about Ms. Merkel is she is able to manage this sort of
transition with very high tactical skills,” said Nicolas Véron, a
visiting fellow at the Peterson Institute for International Economics
Voters in Germany’s most populous state, North Rhine-Westphalia, dealt
Ms. Merkel’s party a devastating electoral loss on Sunday, which was
viewed in part as a repudiation of her emphasis on austerity to the
detriment of growth.
But Ms. Merkel’s ultimate goal, Mr. Véron said, is to maintain
European unity. “Her primary objective is avoiding a situation where
there would be a divide between France and Germany that would be
impossible to manage for both nations and would make the whole euro
crisis even less manageable than it was before,” he said.
Jörg Krämer, the chief economist at Commerzbank, said he believed that
the European Union was actually more flexible than German politicians
had claimed, and could give Greece more time to meet the promised
goals to reduce its budget deficits.
“The political class in Europe still has solidarity with Greek
politicians, with the exception of the radical left,” Mr. Krämer said.
Europe needs to show its support for Greece, Ms. Merkel said in a
second televised interview, on CNN, “as regards growth, as regards
employment, as regards development, because what the people in Greece
are experiencing now is a very, very tough period.”
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