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Report: Greece

Greek charm offensive yields mixed results

Reuters/Yorgos Karahalis

The results of the charm offensive in Europe led by Greek Prime Minister Antonis Samaras, are ambiguous at best. This week Samaras met in close succession three European leaders.

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He first welcomed in Athens Jean-Claude Juncker, the Prime Minister of Luxembourg and chairman of the Eurogroup, and then visited German Chancellor Angela Merkel in Berlin and French President Francois Hollande in Paris. Merkel and Hollande had previously discussed the Greek issue among themselves in Berlin during a mini-summit.

Dossier: Eurozone in crisis

All three European leaders gave Samaras the same message: only after Athens has honoured its commitments, will Europe reach a decision on Greece’s latest request, a two-year respite from the austerity programme the country has undertaken according to the terms of the bailout agreement.

The request does not lack a certain logic: whereas other southern European countries are in recession, Greece is experiencing a full-blown depression. Its economy has been shrinking for five years now and has contracted by 13 per cent in the last two years alone; one Greek in four is unemployed; one in two Greeks under the age of 25 has no job; salaries have been cut down by between a fifth and a third; public expenses –including education and health− have been slashed. Due to austerity, pay cuts and unemployment, public revenues have decreased, in spite of severe tax hikes. There isn’t much hope for a rebound.

The European left tends to be more responsive to the Greeks’ appeal: the German and Austrian Social Democrats, as well as the French Socialists, seem to be in favour of giving Greece what Samaras calls “a breathing space” so that the country’s economy can start growing again.

The conservatives, including the Bavarian Christian Social Union as well as the Austrian and Dutch Christian Democrats, are not willing to allow a relaxation of the programme, arguing that “time is money” and that their countries cannot spare more funds.

Wolfgang Schaeuble, the German finance minister and leading member of the Christian Democrats, is apparently supporting the intransigent camp, though this must also be seen in the framework of his long-standing confrontation with the leader of his own party, Angela Merkel. The CDU is facing crucial federal parliamentary elections in autumn next year; Merkel’s leadership will depend on the outcome.

Final decisions, on whether to extend or not the Greek programme, will be taken only after a team of experts from the Troika of creditors (the International Monetary Fund, the European Commission and the European Central Bank) presents, in mid September, a report on the implementation of the bailout agreement.

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