22nd Oct 2016

Eurozone leaders to have series of Greece meetings

Eurozone leaders will this week begin a round of shuttle diplomacy focussed on debt-stricken Greece amid reports that Athens' deficit problems are greater than previously thought.

Eurozone chief Jean-Claude Juncker will travel to Greece on Wednesday (22 August). Antonis Samaras will make his first trip as Greek Prime Minister to Germany on Friday before heading to France the following day. The French and German leaders will have a get-together in Berlin on Thursday (23 August).

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  • Greece's Antonis Samaras will travel to Germany and then France this week (Photo: DDanzig)

At the centre of all the meetings is the question of whether Greece should be allowed two extra years to fulfil the conditions demanded by its international creditors. But any extension implies extra money, considered an almost impossible sell in fiscally prudent nations such as Germany, Finland and the Netherlands.

Ahead of Samaras' Berlin visit, German politicians have already been indicating that there will be no more concessions.

"We cannot responsibly throw money into a bottomless pit," finance minister Wolfgang Schaeuble said at the weekend.

Volker Kauder, head of the governing conservative bloc in the Bundestag said: “There is no more latitude, either on the timeframe or the matter itself ."

Their words come after this week's edition of Der Spiegel news magasine reported that the Greek government needs to find up to €14bn by end of 2014, €2.5bn up from the previous estimate.

How to deal with Athens' financial plight continues to be a source of division between the eurozone's two biggest economies.

France's Francois Hollande wants Athens to be given some leeway noting that Greeks are weary of years of harsh austerity measures.

German chancellor Angela Merkel meanwhile has let it be known that she will not be able to get a third aid packet through the Bundestag. How to patch over these differences is set to be the focus of the two leaders' meeting on Thursday.

But while political tension about what to do with Greece is set to rise again as the summer vacation period comes to an end, no concrete decision is expected until the troika - officials from the EU commission, European Central Bank and International Monetary Fund - has produced its final assessment of Greece's reform progress. This is not due until late September.

Meanwhile the European Central Bank - seen by some as having the capacity to solve the eurozone's problems - continues to consider options to ease the crisis.

According to a report in Spiegel online, the ECB is examining ways to stop the borrowing rates of eurozone states, such as Spain and Italy, becoming unsustainable.

At its next meeting at the beginning of September, the bank is due to decide whether to install an interest rate ceiling after which it would automatically buy a country's bonds.

In July, Merkel and Hollande released a joint statement saying they were committed to the "integrity" of the eurozone. This was widely seen as implicit support for ECB chief Mario Draghi who the previous day had said he would do "whatever it takes" to save the euro.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

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