NEWS

On visit to Athens, Merkel pledges action on Greek debt sustainability

On her second visit to Athens in less than two years on Friday, German Chancellor Angela Merkel pledged that the eurozone would discuss Greece’s debt sustainability later this year.

There was pleasant surprise among Greek government officials that Merkel made a public reference to the issue of talks on further debt relief as Athens thought that the chancellor would refrain from commenting on the topic.

“We will see what steps we have to take regarding the long-term sustainability of Greek debt,” Merkel said, while noting that this discussion would happen as the adjustment program comes to its conclusion at the end of this year.

She also referred to Greece’s return to international markets on Thursday, when it issued a 3-billion-euro five-year bond, as a “step in the right direction.”

The German chancellor further expressed satisfaction with Greece meeting its fiscal targets. “Greece has honored its pledges,” she said. “I hope that policy is continued.”

She insisted that the combination of austerity policies with structural reforms was the right approach to tackle the Greek crisis and that the country would soon begin to see its benefits. “I believe that after all these necessary reforms have been carried out – with more remaining – Greece will have more opportunities than difficulties,” said the German leader.

On his part, Prime Minister Antonis Samaras insisted that Greece would not need a third bailout program and that it would keep up efforts to restore its economy.

“My pace and that of my government will not change,” he said. “What has changed is the image, the psychology... markets have voted for Greece and given it their confidence.”

Sources said that during a meeting between the two leaders and Deputy Prime Minister Evangelos Venizelos the issue of the loan the Bank of Greece was forced to provide the Nazi regime with during the Second World War was discussed. It is the first time that this issue has been raised at such a high level. It was decided that Venizelos, who is also foreign minister, should take the matter up with his German counterpart Frank-Walter Steinmeier.

It was also decided on Friday that plans to create an investment fund in Greece with German participation would go ahead. The official announcements are expected on May 5 but sources said the two leaders agreed yesterday that the Institution for Growth in Greece (IfG) would initially finance small and medium-sized enterprises. Germany is to invest an initial amount of 100 million euros via its government-owned development bank KfW, which will also have a seat on the IfG’s board. The European Investment Bank and the French government are due to participate in the project too. France is also due to contribute 100 million euros but this has yet to be rubber-stamped due to a cabinet reshuffle in Paris.

Merkel’s visit prompted strong criticism from Greece’s leftist SYRIZA opposition, which accused the chancellor of trying to influence the result of May’s local and European elections. In an interview with daily newspaper Efimerida ton Syntakton, SYRIZA chief Alexis Tsipras said that Merkel’s visit was designed to give Samaras an election boost.

Tsipras, who did not meet with the Merkel during this or her last visit in October 2012, repeated his proposal for an international conference on Greek debt, along the lines of the 1953 London debt conference on Germany.

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