NEWS

Papandreou sets key goals for Merkel talks

Prime Minister George Papandreou is due to meet German Chancellor Angela Merkel in Berlin on Tuesday for talks that he hopes will strengthen her determination to find a comprehensive solution to the eurozone?s debt problems, so that Greece is not isolated if European Union leaders fail to reach an agreement at next month?s summit.

Papandreou, who arrived in Germany on Monday, has two key aims for his talks with Merkel. The first is to gain her support for the repayment period for Greece?s 110-billion-euro loan package being extended beyond 2016 and for the interest rate on the loans, which is currently at about 5 percent, to be reduced.

However, the Greek prime minister?s second challenge may prove more daunting, which is to convince Merkel and other European leaders that he will be meeting over the next few weeks that they need to agree at a March 24-25 summit the details of the mechanism to support eurozone members that run into financial problems.

Germany and France have called on other members to accept a ?competitiveness pact,? which includes tighter wage controls and retirement ages linked to life expectancy, as part of an overall solution. Greece has indicated it is willing to adopt the Franco-German terms but there are fears that they might be rejected by others. Sources said that Athens fears this scenario because it would leave Greece exposed because of its debt problems and without a mechanism that would ensure the solidarity of other members.

The meeting will also be an opportunity to patch up the rocky relations between the two countries over the last few months. In November, Papandreou criticized Merkel?s public suggestions that private investors be asked to accept a reduced profit, or ?haircut? on government bonds, as part of a permanent support mechanism for eurozone members.

Papandreou spoke at Humboldt University in Berlin on Monday but was reportedly interrupted by students shouting slogans in Greek.

He also received a barracking at home from New Democracy, which accused him of lying about when he started talks with the International Monetary Fund about Greece being bailed out. IMF Managing Director Dominique Strauss-Kahn said he spoke to Papandreou about emergency loans in December 2009, several months before a package was put together. Government spokesman Giorgos Petalotis said Papandreou had merely had ?exploratory talks? at that stage and had not entered into negotiations.