Greece on collision course with Brussels after Merkel backs hardline debt stance
Germany will resist Greek efforts to do deals with individual creditor nations, even as Syriza finance minister heads to meet French counterpart
Angela Merkel has ruled out the prospect of Greece securing further debt cuts from its creditor nations, potentially putting the country’s new leftist government on a collision course with Brussels. The German chancellor’s uncompromising stance will not be welcomed in Athens, where the new ruling party, Syriza, insists that it will make good on its promises to halve the country’s €320bn (£240bn) debt obligations and scrap a range of swingeing budget measures that were imposed in exchange for the loans.
Athens is refusing to cooperate with the European Commission, European Central Bank and International Monetary Fund – the troika of institutions overseeing the loans, which total about 175% of Greece’s gross domestic product. Instead its new government is looking to meet with individual creditor nations as it seeks concessions that it claims are vital if Greece is to emerge from years of austerity.
However, such unilateral measures will be fiercely resisted by Germany, which is adamant that eurozone creditor nations must hold the line on Greece’s debt. When asked in a newspaper interview published yesterday whether there could be further concessions for Greece, Merkel said Athens had already been forgiven billions of euros by private creditors. “I don’t see a further debt haircut,” she said.
Her comments echoed those made the previous day by the German finance minister, Wolfgang Schäuble, who told Die Welt: “If I were a responsible Greek politician, I wouldn’t lead any debates over a debt haircut.”
However, Merkel stressed that Berlin still wanted Greece to remain in the eurozone. She told the Berliner Morgenpost thatEurope will continue to show solidarity with Greece and other struggling nations “if these countries undertake their own reform and saving efforts”.
Germany is clearly worried that if concessions were granted to Greece, other struggling EU member states would make similar demands. Yesterday tens of thousands of people marched through Madrid’s streets in a show of strength by Spain’s fledgling radical leftist party Podemos, which hopes to emulate the success of the Syriza party in elections later this year.
However, Germany will be buoyed by the fact that its tough line on debt relief appears to have been endorsed by France. On Friday night a source close to the French president’s office told Reuters that president François Hollande and Merkel were agreed “that it is important to respect the choices of the Greek people and for Greece to respect its commitments” to the holders of its debt. “There is a need for dialogue and exchange to better understand the intentions of the Greek government,” the source said after Hollande and Merkel had met over dinner in Strasbourg.
In an attempt to break the consensus among eurozone nations, the new Greek finance minister, Yanis Varoufakis, is meeting with his French counterpart, Michel Sapin, in Paris. Varoufakis appeared to rule out the prospect of ceding to the wishes of eurozone creditors. “We are not prepared to carry on pretending and extending, trying to enforce an unenforceable programme which for five years now has steadfastly refused to produce any tangible benefits,” he told the BBC’s Newsnight.
“The disease that we’re facing in Greece at the moment is that a problem of insolvency for five years has been dealt with as a problem of liquidity.”
