Chancellor Angela Merkel said Germany and France will keep pressure on Greece to overhaul its economy when she meets Prime Minister Antonis Samaras, who is seeking more time to fix his debt-ravaged country.
“We, and I, will encourage Greece to pursue the path of reform that demands a lot from the people,” Merkel said late yesterday before hosting French President Francois Hollande for a working dinner in Berlin to coordinate positions on Greece. Merkel receives Samaras at the Chancellery today and a joint news conference is scheduled for about 1 p.m. Berlin time.
Merkel and Hollande agreed that Greece must meet the commitments it has made as a condition of its international bailouts, a German government official said on condition of anonymity after the talks because they were private. Both will make that point to Samaras in a bid to strengthen the euro area’s credibility, the official said. Samaras is due in Paris tomorrow to meet with the French president.
Samaras has used interviews this week with German and French newspapers to call for more time to meet program targets as European officials look for ways to stave off an immediate crisis after international monitors report on the health of the country’s finances. Greece is dependent on outside funds to remain in the 17-nation euro area, where the debt crisis has led nations including Spain to seek bailouts.
“It’s important to me that we all stand by our obligations and wait for the troika report and see what the result is,” Merkel said yesterday, referring to the report due next month on Greece’s progress in meeting its bailout terms by the European Commission, the European Central Bank and the International Monetary Fund.
“We want, I want, Greece to be in the euro zone,” Hollande told reporters. “It’s up to the Greeks to make responsible efforts to achieve this objective.”
The euro pared the biggest weekly gain versus the dollar since February today before Samaras and Merkel met. The 17-nation single currency declined 0.2 percent to $1.2543 at 9:07 a.m. in Berlin.
“The statements from the creditor countries highlight that the room for Greece to renegotiate the terms of the MoU is very small,” Citigroup analysts in London led by Juergen Michels said in a note.
Merkel and Hollande said policy makers must move forward on agreements made at a summit of European Union leaders in June, including plans for closer cooperation between banking authorities.
‘Flesh It Out’
“We favor going faster on banking union, with the ECB,” Hollande said. “We have a road map, we now have to flesh it out both in a financial sense and in an economic one.”
Greece’s struggle to meet the terms of its financial rescue has been a catalyst for criticism and ultimatums by politicians in Germany, the biggest country contributor to euro-area bailouts that began with Greece’s first rescue in 2010.
Germany can’t make more money available for Greece and neither the content nor the timeframe of the aid program can be renegotiated, Volker Kauder, the parliamentary caucus leader of Merkel’s Christian Democratic Union, said today.
An exit of Greece from the euro region would “not be a problem for the euro” because the region’s financial backstops can help prevent contagion, Kauder said on ZDF television.
German 10-year bonds were set for the biggest weekly gain in almost two months amid signs of slowing growth in the euro region. Spain’s 10-year bond yields rose 2 basis points to 6.34 percent at 10:12 a.m., while Italian 10-year yields were little changed at 5.69 percent. Equivalent German debt yielded about 1.4 percent, down 2 basis points.
Spain and Italy are deciding whether to make formal requests for help from Europe’s rescue funds after Mario Draghi said the ECB will consider entering bond markets to help lower borrowing costs. The Spanish and Italian governments are both holding Cabinet meetings today as they struggle with crisis contagion from Greece.
Holding Europe together is “worth every hardship and effort” as policy makers grope for ways to preserve the joint currency which arrived in people’s wallets only a decade ago, Merkel said yesterday.
“Amid all the quarreling and the searching for the best way on the details, we shouldn’t forget one thing: Europe isn’t just a matter of the mind, it has been and remains a matter of the heart,” she said in a video message at the start of a pro-Europe media campaign sponsored by German foundations, companies and celebrities.