Merkel Urges Greece to Maintain Austerity to Stay in Euro

Merkel Urges Greece to Maintain Austerity to Stay in Euro
An elderly man carries a banner past a line of riot policemen during a public protest to mark a visit by German Chancellor Angela Merkel, her first in five years, to Athens. Photographer: Kostas Tsironis/Bloomberg

German Chancellor Angela Merkel used her first visit to Athens in five years to maintain pressure on Greek Prime Minister Antonis Samaras to meet austerity pledges, proclaiming her desire to keep the country in the euro.

The two leaders stood side by side at a press conference as protesters massed outside the Parliament building in a capital on virtual lockdown. Merkel has become the face of austerity in a country suffering a fifth year of recession, which many Greeks blame on German-led conditions attached to emergency loans.

“I want Greece to remain in the euro,” Merkel told reporters today halfway through her six-hour visit. “A lot has been done, much remains to be done.”

At stake is Greece’s membership in the 17-nation euro and the payment of 31 billion euros ($40 billion) from bailout commitments first made in 2010. In Luxembourg, European Union economy chief Olli Rehn said policy makers intended to clear the release in the coming weeks of the funds to keep Greece afloat.

Greece’s unexpected budget blowout in 2009 triggered a financial crisis that has stunted the region’s economy and threatened a currency seen by its founders as permanent. Spain is considering asking for help and Cyprus is in talks for a lifeline, following Ireland, Portugal and Spanish lenders.

Merkel’s trip reciprocated a visit by Samaras to Berlin in August and underscored her desire to silence the calls from her own coalition to kick Greece out of the currency union.

‘Longer Path’

“We are dealing with problems that have arisen in part over decades, and these problems can’t be solved with one bang, with one measure,” she said. “It will be a longer path but I believe that we will see light at the end of the tunnel.”

The German leader, up for re-election next year, has also been criticized at home by opposition Social Democrats for imposing austerity on Greece and not doing enough to ensure the survival of the euro.

“Merkel is on a carrot and stick exercise: show support and hope for the plight of Greeks with the reminder that there has to be a quid pro quo,” Ralph Brinkhaus, a lawmaker from her Christian Democratic Union and a member of the parliament’s finance committee, said in an interview today. “Merkel’s primary constituency is Germany, not Greece: she knows what millions of voters back home expect her to say.”

Athens was the scene of protests on and around its main Syntagma Square. Thousands of Greek citizens vented frustration over Merkel’s perceived role in the country’s economic misery. Some 7,000 police were deployed, with some firing tear gas. Merkel’s destinations were cordoned off. Police said they detained 217 people and arrested 24.

Ending Isolation

“Merkel’s visit to Greece first of all proves that we are breaking an international isolation that existed to now,” Samaras said. “And this was due to our mistakes as well. The political power and image of a country corresponds to its credibility.”

Merkel has softened her tone on Greece since Samaras’s election earlier this year. He formed a coalition after beating back a challenge by parties that advocated tearing up the terms of Greece’s rescues and calling the bluff of the so-called troika of international creditors -- the International Monetary Fund, the European Central Bank and European Commission -- at the risk of triggering global meltdown in financial markets.

Calling Greece a friend contrasts with the threat she delivered in November 2011, when former Prime Minister George Papandreou proposed a referendum on austerity measures. She said the ballot, subsequently rescinded, “will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?”

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