Merkel Vows to ‘Do Everything’ to Save Euro as Greece Sees Difficult Year
“The path to overcoming this won’t be without setbacks but at the end of this path Europe will emerge stronger from the crisis than before,” Merkel said in a New Year’s television speech yesterday. In his New Year’s message, Greek Prime Minister Lucas Papademos said his nation will confront a “difficult” 2012 and must continue efforts to stay in the euro.
Merkel will meet with French President Nicolas Sarkozy in Berlin on Jan. 9 to discuss revisions to Europe’s fiscal rulebook following decisions made at a Dec. 9 summit. A final accord by euro leaders on the German-French proposals agreed at the summit is due in March.
“Today, you can trust that I will do everything to strengthen the euro,” Merkel said. “This will only succeed if Europe learns from the mistakes of the past. One of these is that a common currency can only be successful if we cooperate more than in the past in Europe.”
The euro had a second consecutive annual loss against the dollar in 2011 for the first time in a decade as rising yields on the region’s sovereign debt reflected speculation about defaults and stalling economic growth.
In its 13th year of existence, the 17-nation currency fell below 100 yen for the first time since 2001 as the region’s leaders bailed out Portugal, and Italy, with the world’s third- largest bond market, had its worst year since at least 1992. The Swiss franc rose against a majority of its most-traded counterparts as Europe’s debt crisis spurred demand for safety.
‘Crucial’ Months in Greece
A crisis that began in Greece two years ago has moved to the euro-area’s core and leaders are struggling to convince investors they can contain the risk and assure the euro’s survival.
For Greece, “the next three months will be particularly crucial,” Papademos said in an e-mailed statement yesterday sent from his Athens-based office. “The decisions taken will determine the course of Greece in the coming decades.”
Papademos, appointed on Nov. 11 as head of a government backed by three of the five parliamentary parties, is trying to secure loans under a 130 billion-euro ($168.5 billion) bailout for Greece agreed to in October by European Union leaders before elections are held. Measures include negotiating a debt swap with private creditors that will cut 100 billion euros off Greece’s burden.
Germans are split over whether the debt crisis can be fixed, with 52 percent of voters saying that a “fundamental solution” can be found to the euro-region’s woes, according to a Forsa GmbH poll for financial consultants AWD Holding AG published on Dec. 29.
Some 22 percent of the respondents expect the region to abandon the euro and return to national currencies while 90 percent said in response to a separate question that other euro member states would join Greece, Portugal and Ireland in needing aid.
Finance Minister Wolfgang Schaeuble urged Germans to show more “calm” over the crisis in 2012, saying in a Dec. 24 interview in the Bild am Sonntag newspaper that it is “manageable.” Germany plans to speed up paying installments to Europe’s permanent bailout fund to boost market confidence in the euro area’s resolve to beat the crisis.
The euro-region is “close to a turning point” in the crisis, Norbert Barthle, the budget spokesman for Merkel’s Christian Democrats, said in an interview on Dec. 29, adding that Germany may not even be forced to raise its net borrowing next year to accommodate increased payments to the European Stability Mechanism due to rising tax revenue.
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