October 9, 2012
Greece: Merkel travels to eurozone fault line
Page 2 of 2
The Associated Press
Greece's Prime Minister Antonis Samaras, right, and Germany's Chancellor Angela Merkel speak before their meeting at the Maximos mansion in Athens, Tuesday. Amid draconian security measures and a mass protest, German Chancellor Angela Merkel arrived Tuesday for her first visit to Greece since the eurozone crisis began there three years ago. Her five-hour stop is seen by the Greek government as a historic boost for the country's future in Europe, but by protesters as a harbinger of more austerity and hardship.
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But Merkel, heading Europe's largest bailout contributor, accepted Samaras' invitation to Athens despite failure by his government so far to conclude a massive new austerity package.

Greece has depended on bailouts from Europe and the International Monetary Fund since May 2010. To get the loans, it has implemented a series of deep budget cuts and tax hikes, while increasing retirement ages and facilitating private sector layoffs.

However, Athens must pass further austerity measures worth $17.5 billion over the next two years to qualify for its next rescue loan payment - without which the government will run out of cash next month. New cuts are set to further reduce pensions and salaries and increasing the retirement age by two years, to 67.

Debt monitors from the EU, IMF and European Central Bank, known as the "troika", will deliver a report within coming weeks on whether Greece should receive its next bailout payment, without which it will go bankrupt.

After months of tough rhetoric, the German chancellor could be using her visit to prepare her own voters for a more tolerant approach toward Greece ahead of federal elections next year, according to Jason Manolopoulos, author of the 2011 book on Europe's financial crisis "Greece's Odious Debt."

"Given how some other members of the (eurozone) core - Austria, Holland, Finland - had made some very harsh comments ... I think it does send a message to Greece," Manolopoulos said of Merkel's visit.

"But I think it's also important, if not more important, for German domestic consumption."

Economist Martin Koehring, from the Economist Intelligence Unit, said Merkel wanted to underscore her commitment to keeping Greece in the 17-member eurozone, and make a gesture of support to Samaras' coalition government, in power since late June.

He added: "Mrs Merkel's visit is ... also likely to stress that, in addition to solidarity from its EU partners, the pressure to implement fiscal austerity and structural reforms will not be eased."

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Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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