x Abu Dhabi, UAEFriday 28 July 2017

Anxious Greece awaits its destiny

Country is on the brink of being thrown out of the euro zone.

MARSEILLE, FRANCE //A frantic round of last-ditch talks began yesterday to decide the fate of debt-ridden Greece and its possible exit from the euro zone.

The single currency area's most influential leaders, the German chancellor, Angela Merkel, and the French president, François Hollande, met in Berlin ahead of separate discussions today and tomorrow with the Greek prime minister, Antonis Samaras.

At issue was Greek's desperate plea for more time to meet harsh conditions attached to the latest European bailout, designed to ease it out of a crippling financial crisis.

The Euro group president, Jean-Claude Juncker, had set the scene for a sombre series of meetings, warning that Greece was now on its "last chance" to make the changes needed to avoid bankruptcy.

The terms of the Greek bailout included massive spending cuts - potentially even greater than the €11.5 billion (Dh53.1 billion) originally sought - as well as economic and structural reform and more privatisation.

A "troika" of institutions - the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission - is due to report next month on whether Greece has done enough to qualify for the next €33.5 billion instalment of the €130 billion bailout.

Mr Juncker has commended Greece's "tremendous" efforts to cut its deficit.

But while he voices strong support for Greece staying in the euro zone, others - notably in Germany - are losing patience.

Mrs Merkel has insisted she was embarking on the round of talks "with the awareness that we [must ensure] that every partner sticks to his commitments".

The chancellor is reported as sharing the view of her party's deputy parliamentary leader, Michael Fuchs, that if Greece did abandon the euro, it would have no great impact "because the countries are prepared".

Mr Fuchs said Germany would not hesitate to veto further help for Athens if it failed to meet the bailout conditions.

"We long ago reached the point where the Greeks must show they are capable of delivering a shift," he told the German newspaper Handelsblatt. "A policy of the last, last, last chance won't work anymore and must come to an end."

Britain, though outside the euro zone, is watching developments with keen and nervous interest. David Cameron's coalition government is worried about the effect of a Greek exit on the troubled economies of Spain and Italy and media reports last week said officials have estimated that wider collapse of the single currency could wipe £100 billion off UK economic output.

Greece is pleading for what Mr Samaras calls "a little breathing space", a two-year extension of the timetable for imposing painful and acutely unpopular measures to enable the country to achieve growth.

In an interview with the French newspaper Le Monde, he said Greece's exit from the zone would by devastating or his country, detrimental to Europe and, when combined with instability in parts of North Africa and the Middle East, capable of causing a "geopolitical nightmare".

The current deadline for Greece to meet its obligations is 2014 and Mr Juncker has said any question of an extension would depend on the troika's conclusions after its visit to Athens in early September by the end of the month and European finance ministers are due to meet for what could be a conclusive summit in Luxembourg on October 8-9.

Despite his remark about Greece's last chance, and the strength of feeling in Germany, Mr Juncker has given some observers the impression there may be scope for some concession to Mr Samaras.

Last night's talks in Berlin also represented an attempt by France and Germany to rediscover common ground. Mr Hollande's defeat of Nicolas Sarkozy in the French presidential elections in May ended the so-called "Merkozy" united front.

The French socialist leader was elected on a manifesto that challenged the Merkel view, as supported by her conservative ally, Mr Sarkozy, that austerity was the key to resolving Europe's debt crisis.

Mr Hollande's prime minister, Jean-Marc Ayrault, was echoing his president's essential message - that action must be taken to stimulate the economies of euro zone nations - when he said: "It's not just about balancing budgets, although we must hold to that, it's also about growth."

foreign.desk@thenational.ae

* Additional reporting by Reuters