Greece's growing rows with Germany over austerity and euro-referendum boosts support for anti-bailout party

An escalating row with Germany over the EU’s austerity plans has boosted Greek support for the anti-bailout party Syriza, ahead of elections to decide Greece’s future in the eurozone

Greek politicians from all sides reacted furiously on Saturday to reports that Angela Merkel, the German chancellor, had suggested that the country hold a referendum on euro membership next month, alongside the new election for which preparations have now begun.
"The Greek people have no need for a referendum to demonstrate their choice for the euro,” said Antonis Samaras, leader of the right-of-centre New Democracy party, which won most seats in the May 6 election but could not find enough support from pro-bailout parties to form a government.
Alexis Tsipras, leader of Syriza - which shocked establishment parties by coming second on May 6 - said: “Mrs Merkel is used to talking to Greek political leaders as if she was addressing a protectorate. Greeks would give “a definitive answer” in next month’s election, he said, “and are going to put an end to the policies of austerity and submission”.
An official German denial that the German leader had even made the suggestion - said to have come during a conversation with the Greek president, Caralos Papoulias - was too late to prevent headlines such as “Merkel Ultimatum” and criticism of what one newspaper called “a Merkel Bomb”.
As Mr Papoulias formally dissolved the Greek parliament on Saturday, an opinion poll by Metron Analysis suggested Syriza - whose support had briefly dipped - was again ahead of all other parties, with 25.1 per cent of voters saying they would support it next month.
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Mrs Merkel has insisted she wants Greece to remain within the eurozone, but that it must meet commitments to cut its defecit. But sensitivity over what many Greeks see as Germany’s high-handed attitude was further heightened when a German MP from Mrs Merkel’s Christian Democratic Union contradicted her, calling for Greece to exit the eurozone.
“That could open the path to growth. We could also negotiate a sort of European Marshall Plan for Greece,” Wolfgang Bosbach said in a magazine interview to be published on Monday. He said that a further aid package would only make things “more expensive, not better”.
The German chancellor’s refusal to bend on the terms of the “fiskalpakt” treaty signed by 25 EU countries in March - but not by Britain - has led diplomats to warn of a German government “death wish” that is pushing Europe’s economy to the brink of disaster.
The Sunday Telegraph has learned that the German attitude contributed directly to the collapse of Greek attempts last week to form a national unity government, sparking market turbulence that now threatens Spain and Italy.
At a meeting of EU officials 11 days ago Wolfgang Schäuble, Germany’s finance minister, told his audience that after the success of anti-austerity parties in the first Greek election, contingency plans were being drawn up for Greece to leave the euro. “He horrified his audience by saying that, unless the Greeks toed the line, life would be made so unpleasant for that Greece would be left with no option but to ask to leave,” said one EU source.
Mr Schäuble suggested cutting off the EU financing on which Greece depends to prevent it going bankrupt, thus pushing it into default and out of the euro.
In the event representatives of the eurozone bailout fund decided instead on a less dramatic course: witholding €1bn of the €5.2 billion instalment of aid due to be paid to Greece on May 10.
But that signal backfired, however, when Mr Papoulias convened talks with all his country’s political parties last weekend. On the table was a secret deal from the EU that would have given Greece a breathing space to pay back its debts, and some new investment to help kick start its ravaged economy. He said, according to official minutes, that Herman Van Rompuy, the EU president, had told him that the election of Francois Hollande as France’s new socialist president meant “a new climate is forming in Europe and it will be a shame if we do not take advantage of it”.
Other European governments are sympathetic to the need to tone down the rhetoric, rather than aggravate Greek voters further. But Mr Van Rompuy’s promise was not enough to sugar the bitter pill of the aggressive German threat to push Greece out of the euro unless its politicians surrendered.
“Even the mainstream Greek parties could not swallow such naked threats, let alone the anti-austerity leftists,” said one diplomat close to the talks.
A senior European diplomat said: “There was a deal on table but the Germans made it impossible for anyone to take the step. It’s a death wish. Politics is about adapting to changes in order to manage them, not defying reality because it’s inconvenient for some EU deal that was a compromise anyway.
“Some European leaders and officials are so doctrinaire about keeping promises that they risk destroying everything.”
The debate will come to a head at an EU summit on Wednesday, which the new French government hopes will show backing for Greece. “All issues must be put on the table: finance, the banking system, growth, protectionism,” the country’s new prime minister, Jean-Marc Ayrault, told Liberation newspaper yesterday. “We must send a strong signal to the Greek people and to all Europeans.... No subject is taboo.”
The Brussels meeting is expected to focus on new Mr Hollande’s call for measures to kick-start growth across the EU, especially within the 17-nation euro zone, while maintaining efforts to cut budget deficits. But Germany will demand that any such approach - including proposals, supported by Britain, for new eurobonds backed by the European Central Bank - is matched by moves to closer political and economic union, which will mean challenging choices for Britain.
http://www.telegraph.co.uk/news/worldnews/europe/eu/9277432/Greeces-growing-rows...

Dont understand

SOB

corporate_whitey wrote on May 20^th, 2012 at 10:06am:

Use your mind, have you been gazing in crystal balls

OH yes, the corporate world are an appalling lot but have little to do with the situation in Greece, the problem in the Euro zone is government debt, not toxic mortgage debt that took the Uass down. The free and easy credit days that everyone seems to think were the glory Howard days that have taken down the world economies. The Euro zone countries are in pain because they have all lived way beyond there means during the boom instead of doing the one good thing Costello did and pay off your debt when the riches are high. This is the people paying for there own greed, like the Greeks need to pay tax. So why should the Germans allow themselves to be drawn into massive debt to prop up these countries when they have never shown any interest in doing the right thing.

Sir Spot of Borg wrote on May 20^th, 2012 at 9:29am:



That's you motto, isn't it.


yeah,  it's a German conspiracy  to trick the lazy bvggers into paying their own way in the world.  How very dare they expect the Greeks to cover their on expenses and not sponge off the Krauts.

corporate_whitey wrote on May 20^th, 2012 at 10:06am:



The austerity is necessary ONLY if they want to stay in the Euro (which means continued German financial support).

The alternative is to bail out, reintroduce the drachma and devalue it. Anything local would be affordable but anything imported from Europe would be pretty much out of reach for most Greeks. They could use the tourism income to pay off their debts and there would be no austerity around things they produce themselves.

In other words, it would be austerity without the Germans...