Crucial week for the future of the euro

The coming days seem crucial for the future of the euro for many, even in the European Union, as pressures on the Spanish economy are rising and scenarios about further support of Greece from its partners are giving and taking, along with the conflicting views of European policies on how to manage the debt crisis in the EU.

The meetings of EU president Herman van Rompuy with European leaders are particularly important, as he will try to find a common line before the ECB meeting and the decision of the German Constitutional Court about the Permanent Support Mechanism (ESM).

Specifically, on Tuesday September 4, van Rompuy will meet with Angela Merkel, and the next day with François Hollande in Paris.

Diplomatic sources cited by the French news agency report that Greece will be found high on the agenda of van Rompuy’s diplomatic contacts, who has made an informal request for a two-year extension of the loan program.

The issue of Spain will also be discussed, about which the EU has announced that it can release up to 100 billion euros to recapitalize commercial banks, while there is still an open issue regarding its appeal for a complete bailout package, and not just for the banking system.

On Friday, September 7, van Rompuy will come to Athens to meet with prime minister Antonis Samaras. On Saturday, he will visit Cernobbio on the shores of Lake Como in northern Italy, where he will meet with Italian prime minister Mario Monti.

Change of climate in Greco – German relationships

The Greek government appears satisfied with the meetings in the German capital, as it believes the first crucial step towards the normalization of relations between the two countries has been taken, and that it will affect the overall climate against our country.

Samaras assured that whatever has been agreed with the Greek side and its partners it will be respected. His colleagues say that the package of 11.5 billion euro will be the last to be imposed on the Greek people and especially those who have lifted the biggest part until now.

Although much will depend on troika’s report, the government believes that the path to the exit from the euro would be stopped and that by the end of October we will get the next tranche and the extension.

Indicative of good the climate is the fact that after the formal meeting and working dinner, Merkel held a private meeting with prime minister Samaras, which lasted another 40 minutes.

Samaras affirmed that "Greece will remain loyal to its commitments and obligations".

The Greek delegation believes that this was the first major step, not only to restore the credibility of Greece, but also to remove the mistrust between the two countries. They believe that this will help to change the psychology in international markets towards our country.

During the meetings the two sides discussed all issues and Greeks officials presented the views of the Greek side, including the way the recession burdens the deficit in a vicious circle that can only be broken by returning our economy to the path of growth. Naturally, they discussed about the issues of privatization and structural changes, where the officials of the German government raised the question as to why the agreed commitments and timelines are not being met.

"From our side we showed the resolve that we will take the necessary steps in order to give perspective to our country. The prime minister made it clear that the key issue is the lack of recovery," a PM associate said.

The Greek delegation argued that already in five years of recession, GDP has fallen by 20% cumulatively and it will continue until 2015, reaching 30%. The government believes that the suffocation from lack of liquidity of the Greek economy must stop, as it leads to further reduction of incomes and worsening of the recession.

They agreed to create a Greek Development Fund, with the participation of a German bank and individuals, in order to provide development resources.

Another issue discussed with the German officials was the tackling of tax evasion. For this issue, secretary of State Yorgos Mavraganis will meet early September with the relevant minister of Switzerland, in order to implement an agreement on the taxation of savings, similar to that which has been applied with England and Germany.

Also, Samaras’ adviser Stavros Papastavrou will discuss with German officials the unfreezing of the memorandum previously agreed between Papandreou and Merkel. It was also agreed that the German government will provide expertise and help to structural changes and reforms in various sectors, such as health.

Greek Election 17 June 2012

The International Political Review (IPR) covers the Greek Election. Minute-to-minute IPR will report all details and exit polls, on Sunday, from Athens. The Greek Election will affect the future of Euro and European Union.