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.

Hollande: Greece must remain in the Eurozone

For Greece there is no question of leaving the eurozone, said the president of France, Mr. Francois Holland after his meeting with Prime Minister Antonis Samaras at the Elysee Palace. He added that Greece must remain a member of Europe.

For the courtesy signing, the French president agreed to make joint statements with the Greek prime minister after their meeting at the Elysee Palace, which was not foreseen by the protocol of the French presidency.

Mr. Holland said that he recognizes the efforts made by the Greek people, but added that the Greek government must prove its credibility and Greek political will to continue the reforms.

All this, he said, so that they can withstand the Greek people. He also added that the report of the troika have to confirm that commitments are honored, not only the economic but also the reforms that Europe has done what should do.

On his part, the Greek Prime Minister Antonis Samaras, after he spoke in French to reporters, said that some wager close to the exit of the country from the eurozone. He notes that he was there to assure the President Hollande that Greece will do what it must and will manage to gain its proper place in Europe.

Mr. Samaras said that Mr. Hollande agrees on the issue of recovery and that is the only way that Greece and Europe to achieve their goals.

And closed by saying that the Greeks are proud people, we do not like to borrow and to depend on borrowed money. Europe means dignity and democracy, and the people who suffer should be helped to preserve democracy and dignity.

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.

The rough German stance discourages Athens

 

 

 

No governmental member expected that the renegotiation path of the memorandum would be easy, but the most pessimistic expected that the climate would improve after the determination shown by the government in the implementation of the 11.5 billion measures for the period 2013 -2014. Thus, unpleasant placements by members of the German government in recent days Eurozone, not only limit their expectations for the meeting between PM Antonis Samaras and Angela Merkel in Berlin, but are forcing the government to redefine its tactics on the request of an extension to the fiscal adjustment program.

 

Maximos Mansion learned Monday evening with embarrassment about German Foreign minister Guido Westerwelle’s placement - after meeting with Avramopoulos- that there is no room for renegotiation. It were preceded by similar placements by Finance minister W. Schäuble and parliamentary leader of the Christian Democrat party Volker Kauder.

 

Faced with this German attitude Samaras will redefine his tactics. Maximos Mansion already leaked that no decisions will be taken in the meeting and that the issue of extension will be officially placed in the European institutions during the upcoming summit in October.

 

Naturally, Samaras will set out the situation in the country, emphasize that recession is larger than estimated due also to the memorandums and will defend the need for changes to the agreed framework for the country to be able to meet its obligations and debts.

 

Until the extension is officially placed in the summit, Samaras wants to avoid negative statements by Merkel and the German political elite. He will seek to get Merkel's declaration that Germany is in favor of Greece’s stay in the eurozone. He will also try to convince the German leadership to depend its stance on extension to the troika report and the package of 11.5 billion euros and its adoption by the Greek parliament, that will be a testament of determination by the Greek government.

 

Thus, the prime minister and the economic team are completing the package of 11.5 billion euros, which will be extremely hard as it will include cuts in pensions over 700 euros, reduction and elimination of benefits for which the prime minister and political leaders had committed not to touch before the elections, significant cuts in payrolls of SOEs, a new type of redundancy in the public sector as well as significant reductions in welfare, health, education etc.

 

This was the subject of yesterday's meeting at Maximos Mansion. And since the argument of hard European and German elites against our country is that there can be no new funding, the Greek leadership has to develop proposals that the extension cost be restricted to the minimum to avoid having to pass it through the parliaments of member countries and it will be covered by the Greek economy when it enters a development phase. The prime minister will argue that Greece must remain in the euro at all costs and that it should take all necessary steps as hard as they might seem to restore its credibility.

 

Samaras will attempt to transfer the critical decisions so that when the package of measures is brought in parliament, MPs of the three parties that support the government will be found in front of the dilemma either to vote in its favor or to pave the way for the fall of the government and the country’s exit from the euro.

Crucial week for Eurozone and Greece

The first tour abroad as prime minister of Greece, Antonis Samaras has a mission to win the last chance that Greece has to escape the economic collapse.

The international press is full of scenarios for a possible exit of Greece from the euro area. Besides German media are trying to determine the cost of "buy out" of the Greek debt and refinancing of the deficits of Spain.

Many European politicians talks about “Babel” without a common line, the burden of decision falls in Germany, which enters the final straight for the elections of 2013 and therefore affected by the partisan balance in order to attract votes.

The appointment of Mr. Antonis Samaras with Mrs Angela Merkel is the most crucial of the three tests required to pass prime minister the next seven days. Mr. Samaras has realized that the choices are limited and there are no magic solutions to overcome the crisis.

The risk of running the country is very great and European partners are sure to make it absolutely clear through public statements and leaks to the intentions and to consider alternatives without Greece in reports published in major international media .

The prime minister knows that the leeway that has been limited. The decision taken at the highest government level and are known as the leader of PASOK Evangelos Venizelos and the chairman of the Democratic Left Fotis Kouvelis is to present the German chancellor plan to reduce state spending by 11.5 billion just for by the Memorandum.

Under this plan, Mr. Samaras will seek to conduct an initial exploratory discussion with Ms. Merkel on the possibilities of extending the fiscal adjustment program by 2016.

The Greek prime minister, according to reliable information, will try to refute the view expressed mainly by German Economy Minister Philipp Relser that a possible way out of the euro by Greece is manageable from the other 16 eurozone countries. The Greek effort will be to convince the German government that Athens did not ask Berlin to transfer even more money from the pockets of German taxpayers to the Greeks.

Juncker sees no Greek exit from eurozone

Luxembourg’s prime minister says Greece won’t leave the 17-nation eurozone, arguing that an exit wouldn’t be politically feasible and would carry unforeseeable risks.

Greece has been kept afloat by international loans but has fallen behind on implementing reforms and austerity measures demanded in exchange, feeding speculation about a possible euro exit.

But Luxembourg’s Jean-Claude Juncker (photo), who also chairs eurozone finance ministers’ meetings, was quoted Saturday as saying in an interview with Austria’s Tiroler Tageszeitung newspaper, “It will not happen unless Greece violates all the conditions and keeps to no agreements.”

Juncker said he assumes Greece will redouble efforts to reach its targets, so “there is no reason to assume that this exit scenario can become relevant.”

He said an exit would be “technically” but not “politically” feasible.

AP

What do the Germans want? German court widens army's internal crisis role

The ruling says the armed forces can be deployed only if Germany faces an assault of "catastrophic proportions", but not to control demonstrations. 

The decision to deploy forces must be approved by the federal government.

Severe restrictions on military deployments were set down in the German constitution after Nazi-era abuses.
The court says the military still cannot shoot down a hijacked passenger plane - fighter jets would have to intercept the plane and fire warning shots to force it to land.

After World War II the new constitution ruled that soldiers could not be deployed with guns at the ready on German soil, the BBC's Stephen Evans reports from Berlin.

The court has now changed that, saying troops could be used to tackle an assault that threatens scores of casualties.

The judges had in mind a terrorist incident involving armed attackers in public places.

German troops have been deployed abroad since the war, but it has been a gradual process.

German warplanes have been used in the Balkans and troops are on the ground in Afghanistan, protecting construction workers, but able to return fire if attacked.

Via BBC

Meetings Merkel, Hollande and Juncker with Greek Prime Minister Samaras

In the next week the Greek government is going to announce the new measure of austerity. After that the Greek Prime Minister Antonis Samaras will meet with German Chansellor Angela Merkel and President of France Francois Hollande and Eurogroup Chairman Jean – Claude Juncker.

Antonis Samaras is determined to put the Greek demands and particularly the extension of the fiscal adjustment program in front of the European partners. After a short vacation, he has returned to his office in Athens and will begin preparing for a difficult and crucial week.

The climate for our country is still not good, especially in Germany, as shown by the recent statements of Philipp Rösler and the articles of the international press. Financial Times report that Samaras will ask a two-year extension of the fiscal adjustment program and that the Greek government suggests ways that the additional funding will not be required to pass by the European Parliament, which would bring further entanglement.

The same newspaper notes that the patience of creditors against Greece is exhausted and another conflict between Athens and Berlin might further destabilize the markets, and that German officials have ruled out any additional funding in Greece and a growing number of politicians are asking for Greece's exit from the eurozone.

Just two days ago vice chancellor Rösler returned to harsh statements saying that there can be no extension for Greece, which must implemented what has been agreed. German magazine Der Spiegel says Greece should go bankrupt, since neither the IMF nor the eurozone can sacrifice their credibility by offering new help. However, the magazine criticizes the German government arguing that if their goal was to save Greece they have failed and the austerity measures only managed to exacerbate the crisis and increase the debt.

Samaras will meet Wednesday in Athens with eurogroup chairman Juncker and then on Friday in Berlin with Merkel and on Saturday in Paris with Hollande.

The Prime Minister's strategy is fixed and described as "stay in the euro at all costs." Until meeting with Juncker, Merkel and Hollande, the government should specify the measures of 11.5 billion eurso that will be presented by Samaras.

He will assure his interlocutors that he will promote privatizations and the reduction of the public sector at a fast pace. Whether he will manage to lift Merkel’s reservations remains a question. It is estimated that Juncker and Hollande are more positive about our country. The meetings will be crucial for the report of the troika who returns at the end of the month in our country. The goal is a positive report so that the eurogroup will give the green light for the next tranche of 31.5 billion euros.

It still has not been decided if Samaras will meet with Venizelos and Kouvelis, the leaders of parties which support the government, before the crucial meetings with the Europeans. As there are disagreements on certain measures related to the pressure from within their parties Samaras would not want to have a disagreement with the government's partners before the meeting with Juncker. He seems determined to assume full responsibility for the 11.5 billion euros package and the overall strategy to promote the plan for the rescue of our country.

The enthusiasm of Angela Merkel for Euro 2012

Merkel exults when Germany beats the Netherlands (final score and result:- Netherlands vs Germany 1-2 // Van Persie/ Gomez*2).