Merkel’s visit sends messages to Greeks, Germans and the markets
Greek Prime Minister Antonis Samaras welcomes German Chancellor Angela Merkel at the Athens airport, 9 October 2012.| AFP PHOTO/PANAGIOTIS MOSCHANDREOU
ATHENS - On 9 October, German Chancellor Angela Merkel, on her symbolic visit to Athens – the first since Europe's debt crisis began, delivered messages to Greeks struggling amid recession, her voters resentful over bailouts, and bond market speculators.
Merkel, who was met at the airport by Greek Prime Minister Antonis Samaras in an official ceremony, fifteen minutes later, rode in the same car to the prime minister’s mansion for talks. "I hope and I wish that Greece remains as part of the euro," Merkel told a press conference alongside Samaras following their talks. "We really can see light at the end of the tunnel."
Merkel's six-hour trip to Athens was seen as a vote of support for Samaras, who in June was elected to head a three-way coalition government. Her visit comes as the Greek government prepares some €13.5bn in new austerity measures. The visit also reflects a recent thaw in relations between Greece and Germany despite massive protests that coincided with her visit.
But her visit was also an effort by the German chancellor to support the euro as Spain and Italy also suffer the massive effects of the economic crisis and brace for more austerity measures.
Justin Urquhart Stewart, marketing director of Seven Investment Management, told New Europe on 9 October - soon after Merkel wrapped up her meetings in Athens and she was accompanied by Greek Foreign Minister Dimitris Avramopoulos to the airport - that her visit reinforces the message that Greece isn’t going to leave the euro. “If Greece is not a financial issue compared to the rest of the eurozone, it’s a political issue. What Mrs Merkel is doing is really highlighting the fact that it is a political reason that we want the euro in place, it’s not going to go disappear anytime soon and that the main guns will be pointed at Spain and Italy to make sure they are secure. But Greece has to have faith to stay in the euro,” Urquhart Stewart said.
He noted, however, that eurozone authorities must at least give people a vision that there will be some growth at some stage and give them hope that there is a sign of change “because five years of recession with the outlook of another five years of recession with no hope at the end of it is appalling to everybody and that is when Greece becomes a social problem, not a financial problem”, he said.
Merkel tried to reassure the Greek politicians and the Greek people that their reforms would eventually pay off, but also made clear that Greece would not solve its problems overnight.
Merkel and Samaras walked casually side by side as the Greek Prime Minister accompanied her from his office through the garden to the Presidential Mansion. During his meeting with Merkel, Greek President Karolos Papoulias stressed that the Greeks had to endure a lot of sacrifices and were stretched to their limit.
Merkel’s visit came as tens of thousands of Greeks marched in Athens to protest the tough cutbacks the country is being forced to make in exchange for aid from its creditors. Some clashes turned violent although they were led by a small group of hooded youths.
Merkel’s visit also comes only days after her main rivals, the Social Democratic Party, announced that Peer Steinbrück would run against her in the general election in 2013. Steinbrück’s party has been more lenient in its talks of Greece’s future prospects in the eurozone, arguing the time lost by the government between elections earlier this year must be taken into account when considering financial aid to the country. The Social Democrats criticised Merkel’s visit to Athens as coming too late. Even within Merkel’s own Christian Democratic Party there are differences of opinion on how to handle Greece.
Urquhart Stewart told New Europe that Merkel’s visit came at the right time. “The trouble is because she is not in control of the eurozone, she can only move at the pace of all 17 leaders. I think if she had gone any earlier it would have been even more difficult because she had to give proper time for Greece to show that they are making the effort and Greek politicians are making the effort. If she had gone too early, too soon without the authorities and [European Central Bank President Mario] Draghi’s proposal being in place it wouldn’t have had the credibility. What she has done is put another dot which you can join up to show the strength of the euro will have a new course,” Urquhart Stewart said.
Merkel also met with German businessmen at the Hilton Hotel to discuss investments in energy, banking, telecoms and pharmaceuticals. Her visit was seen as psychological boost to investors that have been holding back investment decisions worried by the prospect of a Greece leaving the eurozone.
But Merkel’s visit to Greece was also a message to the bond market speculators that they have had their fun but now Germany is willing to support the euro. Draghi’s earlier pledge to “do whatever it takes to save the euro” could have been made without a nod from Merkel.
“You have to join dots together of the drawing that is being made by Merkel and the authorities,” the director of Seven Investment Management said. He said the German Chancellor sent a message that the euro is here to stay, Greece is staying in it and the disciplines will be applied. “It is a very clear message and Merkel has to do this now because she only got less than a year to her elections so she needs to get that message across. But at the same time needs to start changing the message to saying: Don’t try to take us on because we will beat you. But at the same the economy will at some point will turn around and starting to grow,” Urquhart Stewart concluded. new europe on line
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