Greece warned that delaying reforms ‘is not an option’

Athens Parthenon Greece_Picnik.jpg

While Eurogroup chief Jean-Claude Juncker expressed support to Greece's conservative government yesterday (22 August), the Netherlands rebuked Greek pleas that more time should be allowed for the country’s painful reforms.

Juncker became the most senior European leader to visit Athens since a new conservative-led government took power in June, promising to fulfil austerity pledges Greece made to receive a bailout, but to seek more time to reach the targets.

Prime Minister Antonis Samaras's plea for "air to breathe" has been met with hostility in the Netherlands and European paymaster Germany. Juncker said a decision to grant more time would depend on the findings of a review by EU and IMF lenders on the country's progress in fulfilling its pledges.

He accompanied that with a warning to Greece to shore up its dire finances, saying the country's next tranche of aid would depend on it producing a credible strategy for austerity cuts.

"As far as the immediate future is concerned the ball is in the Greek court," Juncker said. "In fact this is the last chance and Greek citizens have to know this."

Juncker acknowledged that Greece was struggling with a "credibility crisis" but reiterated he was against Greece exiting the euro which he said would be of no help to Greece and "entail major risks for the whole euro area." He said he was against a third bailout for Greece, and instead urged Athens to step up structural reforms and privatisations to drag its economy back from the brink.

The Eurogroup’s president show of support for Greece's conservative-led government comes as a welcome boost for Samaras, who has begun a charm offensive to convince European leaders he has the will to ram through unpopular reforms and deserves more time to do it.

"All we want is a bit of 'air to breathe' to get the economy running and to increase state income. More time does not automatically mean more money," Samaras told Germany's mass-market Bild newspaper before the talks with Juncker.

"Let me be very explicit: we demand no additional money. We stand by our commitments and by fulfilling all our requirements."

That failed to impress the Dutch finance minister, whose country has been a vocal critic of Greece's slow pace of reform.

"If it concerns delaying reforms and budget cuts, then it is not a good idea," Jan Kees de Jager told reporters.

No Greek exit

Appointed in June after two tumultuous parliamentary elections (see background), Samaras has been juggling opposing demands from voters at home fed up with austerity and irate policymakers abroad demanding more painful cuts from Greece.

With cash coffers running empty and renewed talk of a Greek eurozone exit without more aid, Samaras travels to Berlin on Friday to meet German Chancellor Angela Merkel and to Paris a day later for talks with French President François Hollande.

Initially vocal about demanding more time from lenders, Samaras's government has toned down its rhetoric on the issue in recent weeks and now expects merely to broach the idea during talks this week rather than formally request it.

Merkel has already said she and Samaras will not make any decisions during their talks, adding she too would wait for the lenders' report on Greek progress in meeting targets. That report is not expected until late September.

Background

New Democracy, the centre-right party that won the general election in Greece in June 2012, formed a coalition government with the third-placed socialist PASOK and a small pro-European leftist force, the Democratic Left party.

New Democracy won 29.7% of the vote, ahead of the leftist Syriza with 27%. Both New Democracy and PASOK are part of the “pro-bailout” camp.

New Democracy and PASOK alternated in power from the fall of military rule in 1974 until last year, when Greece's economic crisis forced the rivals to share power in a national unity government tasked with rescuing the country from bankruptcy.

Many Greeks hold both parties responsible for the nation's near bankruptcy, which forced it to take bailouts from the European Union and IMF in 2010 and again this year.

Timeline

  • 23 Aug.: French President François Hollande to meet German Chancellor Angela Merkel in Berlin to discuss Greece
  • 24 Aug.: Samaras goes to Berlin to meet Merkel
  • 25 Aug.: Samaras goes to Paris to meet Hollande
  • September: the Troika (European Commission, International Monetary Fund and European Central Bank) will determine whether Athens gets the next tranche of its bailout. If not, Greece will go bankrupt and will have to leave the euro.

Further Reading

Subscribe to our newsletters

Subscribe