Germany’s Merkel rules out more debt cuts for Greece

Athens, Feb 1:

German Chancellor Angela Merkel ruled out further debt cuts for Greece, putting the new Greek government on a collision course with the European Union (EU).

According to a report in The Guardian, Merkel’s uncompromising stance will not be welcomed in Athens, where the new ruling party, Syriza, insists that it will make good on its promises to halve the country’s 320 billion euro (nearly $362 billion) debt obligations and scrap a range of extreme budget measures imposed in exchange for the loans.

Athens has refused to cooperate with the auditors of the “troika” of lenders comprising the European Union (EU), European Central Bank (ECB) and International Monetary Fund (IMF), who monitor the Greek economy on behalf of the three lenders.

This “troika” of institutions have overseen the loans to Greece, which make up about 175 percent of Greece’s gross domestic product (GDP).

Instead, its new government is looking to meet with individual creditor nations as it seeks concessions that it claims are vital for Greece to emerge from years of austerity.

However, such unilateral measures would be fiercely resisted by Germany, which has been adamant that eurozone creditor nations must hold the line on Greek debt.

When asked if there could be further concessions for Greece, Merkel said that Athens had already been spared billions of euros by private creditors. “I don’t see a further debt haircut,” she said.

Her comments echoed those made by the German Finance Minister, Wolfgang Schauble, who told the German daily Die Welt: “If I were a responsible Greek politician, I wouldn’t lead any debates over a debt haircut.”

However, Merkel stressed that Berlin still wanted Greece to remain in the eurozone. She told the Berliner Morgenpost newspaper that Europe would continue to show solidarity with Greece and other struggling nations “if these countries undertake their own reform and saving efforts”.

Germany was clearly worried that if concessions were granted to Greece, other struggling EU member states would make similar demands. On Saturday, tens of thousands of people marched through Madrid’s streets in a show of strength by Spain’s fledgling radical leftist party Podemos, which hoped to emulate the success of the Syriza party in elections later this year.

The new Greek Finance Minister, Yanis Varoufakis appeared to rule out the prospect of ceding to the wishes of eurozone creditors. “We are not prepared to carry on pretending and extending, trying to enforce an unenforceable programme, which for five years now, has steadfastly refused to produce any tangible benefits,” he told the BBC.

“The disease that we’re facing in Greece at the moment is that a problem of insolvency, for five years, has been dealt with as a problem of liquidity,” he said. IANS