A visiting German Chancellor Angela Merkel told Greek Prime Minister Antonis Samaras in Athens she first wants to see proof there will be a primary surplus before any talks of debt relief.
Samaras has said there will be a primary surplus – not including interest on debt, the cost of running cities and towns and state enterprises, social security and some military expenditures – of up to 2.5 billion euros, 70 percent of which he pledged to return to victims of austerity measures the government imposed on orders of international lenders.
Germany is the biggest contributor to two bailouts of 240 billion euros ($330.7 billion) from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) but Merkel has insisted on big pay cuts, tax hikes, slashed pensions and worker firings in return.
Despite the surplus and successful sale of a five-year 3 billion euro bond, ($4.16 billion) sovereign bond, the first since bailouts began in 2010, Greece still wants the Troika to provide debt relief, either in the form of restructuring or a so-called “haircut” in which some of the loans, or much of them, won’t be repaid.
She also added that it is important to wait for the confirmation of the primary surplus in the coming months and “to enter talks on how to help Greece,” without specifying what she meant.
She has several times previously ruled out a haircut as that would force the taxpayers in the other 17 Eurozone countries to pay for generations of wild overspending by alternating Greek governments of Samaras’ New Democracy Conservatives and his coalition partner the PASOK Socialists.
Merkel nodded to the sacrifices Greeks have suffered. “The unemployed have had a hard time and will continue having a difficult time, the process has not yet been completed, but a lot has been done,” she said after meeting Samaras at Maximou Mansion
“In the last one and a half years, a lot has taken place in Greece. The huge efforts have paid off,” she said, in terms of the economy beginning to show some improvement although the debt remains a staggering 309.4 billion euros, some $430 billion.
The austerity measures have created record unemployment and deep poverty, with more than 60 percent of Greeks under 25 still out of work and many analysts saying despite the recent developments that the country’s debt remains unsustainable.
Samaras thanked Merkel for her visit and for backing him over the reforms he implemented in the face of searing public opposition that has driven down support for his party and evaporated PASOK. He cited the “Solidarity shown by the german people towards their Greek counterparts” although many Germans didn’t want to provide loans to Greece.
Samaras said the economy is recovering. “It is all due to the enormous sacrifices and the patience of the Greek people. Greece has left behind it a shaky period, during which the country’s part in the Eurozone was being questioned,” he said.
Merkel pressed him not to let up and to find a way to create growth instead of relying on loans. “The process has not been completed,” she said. “The government’s policies was a hard road. Greece can now say that, ‘Whatever I had promised to do, I did it,'” although the Troika has questioned that and 20 percent of identified reforms remain uncompleted.
Merkel acknowledged the difficulties Greeks have faced. “I want to tell the Greek people, especially the young unemployed, that it was a road full of sacrifices, which you have gone through. You will have better opportunities in the future. The primary surplus means nothing for the unemployed.”
Samaras last year promised to unveil a program this January to put 75,000 young to work but never did.
Noting the bond sale the day before she arrived, Merkel said, “Yesterday was crucial. Greece has returned, it gave everyone a sign”.
Sources said that during a meeting between the two leaders and Deputy Prime Minister Evangelos Venizelos the issue of the loan the Bank of Greece was forced to provide the Nazi regime with during the Second World War was discussed. It is the first time that this issue has been raised at such a high level. It was decided that Venizelos, who is also foreign minister, should take the matter up with his German counterpart Frank-Walter Steinmeier.
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