GREECE is under extreme pressure to settle its political turmoil as markets reacted badly to increasing claims that the country might be forced to leave the euro if it fails to implement its EU-IMF rescue plan.
Ahead of maiden talks tonight in Berlin between incoming French president François Hollande and German chancellor Angela Merkel, euro zone finance ministers told Greek leaders that they expect them to meet the country’s bailout commitments. As the Greek political crisis worsens, Germany and senior European Bank figures have issued dire warnings that the euro can survive without the country.
After eight days of fruitless political talks, Greek president Karolos Papoulias will ask party leader this morning to form a new technocratic government.
Greek leftists immediately rejected the suggestion. Mr Papoulias must call a new election if he cannot broker a deal today.
In Brussels late last night, Luxembourg’s premier Jean-Claude Juncker issued a withering attack on those who are questioning Greece’s place in the euro and said no minister spoke about a Greek exit.
“This is nonsense, this is propaganda and we have to respect the Greek democracy,” said Mr Juncker, who is chief of the euro group ministers.
“I’m against this way of dealing with Greece, consistently provoking the Greek public opinion and giving advice and indications to the Greek sovereign. We don’t have to lecture Greece, the Greek public. The Greek citizens, I’m respecting them, have to know that we agreed on the programme and that this programme has to be implemented. But I don’t like the way of dealing with Greece of those who are threatening Greece day after day. That is not the way of dealing with partners, colleagues and friends and citizens in the EU.”
Mr Juncker said the ministers did not preclude debate over the extension of Greece’s fiscal targets “if there were to be dramatic changes in the circumstances” but said there would be no substantive revisions.
His remarks came at the end of a day in which the Austrian minister Maria Fekter said Greece might have to leave the EU in order to exit the euro and then seek to rejoin the EU.
“Greece would have to reapply and then we would have membership negotiations and look very closely whether Greece would be able to become a member at all,” Ms Fekter said.
Uncertainty over Greece drove European stock markets their lowest level for more than four months and the euro also fell sharply against the US dollar. While the ministers called on Spain to speed up its new bank rescue plan, it was Greece that dominated.
“I would like Greece to stay in the euro. I think it’s very important that the euro zone stays intact,” said Minister for Finance Michael Noonan.
Mr Juncker praised the Government’s execution of the bailout and said the ministers will discuss Ireland at their meeting next month.
“We welcomed the continued steadfast implementation of the programme by the Irish authorities and agreed to discuss this in more depth at our next meeting on the basis of a detailed troika assessment.”
Mr Hollande meets Dr Merkel in Berlin after he is sworn in today in Paris. The two leaders have never met.
The Government will be closely observing their talks given Mr Hollande’s pledge to insert new provisions into the treaty to promote economic growth, something the chancellor rejects.
In spite of the increasing clamour for new policies to stimulate growth, Mr Juncker said the ministers confirmed that their fiscal consolidation strategy “remains appropriate”.
“We insisted that there was no contradiction between fiscal consolidation and growth–oriented policies,” Mr Juncker said.
