GERMAN CHANCELLOR Angela Merkel has insisted she will not be rushed into any move to boost the Greek bailout plan, playing for time as protesters clashed with police on the streets of Athens.
As Greek workers staged a 24-hour strike to express their anger at the austerity policies pursued by the country’s Socialist government, police fired tear-gas at protesters.
The exchanges, an echo of scenes seen last year as Europe’s first bailout was set in course, come in advance of a meeting next Monday at which euro zone finance ministers will take stock of the country’s precarious situation.
However, Dr Merkel told reporters in Berlin that she is awaiting the outcome of an EU-IMF mission to Greece before moving forward.
As uncertainty about Greek prospects of avoiding a debt default helped drive the euro to a three-week low against the US dollar, the chancellor acknowledged that the focus was on the country. “We are discussing matters with them. Any kind of statement as to what the situation is and what we are going to do as a result is something that I can only do when we have the results of this mission on the table,” she said.
“I think it’s most important to actually go about this on a step-by-step basis.
“I think it would be wrong drawing conclusions without drawing the true facts of the matter. This is why we are waiting for the results from the evaluation of this mission to Greece.”
The review by the bailout troika – which embraces the European Commission, the European Central Bank (ECB) and the IMF – will not be completed before ministers gather next week in Brussels.
However, officials familiar with the mission’s progress are increasingly gloomy about Greece’s ailing position.
While a new bailout appears likely, the chancellor is under pressure from a sceptical electorate about the merits of a rescue plan which has failed to restore market confidence in Greece.
Her call for calm scrutiny of the country’s situation follows public recognition by Eurogroup chief Jean-Claude Juncker that Greece needs an additional aid programme.
While an intensive debate is under way about the merits of a debt default, senior European figures fear such a move would spark a new wave of contagion in the euro zone. This reflects anxiety about the high exposure of European banks to Greek debt and concern that any restructuring would lead to consequent pressure on bailout recipients Ireland and Portugal and vulnerable countries such as Spain.
In line with other public declarations in recent days by the European authorities, French economics minister Christine Lagarde said yesterday that debt restructuring is not on the cards.
"Nobody wants to keep funding countries in difficulty like this. But we absolutely must do it because a sovereign debt restructuring would send such a negative message to investors that the whole zone would suffer, the cost of refinancing for all its members would soar," she told Le Figaro.
