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Monday 29 May 2017

Merkel warns Greece to act fast to seal new bailout deal

German Chancellor Angela Merkel waits prior to an interview at a TV studio in Berlin
German Chancellor Angela Merkel waits prior to an interview at a TV studio in Berlin

Costas Pitas Athens

Greece will reopen its banks today for the first time in three weeks, but with restrictions on withdrawals still in place.

But German Chancellor Angela Merkel warned that the Greek government would have to move fast on any new bailout terms. However, she said there could be an easing of Athens' debt burden if a deal is agreed.

The cautious reopening of the banks, and an increase in value added tax on restaurant food and public transport from today are aimed at restoring trust inside and outside Greece after an aid-for-reforms deal last week averted bankruptcy.

Greeks will be able to withdraw €420 a week at once instead of just €60 a day but capital controls will remain.

"That's not a normal life so we have to negotiate quickly," Ms Merkel said in a German TV interview.

Greek Prime Minister Alexis Tsipras is trying to turn a corner after he reluctantly agreed to negotiate a third bailout, allowing the European Central Bank to top up emergency credit lines but prompting a rebellion in his leftist Syriza party.

The head of Greece's banking association, Louka Katseli, urged Greeks to do the opposite of what they have done for months and put cash back in their bank accounts rather than withdraw more. "Tomorrow when the banks reopen and normality is restored, let's all help our economy. If we take our money out of chests and from our homes - where they are not safe in any case - and we deposit them in the banks, we will strengthen the liquidity of the economy," she said.

Ms Merkel said it would be possible to talk about changing the maturities of Greece's debt or reducing the interest Athens has to pay after the first successful review of the new bailout package to be negotiated.

Berlin, the biggest contributor to eurozone bailouts, would do all it could to bring talks to a successful conclusion but would "negotiate hard" to ensure Athens stuck to agreements, she said.

"That certainly won't be easy because there are things that we have discussed with all of the Greek governments since 2010 that have never been done but that have been done in other countries like Portugal and Ireland," she said.

Acceptance of the bailout terms that meant the banks could reopen marked a turnaround for Mr Tsipras after months of talks and a referendum that rejected a less stringent deal from the lenders.

He sacked party rebels in a government reshuffle on Friday and is seeking a swift start to bailout talks with European partners and the IMF before elections which Interior Minister Nikos Voutsis said were likely in September or October.

But while opinion polls suggest the prime minister's popularity remains high, on the streets of Athens some were sceptical that the bank reopening would change much in a recession-hit country with an unemployment rate over 25pc.

Growth

"The banks opening tomorrow won't change anything for me," said 31-year old hotel worker Joanna Arvanitaki. "I never used to withdraw €60 a day - €60 is what I had a week for my expenditure."

German Economy Minister Sigmar Gabriel said this deal could succeed where previous ones failed because the EU now emphasises growth and investment rather than just austerity.

It would depend on reforms being enacted and "convincing the population that this is a path that allows Greece to assert itself rather than becoming a permanent alms-receiver," he said in a TV interview.

Irish Independent

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