Business World

Tuesday 23 January 2018

Greece crisis: Angel Merkel told to give up on struggling country

German Chancellor Angela Merkel
German Chancellor Angela Merkel

Brian Parkin and Rainer Buergin

German Chancellor Angela Merkel is coming under growing pressure from within the ranks of her own party to give up on Greece for the sake of the euro.

Members of Dr Merkel's Christian Democratic bloc are openly challenging her stance of keeping Europe's most-indebted country in the 19-nation currency region. Even some officials in the finance ministry are leaning toward the conclusion that the euro area would be better off without Greece, sources told Bloomberg yesterday.

Finance Minister Michael Noonan is due to travel to Brussels today for talks with European counterparts about what to do with Greece.

Hardening sentiment in Germany risks sending mixed signals to investors as prime minister Alexis Tsipras's government attempts to reach a deal with creditors.

"The euro would be strengthened if Greece left," said Alexander Radwan, a Merkel-affiliated deputy who voted for granting Greece a temporary extension of its bailout in February. "The other countries could then move closer together and apply the rules more strictly."

Dr Merkel has repeatedly voiced public support for keeping the country in the euro, partly for geopolitical reasons. Other officials in her government view Greece as a rule-breaker and a drag on the region's economy, said the sources, who asked not to be named.

Finance minister Wolfgang Schaeuble, a prominent German advocate of European unity for decades, has given plenty of signs of exasperation with Greece since Mr Tsipras and finance minister Yanis Varoufakis took office in January on an anti-austerity platform.

He told an Austrian television interviewer in March that he could envisage a Greek exit from 19-nation currency. On a panel in Berlin the following week, he accused Greek authorities of lying to voters by failing to tell Greeks that they "lived way above their means" for decades.

While that rhetoric resonates with lawmakers in Dr Merkel's party bloc who have to sign off on future Greek aid, Dr Merkel wasn't happy about the outburst, a person familiar with the chancellor's thinking said. She blamed it on Mr Schaeuble's temper and saw no need to disavow or reprimand him, source said. The finance ministry declined to comment on Mr Schaeuble's position on Greece's future in the euro area.

In numbers

0.5pc -  The forecast growth rate for the Greek economy this year

€700m - The amount Greece must repay to the IMF tomorrow

40pc - The discount applied by the ECB to Greek bank collateral

Irish Independent

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