Mon, June 18, 2012
Euro zone paymaster Germany, relieved at a narrow election victory for Greece's pro-bailout parties, signalled on Monday it may be willing to grant Athens more time to meet its fiscal targets to avert a catastrophic euro exit.
But financial markets' relief that the 17-nation European currency area had avoided plunging deeper into crisis was mitigated by concern about unresolved problems in Greece, the lack of a comprehensive plan for the euro zone as a whole and weakness in the world economy.
German Foreign Minister Guido Westerwelle said the substance of Greece's austerity and economic reform programme, agreed in exchange for a second EU/IMF rescue, was non-negotiable, but the timing could be adjusted.
"We're ready to talk about the timeframe as we can't ignore the lost weeks and we don't want people to suffer because of that," Westerwelle said in a radio interview.
Government officials said his comments did not reflect Berlin's official position, and a government spokesman said now was not the time to give Greece "a discount".
However, Deputy Finance Minister Steffen Kampeter, who is closer to Chancellor Angela Merkel and normally a stickler for strict adherence to fiscal orthodoxy, told ARD television: "It is clear to us that Greece should not be over-strained."
Austrian Chancellor Werner Faymann said Greece needed both a sustainable course of fiscal consolidation and a return to economic growth after four years of crippling recession.
"The conditions that were negotiated have to be observed but we also need to give the Greeks room to breathe," Faymann said in a statement. "For example it must be assured that people have sufficient access to medicine. Consolidation cannot be carried out solely on the backs of the people."
The hints at leniency should help Greek conservative leader Antonis Samaras, whose New Democracy party narrowly outpolled the radical leftist anti-austerity SYRIZA movement in Sunday's election, to form a mainstream coalition with the centre-left Pasok Socialists.
He will face fierce pressure from European and International Monetary Fund lenders to start implementing seriously an economic reform programme agreed earlier this year, which has largely remained a dead letter so far.
(Agencies)
