(Reuters) – Angela Merkel reassured Greek Prime Minister Antonis Samaras on Friday that she wanted his country to stay in the euro zone, but gave no sign of ceding to his pleas for more time to meet the tough terms of Athens’ international bailout.
Samaras, who made clear he was asking Berlin and Paris for more “air” to implement the reforms rather than going cap in hand for more cash, promised to get results and to narrow Greece’s “fiscal deficit and the deficit in confidence”.
“We’re not asking for more money. We’re asking for breaths of air in this dive we are taking,” Samaras told a joint news conference with Merkel.
But the most he got from the German chancellor was a promise “that we will not make premature judgments but will await reliable evidence”, by which she meant the “troika” report by Greece’s international creditors due this autumn.
Samaras is likely to get much the same response from French President Francois Hollande in Paris on Saturday. Hollande and Merkel coordinated their stance on Greece over dinner in Berlin on Thursday evening.
Trying to emulate the “Merkozy” partnership under Hollande’s predecessor Nicolas Sarkozy, the conservative Merkel and the Socialist French president showed a united front, insisting Greece must meet its targets before any new discussion of terms.
Merkel stuck doggedly on Friday to her policy of deferring to the troika report from the European Commission, European Central Bank and International Monetary Fund, though she did say that she and Hollande were in no doubt they wanted Greece to stay in the single currency.
“Greece is part of the euro zone and I want Greece to remain part of the euro zone,” Merkel said.
European shares and the euro weakened on Merkel’s cautious response to Samaras and fading hopes of ECB action to prop up the bonds of struggling euro zone countries.
NO RENEGOTIATION OF TERMS
In a chilly welcome for Samaras in Berlin, Merkel’s parliamentary leader Volker Kauder said “neither the time nor the content can be renegotiated” and added for good measure that a Greek exit “would be no problem for the euro”.
One German paper said the finance ministry was studying the impact of a Greek exit while the populist daily Bild wanted the Greek leader to make a personal promise not to short change German taxpayers.
“Sign here, Herr Samaras!” said the paper, which like much of the German media has been taking a tough line on Greece.
The Greek prime minister complained about such media coverage, telling the news conference that this “cacophony” about his country leaving the euro made it impossible to launch the privatizations needed to restore fiscal balance in Greece.
“Would any business invest in euros in something if he thinks he will get back drachmas? Of course not,” said Samaras.
Merkel said she reads the Greek press every day to see how the austerity measures she champions are received, but added that she could not do anything about German media coverage.
Their meeting follows a brief period of market optimism that Europe – and particularly the ECB – will finally come up with decisive action in a busy month of euro diplomacy in September to resolve the sovereign debt crisis.
With sources now saying Spain may be on the brink of a sovereign bailout as well, after a 100 billion-euro deal to help its banking sector, Europe and the IMF are keen to stress the importance of strict conditions for aid.
Some of Merkel’s conservatives have signaled this week that they might envisage alleviating the interest rates or maturities on Greece’s emergency loans if the “troika” mission finds that Athens is respecting the main lines of the deal.
But German Finance Minister Wolfgang Schaeuble has taken a tough line on Greece this week and his spokesman pointedly said a small clause in the Greek bailout deal apparently allowing more time for reform targets in the case of a worse-than-expected recession was “not legally binding”.
(Additional reporting by Alexandra Hudson and Athens bureau; Writing by Stephen Brown; Editing by Gareth Jones and Giles Elgood)
