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Old August 23rd, 2012 #699
Alex Linder
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Greece, Germany at Odds Ahead of Talks

By WILLIAM BOSTON

Germany and Greece on Thursday continued their verbal sparring ahead of a fateful meeting between their leaders on Friday that could decide whether Athens is granted a reprieve in its efforts to implement painful economic reforms.

Greek Prime Minister Antonis Samaras, speaking to German newspapers ahead of his meeting with German Chancellor Angela Merkel on Friday and French President Francois Hollande on Saturday, appealed for more time to implement budget cuts and economic reforms. He pledged to step up privatization of state-owned industries good - the right thing to do and to repay all money that Greece has borrowed from international lenders. He also vowed to fulfill all obligations agreed with the troika of the European Commission, the European Central Bank, and the International Monetary Fund in exchange for a 173 billion euro ($271.1 billion) bailout, dismissing allegations in Germany that Greece will never pay back its loans.

"The Germans will get their money back," Mr. Samaras told the daily Sueddeutsche Zeitung in an interview published Thursday. "I guarantee that personally."

The impending decision over the Greek bailout--whether the next installment of aid will be given in the coming weeks--is widely seen as a turning point in efforts to stem the euro-zone debt crisis. Without further aid, it is almost certain that Greece will become insolvent and possible forced to leave the euro, economists say. But in Germany, the paymaster for any euro-zone bailout, there is growing support for allowing Greece to default and leave the euro rather than continue to throw good money after bad.

Mr. Samaras, noting that the Greek economy is in a tailspin, is appealing for more time to implement reforms, which in the end means that Europe will have to give more money to Athens. He is asking for a two-year extension to 2016 to meet the deficit target set by the troika commission. Mr. Samaras is expected to raise the issue with Ms. Merkel on Friday, but he has also made clear that Greece is determined to fulfill its obligations.

"First we need to show everyone that we are delivering," he told the Sueddeutsche Zeitung, but added: "Our economy shrank 27%. Greece is bleeding. It is really bleeding."

The latest bailout for Greece was approved by European leaders just six months ago. That is too soon for Athens to come and say that the agreed aid isn't sufficient, German Finance Minister Wolfgang Schaeuble said Thursday in an interview with Germany's SWR2 radio.

"That way you'll never gain the trust of the financial markets," Mr. Schaeuble said. "And so more time is no solution to the problems. The question is how we win back confidence. But for that we need to wait for the report of the troika that's due in September."

Ms. Merkel has all but rejected Greece's demands for more time, saying Wednesday that no one should expect any concrete decisions to come out of her meeting with Mr. Samaras.

The question of whether to grant Athens more time is likely to play a significant role in talks between Ms. Merkel and Mr. Hollande at a working dinner in the Berlin chancellery on Thursday evening. The German and French leaders will make a brief statement to the press at about 1700 GMT Thursday and then withdraw for dinner and try to resolve their differences over dealing with Greece. It is believed that Mr. Hollande favors granting Greece more time. Ms. Merkel has not showed her hand yet, but her coalition government is deeply divided over the issue and she risks splitting the government if she agrees to give Greece more money, say analysts.

The pro-business Free Democrats, junior partner in Ms. Merkel's ruling center-right coalition, have insisted that Greece should be given no more aid and suggested it would be better for Athens to leave the euro.

"We want to help, but there won't be any substantial changes to the agreed reforms," Foreign Minister Guido Westerwelle, a senior FDP FDP -0.37% official, told the daily
Maerkische Allgemeine newspaper in an interview published Thursday.

German opposition parties oppose the government's apparent hard line on Greece.

"It's not very smart to abandon all conditions (for aid) over an extension of 12 months," said Frank-Walter Steinmeier in an interview with the left-leaning Frankfurter Rundschau newspaper.

http://online.wsj.com/article/SB1000...537698734.html