Brussels willing to soften austerity measures for the Greek pro-bail out government
European governments signaled a willingness to relent on Greece’s austerity measures as leaders turn from an election victory by Greek bailout proponents to focus on safeguarding the other 98% of the Euro economy
Greece’s new government must emerge “swiftly” from Sunday’s contest, which showed pro-bailout New Democracy in a position to form a coalition, Euro finance chiefs said in a statement. German Foreign Minister Guido Westerwelle said negotiators could consider giving Greece more time to fix its finances, telling ZDF television that the political gridlock over the past six weeks “has done damage.”
Greece’s international monitors will “return to Athens as soon as a new government is in place to exchange views with the new government on the way forward,” the finance ministers’ statement said. They want “the swift formation of a new Greek government that will take ownership of the adjustment program.”
The election result in the country where the debt crisis began in 2009, paves the way for Euro leaders’ fourth make-or- break summit in a year. While Chancellor Angela Merkel warned global leaders last week that Germany rejected what she called quick-fix management of the crisis, a softening of the terms of Greece’s bailout may provide a template for how euro leaders overcome policy differences.
The IMF, which contributed to Greece’s two rescue packages, said that it is “ready to engage with the new government” to help the country reach its goals “of restoring financial stability, economic growth and jobs,” according to an e-mailed statement.
The Group of Seven nations said in a statement that it was looking forward to working with the next Greek government, “and believe that it is in all our interests for Greece to remain in the euro area while respecting its commitments.”
“It will be tough for the Greek people,” Japanese Finance Minister Jun Azumi told reporters in Los Cabos, Mexico, before a Group of 20 summit. “But by keeping to the plan that they have been building on, I hope they make progress on mending their finances -- by implementing the agreed-upon reforms and receiving outside aid while staying within the euro framework.”
European and world leaders will have a chance to design an improved plan to overcome the two-year-old crisis as leaders including Merkel and French President Francois Hollande convene Monday at the G-20 summit in Mexico, as well as next week in Rome, before descending on Brussels on June 28.
Amid what Bank of England Governor Mervyn King called a “black cloud” over the world economy, Euro chiefs will use the last two weeks of the month to hammer out a plan. Global leaders will probably press Merkel to give ground on her austerity-first policy, as they did at the G-8 summit last month.
After the G-20 gathering, Italian Prime Minister Mario Monti will host a meeting in the Italian capital on June 22 with Merkel, Hollande and Spanish Premier Mariano Rajoy to seek common ground. The three will gauge Germany’s position after Merkel last week said her country’s resources weren’t “infinite” in the “Herculean task” of mastering the debt crisis -- and that jointly issued euro bonds and a euro-wide deposit insurance were a non-starter.
Merkel’s role as leader of Europe’s biggest economy gives her an effective veto on crisis-fighting policy.