With Money Running Out-Merkel to Visit Greece

German Chancellor Angela Merkel will make her first visit to Greece next week since the euro zone debt crisis erupted, in a show of support for Athens after it said it will run out of money at the end of November without fresh international aid.

Greek Prime Minister Antonis Samaras hailed the trip as a very positive development at a time when his country is locked in negotiations with euro zone and IMF creditors who are holding back some 31.5 billion euros ($41 billion) in urgently needed loans.

“The key is liquidity. That is why the next credit tranche is so important for us,” Samaras told the German business daily Handelsblatt. Asked how long Greece could manage without it, he said: “Until the end of November. Then the coffers are empty.”

A German government spokesman said Merkel would travel to Athens on Tuesday for her first visit since the crisis began in late 2009, when a previous government revealed that Greece had hugely understated its public deficit.

“It is a trip that of course happens to the backdrop of this very difficult situation that Greece is going through right now, the massive adjustment and reform measures that have shaped Greece for the past two years,” Merkel’s spokesman Steffen Seibert told a news conference.

“We see that the reform efforts have increased under the Samaras government and we want to support that.”

The visit appears to signal that Europe’s most powerful leader has decided it is essential to keep Greece in the single currency area despite is repeated failure to meet fiscal targets and economic reform commitments under two bailout programs.

“This is symbolically very important. It points clearly to the fact that Merkel is not going to drop Greece, even though things are not going well there,” said Carsten Brzeski, senior European economist at ING bank.

Merkel has been vilified in some Greek media as dictating devastating austerity to Greece. One newspaper dressed her in a Nazi uniform on its cover. Germany’s popular press meanwhile has systematically depicted the Greeks as work-shy tax cheats.

Greek government spokesman Simos Kedikoglou said in a statement: “It’s the first time in five years that the German Chancellor visits Greece. This visit … will certainly be a further, important step towards future European decisions.”

But Greek labor unions called a work stoppage and a protest rally outside parliament during her visit, and a far-right anti-bailout party, the Independent Greeks, will demonstrate at the German embassy “to express in front of Chancellor Angela Merkel our opposition to Greece becoming a German protectorate”.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell