In World Economy News 06/04/2015
Germany’s top envoy for Europe urged Greece to end its spat with the European Central Bank, saying ECB President Mario Draghi is an ally in the country’s struggle for funding.
Deputy Foreign Minister Michael Roth said he made the point in talks with Greek government officials in Athens this week. Confrontation with the ECB won’t help Greece and it would be “disastrous” if Europe failed to put the country on the path to prosperity, he said in an interview in Berlin.
As Greece and its European creditors seek a financing deal, Roth’s trip reflects a German effort to smooth relations and keep Greece in the euro area. A week after Chancellor Angela Merkel hosted Prime Minister Alexis Tsipras for talks and dinner, Roth met Nikos Pappas, Tsipras’s chief of staff, and Economy Minister Giorgos Stathakis.
“I tried to make clear during my trip to Greece that the ECB is a partner, not an adversary,” Roth said Tuesday, a day after his return.
Greece’s agreements with its European partners allow leeway in the measures Tsipras takes to meet economic reform requirements, Roth said.
“We’ve conceded on flexibility and appreciate that the new government wants to take a new course and establish different priorities,” he said. “Assuming that Greece wants to make use of that flexibility, it has to engage with the institutions” in Europe, he said.
ECB loans are buoying Greece as it struggles to win more cash from creditors who have accused Tsipras’s government of failing to meet conditions required for the additional funds. The ECB on Wednesday approved a 700 million-euro ($758,000) increase in emergency funds for Greek banks after deposits declined for a sixth month.
ECB ‘Noose’
Tsipras said last month that the ECB had a “noose around our necks” and has accused the monetary authorities in Frankfurt of treating his government unfairly. He has asked the ECB’s regulatory arm for permission to sell more short-term debt, so far unsuccessfully.
While Greeks complain about the ECB’s limitations, people in Germany blame it for depressing returns on savings with measures to flood markets with liquidity, Roth said.
“In Germany we’re having a very different debate about low-interest policy,” Roth said.
While Tsipras and Merkel both say they want Greece to stay in the euro, Roth said Europe and the Greek government need to avoid letting the standoff drift to a point of a Greek exit by accident.
“Nobody has the slightest interest in a ‘Graccident,’ least of all the Greek government,” Roth said. “Time is very much running out and that’s clear to everybody. Every day, every hour counts.”
