EU enters crucial stretch

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EU enters crucial stretch

Europe’s leaders are gearing up for a high-stakes week of financial diplomacy that could determine Greece’s future — and the stability of the 17 countries that use the euro.

By Geir Moulson (AP)

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Published: Tue 21 Aug 2012, 10:43 PM

Last updated: Tue 7 Apr 2015, 12:16 PM

The first round of the talks began on Monday when Germany’s foreign minister, Guido Westerwelle, hosted his Greek counterpart, Dimitris Avramopoulos, ahead of a meeting in Berlin on Friday between their countries’ leaders, Chancellor Angela Merkel and new Prime Minister Antonis Samaras.

French President Francois Hollande visits Berlin tomorrow for discussions with Merkel and then will meet Samaras in Paris on Saturday. Jean-Claude Juncker, the Luxembourg prime minister who chairs the eurozone finance ministers’ meetings, is due in Athens today.

Meanwhile, Greece’s finance officials were working to hammer out €11.5 billion ($14.19 billion) in spending cuts necessary for it to continue receiving the international funding that is protecting it from bankruptcy.

The eurozone is awaiting a report, expected next month, on Greece’s progress in implementing reforms and austerity measures demanded in exchange for two massive bailout packages. The report is being compiled by the so-called “troika” — representatives of the European Union, European Central Bank and International Monetary Fund.

Greece has been dependent on two multi-billion international bailouts from other eurozone countries and the IMF since its debt crisis broke in 2010. But despite taking a series of harsh austerity measures that saw salaries and pensions slashed and repeated rounds of tax hikes, the results have not been what European and Greek officials hoped for.

The country has fallen behind on implementing the reforms and austerity measures, fueling impatience in Germany and other eurozone countries. Should the troika’s report find that Greece has not been meeting its bailout commitments, the country could face the prospect of having its funding cut off. This would force the country into a chaotic default on its debts and eventually out of the eurozone — a move that would further destabilise the currency bloc and threaten the economies of countries such as the US and China. Samaras’ fragile three-party coalition government, formed after two elections in May and June, has said it hopes to renegotiate parts of the unpopular bailout conditions, mainly seeking an extension in the two-year austerity deadline. But German officials and lawmakers have made it clear they have no appetite for granting Greece more time to comply with the terms of its rescue packages or other concessions.

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