Euro crisis opens old wounds for Greece, Germany
Protesters throw petrol bombs at riot police officers during strike on October 18, 2012 in Athens, Greece.
STORY HIGHLIGHTS
- The Greek coalition government is seeking to push through budget cuts of 13.5 billion euros [$17.4 billion]
- Germany has softened its approach to Greek austerity measures, says German member of parliament
- Samaras' government is negotiating with the "Troika" over extending the country's program
Greece -- the birthplace
of democracy -- is now reliant on eurozone bailouts and subject to
political decision-making in Brussels and Berlin.
In October, Athenians
marched in the streets to make it clear German Chancellor Angela Merkel
-- in her first visit to the Greek capital since 2009 --
Merkel met with Greek
Prime Minister Antonis Samaras to assess the country's economic health
as it attempts to drive through more austerity measures to secure
further bailout money.
In her brief visit, she
pledged German support for Greece but made it clear that Greece cannot
-- and therefore will not -- yield on its austerity reforms.
Rooftop snipers and 7,000 Greek police were deployed to keep the protests under control.
Protesters bearing swastika flags were kept away from Syntagma Square,
the focal point for demonstrators during the crisis. It was here,
six-months ago, that a Greek pensioner took his own life outside
parliament citing austerity measures for his desperation.
The talks between Merkel and Samaras were just the latest episode between two countries with a fraught and tumultuous history.
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Some demonstrators
evoked bitter memories of the brutal Nazi occupation of Greece from 1941
to 1944, when thousands of Greeks were killed.
It was only in 1951 that
the European Union began to take shape through the Treaty of Paris and
the European Steel and Coal Community. The treaty signed by six nations
-- Belgium, France, West Germany, Italy, Luxembourg and the Netherlands
-- was intended to create lasting economic and political stability for a
continent ravaged by war.
Three days after Merkel
left Greece, the European Union won the Nobel Peace Prize for restoring
harmony to much of Europe. Despite the award, relations between
countries -- particularly in northern and southern Europe -- have been
tested by the crisis.
Spyros Economides, a
senior lecturer in international relations and European politics at the
London School of Economics, said Greeks are "not very positive at all"
in their views toward Germany.
He told CNN: "Partly
it's a generational thing for those who remember World War II and the
consequences, but it's also younger people who are unemployed and
suffering economic dislocation, which they pin squarely on other
people's shoulders, in this case the Germans."
While the visit from
Merkel -- intended to strengthen eurozone unity -- quashed any immediate
fears of a '"Grexit" from the euro, many in Europe wouldn't be
disappointed to see them go, according to Economides.
"There will be a lot of
people in the European institutions and national capitals around Europe
who will say, if the Greeks decide to leave the eurozone, then so be it.
Good riddance," he said.
To stay, the Greeks are
coming under intense pressure from eurozone peers --- led by Germany --
to implement further austerity measures of 13.5 billion euros [$17.7
billion].
Economides explained
that the projected cuts could break down into 11.5 billion euros worth
of cuts -- from pensions and wages as well as the sale of state property
-- and the remaining 2 billion euros from additional taxes.
The measures will ensure
that international creditors supply the next 31 billion euro [$40.6
billion] tranche of bailout relief. This will allow the cash-strapped
Greek government to meet its debt obligations beyond the end of
November.
But the clash between
the two countries over the terms of Athens' bailout has led to feisty
rhetoric from senior members of both German and Greek political parties.
Frank Schaeffler, a
German member of parliament in the Free Democratic Party, has previously
advocated the sale of uninhabited Greek islands to fund creditor
repayments. He told CNN that "unfortunately" the proper enforcement of a
Greek adjustment program is an "illusion."
Schaeffler said: "I am
afraid Germany has softened its stance on Greece lately ... Samaras
himself has said that Greece is willing to sell off its uninhabited
islands."
Former Greek Foreign
Minister Stavros Dimas called the suggestion "insulting," and said
Germany should pay reparations for the damage and loss of life the
country inflicted on Europe during the Second World War.
He told fellow
parliamentarians that Greece has never waived its right to claim
reparations, including for the loan that Germany forced Greece to pay
for its own occupation.
He added: "No one can erase the tragedies that our country suffered... They are engraved in our collective memory."
European leaders are
meeting in Brussels this week to discuss the region's debt crisis, and
policymakers will consider creating a separate budget for the 17-nation
monetary union.
Joerg Kraemer, chief
economist at Commerzbank -- Germany's second largest bank -- told CNN:
"If Greece does not comply with the reforms and austerity, the troika
(ECB, IMF and European Commission) should not recommend releasing fresh
money, in pure economic terms."
Germany is concerned
that a Greek exit from the eurozone could lead to a domino effect,
whereby a number of indebted nations -- including Ireland, Portugal and
potentially Spain and Italy -- may be forced to withdraw from the common
currency, which could lead to a full break-up of the monetary union.
Samaras' government is
negotiating with the International Monetary Fund and the European Union
over extending the cuts for another two years into 2014 and beyond. If
achieved, Economides says this would represent a political victory for
the coalition government, as it was elected partly on the promise of
extending the timeframe to make the cuts.
Kraemer added: "I don't
think Greece will be part of the eurozone in five or ten years but
currently the politicians in Germany and elsewhere do not want to pull
the plug."
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