President Barack Obama voiced support for embattled Greek Prime Minister Antonis Samaras and his economic restructuring plans after the two leaders met Thursday.
The Obama administration is hoping Mr. Samaras can hold his government together long enough to undertake economic reforms required as a condition for receiving millions of dollars in aid from the International Monetary Fund and euro-zone countries. A collapse of the Greek government could imperil future installments of the $328 billion in rescue loans and reignite financial turmoil in the euro zone. Woes in Europe, America’s largest trading partner, could hurt the U.S. economic recovery.
“The prime minister has taken some very bold and difficult measures to initiate the structural reforms that will help reduce the debt burden,” Mr. Obama said after the meeting at the White House.
The president said that he is “confident” the Greek prime minister is “committed to taking the tough actions” required under the bailout deal and that the U.S. wants to be supportive of the process. But Mr. Obama also emphasized policies that spur growth over those that focus largely on budget cuts, in contrast to those pushed by Germany, one of Greece’s biggest emergency lenders.
“We cannot simply look to austerity as a strategy. It is important that we have a plan for fiscal consolidation to manage the debt, but it is also important that growth and jobs are a focus,” he said. “Countries that are growing have an easier time reducing their debt burdens.”
Mr. Obama voiced his support as Brazil also weighed in on Greece’s rescue program, calling on the IMF to review its financial aid package for Greece and the broader euro zone and arguing that it doesn’t do enough to spur economic recovery. The statement came as Brazil’s finance minister, Guido Mantega, sought to clarify confusion over the country’s support for the latest €1.7 billion ($2.25 billion) tranche of funding for Greece. After initially abstaining from last week’s vote at the IMF, Brazil then switched to say it supported the loan.
The White House earlier said the meeting was an important opportunity for the U.S. to support Greece as the country undertakes “challenging and painful reforms to make Greece’s economy more competitive and open, while putting its debt on a sustainable path.”
Speaking in the Oval Office, Mr. Samaras said, “we are going to do what is necessary on structural reforms but the focus has to be on growth and jobs, particularly for the youth.” Greek figures released Thursday show unemployment rose to another record in May, to 27.6% from 27% in April and 23.8% a year earlier.
The visit comes at a critical time for Mr. Samaras, Greece and the euro zone.
Mr. Samaras is credited with pushing forward difficult economic policy changes and rebuilding frayed relations between Greece and the rest of the euro zone. But his ruling coalition is hanging onto a razor-thin majority in parliament amid record unemployment and public anger after years of severe budget cuts, economic contraction and major economic policy changes. One of the three parties in the prime minister’s original government left the coalition in June, and the opposition party, which advocates tearing up the bailout deal, threatens to displace the Samaras administration in public opinion polls.
Under terms of the bailout, Athens has to move ahead with highly controversial plans to cut government spending and boost revenues and the country’s economic competitiveness.
Athens also is likely seeking U.S. help in pushing Germany to forgive some of debt held by euro-zone governments. Otherwise, some economists warn that Greek talk about leaving the euro zone is likely to gain momentum.
Greece hopes that after German elections in September, Berlin will allow negotiations on the issue of cutting the value of Greek government debt held by the currency union’s member governments.
European officials—including those in Germany—have promised to help Greece reduce its debt burden, but haven’t agreed to specific terms.
The IMF says that debt relief is vital to putting Greece’s debt on a “sustainable path,” ensuring the country’s economy isn’t overwhelmed by its financial obligations. But opponents are reluctant to take losses on their holdings, believing Athens is responsible for its own problems. A write-down would be particularly unpopular with German voters and would be seen by many as an implicit admission that the German-led austerity approach had failed.
ΠΗΓΗ: Wall Street Journal