May 20, 2012

A War of Words Over the Euro Crisis

BERLIN — A telephone conversation on Friday between Germany’s chancellor and Greece’s president became the latest flashpoint in the war of words between Berlin and Athens in the unfolding crisis over Greece’s membership in the euro.


All sides agree that Chancellor Angela Merkel spoke by telephone with President Karolos Papoulias on Friday.

A spokesman for the caretaker government, Dimitris Tsiodras, said Ms. Merkel “conveyed to the president thoughts regarding a referendum that could be conducted in parallel to the elections, asking Greeks whether they want to remain in the euro zone.”

A spokesman for Ms. Merkel’s government swiftly denied she had called for a referendum, but not before Greek politicians blasted the alleged proposal.

The leftist leader Alexis Tsipras accused her of treating Greece like a “protectorate.” The Socialist Party stated that “referendums fall exclusively within the competencies of the government and the Greek Parliament, not the EU or other member states.”

The Greek conservative leader Antonis Samaras called it “unacceptable” for Germany’s chancellor to issue such a proposal.

The quick condemnation from Greek politicians illustrated unequivocally how raw feelings are in Athens over questions of sovereignty and underscored how the uncertainty over Greece’s future has turned rumors and unconfirmed reports into fuel for even more heated exchanges.

The dispute was only the latest fallout from the instability in Greece, which continued to roil markets across Europe. Top European officials also contradicted each other Friday over planning for the possibility of a Greek exit from the euro.

In the meantime a leading ratings agency downgraded 16 Spanish lenders. With a caretaker government now in place and only four weeks to go until the next round of parliamentary elections in Athens, a broad effort is underway by Germany and its European partners to make it clear to Greek voters exactly what is at stake when they cast ballots on June 17.

Germany finds itself in a delicate position, not wanting to encourage the opposition forces in Athens that failed to form a government after the last election by appearing to interfere in the election, while simultaneously using all possible channels to communicate to Greek voters that their country’s future in the 17-member euro zone depends on electing a government that will uphold its loan agreement with the European Union, European Central Bank and the International Monetary Fund.

Comments by a European Union official, who joined businesses and financial firms in signaling that contingency plans are being drafted to deal with the potential fallout of a Greek exit, pointed to how real the readiness to cut Greece loose may be.

“Today there are, both within the European Central Bank and the European Commission, services that are working on emergency scenarios in case Greece doesn’t make it,” the European trade commissioner, Karel De Gucht, said in an interview published Friday in the Belgian newspaper De Standaard.

Mr. De Gucht’s comments prompted a rare public rebuke from a colleague, illustrating how the raw nerves are not just in Athens over the uncertainty surrounding Greece, which saw its credit rating downgraded further into junk territory by Fitch Ratings late Thursday, on concern over a lack of public and political support for the country’s bailout.

“Karel De Gucht is responsible for trade. I am responsible for financial and economic affairs and relations with the E.C.B.,” the vice president of the European Union Commission, Olli Rehn, said during an event in London. “We are not working on the scenario of a Greek exit. We are working on the basis of a scenario of Greece staying in.”

European Union offices in Brussels were closed Friday and a spokesman for Mr. De Gucht could not be immediately reached for comment.

While continued support for Athens remains the official line, many influential people in Germany would like to see Greece driven from the euro zone, some as an example to other countries and others for what they say is its own good chance to recover.

If Syriza, the party that opposes the terms of Greece’s current bailout plan, were to come out ahead in the next election and overplays its hand, it could find itself with an invitation to leave.

nytimes.com

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