Greek crisis is 'like the Weimar Republic’

 

By Louise Armitstead 9:45PM BST 05 Oct 2012

Greece is plunging into an economic and social crisis as desperate as Germany under the Weimar Republic, the Greek prime minister, Antonis Samaras, has warned in an emotional appeal for leniency.

Greece is plunging into an economic crisis as desperate as Germany under the Weimar Republic, the Greek PM Antonis Samaras has warned Photo: Reuters

Mr Samaras told Germany’s Handelsblatt newspaper that the Greek government was “at the limits of what we can ask of our people”. He added: “The cuts we have already made have cut to the bone.”

Athens desperately needs the next €31.5bn (£25.4bn) tranche of its bail-out agreement which has been delayed for months while the government pushes through more austerity measures demanded by the terms of the bail-out. Mr Samaras said Greece had just enough money to last until “the end of November. Then the coffers are empty”.

“I cannot and I will not deny it: Greek democracy is facing perhaps its biggest ever challenge,” said Mr Samaras. “People are at the point where they are saying 'we are prepared to make sacrifices but we want to see light at the end of the tunnel’. Otherwise everything is in vain.”

Referring to the harsh reparations and rampant inflation that brought Adolf Hitler to power – and which form the root of Germany’s instinctive opposition to debt pooling in the eurozone – Mr Samaras said: “It’s about the cohesion of our society, which is being threatened by rising unemployment, like at the end of the Weimar Republic in Germany.”

He repeated that Greece wanted more time, not more money. “What we need is more time for budgetary consolidation, but not necessarily more aid,” he said.

Berlin announced that Chancellor Angela Merkel would travel to Athens on Tuesday, in her first trip since the crisis started. It is a sore point in Greece that so few European leaders have been to Athens to see the turmoil for themselves. Athens welcomed the visit as “very positive” for bilateral ties.

Nevertheless, the chancellor’s spokesman, Steffen Seibert, insisted that Greece had to stick to the bail-out agreements. But he said: “The message that Germany can take to Greece . . . is that we want to help Greece stabilise itself within the eurozone. We are doing that by massively contributing to the two aid packages that are supposed to help Greece come out of the crisis.”

Meanwhile, there was uncertainty as Spain continued to resist pressure from European leaders to seek financial help from Brussels. Mario Draghi, president of the European Central Bank, said on Thursday he was ready to unleash his bond-buying programme to help Spain, but Madrid made it clear it was not.

“The mechanisms for taking decisions in Europe are complex,” said Spain’s deputy finance minister, Fernando Jiménez Latorre. “What we are doing is talking to the European institutions and we are analysing the options.”

The economic pressure is growing on Madrid. Figures from Spain’s National Statistics Institute show that the country’s industrial output slipped 3.2pc in August, marking 12 consecutive months of decline. In Portugal, ratings agencies warned the country may need to extend its bail-out programme beyond the scheduled three years in the face of weaker growth and a public backlash against austerity.

Separately, sources said six European states had sent letters to the European Commission backing calls for a financial transactions tax. Alongside Germany and France, Austria, Belgium, Portugal and Slovenia are thought to be supportive. The policy, strongly opposed by Britain, needs nine signatories to proceed.

Greek crisis is 'like the Weimar Republic’ - Telegraph