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Europe

'Light at the end of the tunnel' for Greece?

Greece is on the right track, said Chancellor Merkel after meeting with Greek Prime Minister Samaras in Berlin. Samaras used the occasion to hold the EU, ECB and IMF Troika to past promises of relief.

Things are going forward in highly indebted Greece, at least that's the way Germany's chancellor saw it. "The prime minister was able to present a series of impressive facts to me, and Greece has made significant progress," German Chancellor Angela Merkel said after a meeting with Greek Prime Minister Antonis Samaras at the Chancellery in Berlin. "A lot has been accomplished there in the last few years."

The extent of the praise is surprising given Germany's recent disagreement with European partners regarding Greece's next tranche from its second aid package. The Troika, comprised of the EU, ECB and IMF, has been seeking Greek clarification of a 1.5 billion euro ($2 billion) gap in the country's 2014 budget plans. EU countries had also criticized Greece for its lack of progress with regard to reforms.

Back in the black

In light of Greece's disagreements with the Troika, many Greeks fear additional austerity measures might be on the way - and that after tens of thousands of public jobs and numerous social programs have already been eliminated. Samaras, however, categorically rejected that notion after his meeting with Merkel.

A woman holds a Greek and a black flag as she stands in front of parliament Photo: Yannis Behrakis

In July, Greece's parliament passed its first tax cut in four years - while also slashing thousands of public sector jobs

"There are going to be no more measures for pensions or for wage cuts," he said, adding that his country has made considerable progress. "With our budget and structural reforms, we've reached our goal - and have even gone beyond it in some areas."

The prime minister was particularly proud that Greece's government this year will - if interest payments excluded - will take in more money than it pays out. It will, in other words, run a surplus. "I'd like to recall that this surplus wasn't set as a goal for this year, but for 2014," Samaras said.

New loans, therefore, are not necessary. "I believe we are going to soon have a recovery, and that will fully eliminate our budget deficit," he said. At that point Greece can begin repaying interest once more. At the moment, interest payments are on hold.

Relief ahead?

In Berlin, Samaras also reminded others of a promise by the Troika in 2012 that a budget surplus would result in relief regarding debt reduction measures. Easing the strain on Greek citizens is important, Samaras said, adding that Greece would continue implementing structural reforms. "We are keeping our part of the deal, and we believe that everybody should keep doing their part of the deal." The true extent of the country's 2013 budget surplus will only be fully known in April 2014.

Watch video 01:24

Greek Prime Minister in Berlin for talks

It's for that reason that the German chancellor did not want to evaluate ongoing discussions with the Troika. Some questions have yet to be clarified, she said - a statement which includes, of course, Greece's 2014 budget.

"But now we're talking about a half a billion, a billion, maybe 1.5 billion euros and not about and endless holes, and I think that represents incredible progress compared to the discussions we had had in the past," the German leader said.

Positive motivation

"There's a light at the end of the tunnel," Merkel also said. One has to also have "just a bit of trust" and not always assume the worst. Germany intends to help bilaterally, whether through administrative changes, reforms to the health care system or even through the development of a development bank via funds from Germany's government-owned KfW Bank. Merkel also pledged to support Greece's six-month EU presidency beginning January 1, 2014.

Many Greeks will be happy to hear it. In the wake of the financial and debt crisis, relations between Berlin and Athens over the last few years have cooled markedly. Many Greeks see Germany generally - and Merkel specifically - as the driving force behind the harsh austerity measures by international lenders. Words of praise from Merkel's own mouth could carry weight - even if she does remain immovable on other issues.

"This doesn't mean that there'll be relief in obligations," she said.

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