Differences remain as Merkel and Tsipras try to mend fences

The visiting Greek Prime Minister and his German host seemed to try and calm the friction created between the two countries when they met ion Berlin on Monday and appealed to both sides to work for a better European future.

Despite warm words on Alexis Tsipras’ first official visit to Berlin, it was unclear if he and Chancellor Angela Merkel had narrowed their differences on economic reforms that Athens must implement to earn the urgently needed fresh cash from its creditors. Tsipras insisted he was not in Germany to solve Greece’s pressing liquidity problems, but to find common ground to move forward in the eurozone.

He condemned as an “unjust provocation” a German magazine cover depicting Merkel amid Nazi officers by the Acropolis in Athens. And in a rebuke to his own Justice Minister, he said no one in Greece was considering seizing or auctioning off German property for war reparations.

“Please, let’s leave these shadows of the past behind us,” Tsipras said, stressing that the European Union was a force for stability in a troubled region.

Merkel said Germany considered the issue of reparations for the Nazi occupation in World War Two politically and legally resolved, but she was aware of how Greeks had suffered. She hinted that Berlin may increase a fund created last year for youth exchanges, for which parliament has granted EUR 1 mln a year for three years.

She also said Germany considered all European states as equals and wanted good relations with all, including Greece.

The Chancellor made clear there could be no breakthrough to provide fresh funds for Greece from their talks, since that was up to the 19-nation Eurogroup of eurozone finance ministers.

Berlin wanted Greece to restore growth and overcome high unemployment, Merkel said, adding: “For that, you need structural reforms, a solid budget and a functioning administration.”

Tsipras promised eurozone leaders last week he would present a comprehensive list of reform proposals soon to unlock aid, without which EU officials say Greece may run out of money by late April.

Greece can choose its own reforms to unblock the flow of loans from international creditors and stave off bankruptcy, but it will have a hard time avoiding privatisations and a pension reform because of their budget impact, European officials said.

Tsipras agreed last week that Athens would present within days a list of its own reforms that must achieve similar fiscal results to the measures agreed by the previous conservativeled cabinet.

Which reforms to choose

is

politically sensitive,because Tsipras’ Syriza party won a general election in January on a platform of ending the policies of its predecessors, including budget austerity and measures it regards as recessionary.

If the creditors agree that the substitute plans will achieve an impact equivalent to the previously agreed measures, Greece would get more loans from the eurozone and the IMF, averting bankruptcy and a possible euro exit.

The starting point for talks with the IMF, the European Central Bank and the European Commission — “the institutions” — is a long list agreed to by Tsipras’ predecessors. Greece will present its proposed package of reforms to its euro zone partners by next Monday in hopes they will release much needed cash, its government spokesman said on Tuesday.

“It will be done at the latest by Monday,” a government spokesman told Mega TV.

Privatisation is likely to be one of the major hurdles, officials said, because it was due to contribute EUR 4 bln to the budget this year alone. The Tsipras government does not want to sell state assets, although it has agreed in principle not to stop sales that had been initiated already.

A reform of the pension system is another sticking point, where the EU is concerned about early retirement privileges and the need to link benefits to the size of contributions.

Under the agreement with the previous government, Greece was due to pass a law merging supplementary pension funds. However, the new government is strongly resisting that because it would entail a further cut in pensions for many Greeks.

The creditors also want changes in the VAT system to eliminate a reduced rate charged on Greek islands. They also want to double the VAT for hotels to 13%. Athens says that would hit tourism, its main revenue stream.