Merkel: hope new Greek govt will keep promises - Businessweek

By GEIR MOULSON

BERLIN

German Chancellor Angela Merkel said Saturday she hopes Greeks will elect a new government that stands by the country's promises to international creditors, insisting that Europeans have to stop making commitments which they then ignore.

Greeks vote Sunday for the second time in six weeks amid fears the country could be forced out of the euro if they reject strict austerity measures and structural reforms demanded in return for rescue loans by other European countries and the International Monetary Fund. Germany, Europe's biggest economy, has been a key advocate of that approach.

Merkel told a regional conference of her conservative party that Europeans have too often failed to live up to their promises in various policy areas. "Promised, broken, nothing happens -- things cannot under any circumstances continue this way in Europe," she said.

"It cannot be the case -- and this is also an issue now in connection with the Greek election -- that what comes out in the end is that those who don't keep to an agreement can, so to speak, lead everyone else through the arena by the nose ring," Merkel said. "That won't work."

"That is why it is so important that, in the Greek election tomorrow ... a result emerges in which those who form a government in future tell us, yes, we want to keep to the agreements," she added. "That is the basis on which Europe can thrive."

Merkel didn't refer to any specific parties or politicians in Greece. But the anti-austerity, radical-left Syriza party has pledged to rip up the international bailout agreement and repeal the strict austerity measures, while still insisting that others in Europe can be persuaded it is in their interests to keep Greece in the euro.

Officials in Germany and elsewhere, though, say that Greece must stick to the accords to stay in the 17-nation currency.

"Any future government will have to continue the agreed austerity and reform course. Without reforms, there can be no further money," Merkel's vice chancellor, Economy Minister Philipp Roesler, was quoted as telling the Bild am Sonntag newspaper. He insisted that "solidarity is not a one-way street."

At the party convention in the western city of Darmstadt, Merkel defended the European budget-discipline pact she has championed and once again rejected mounting pressure for jointly issued government debt, or eurobonds, viewed by advocates as a way of bringing down struggling countries' borrowing costs.

Merkel, however, insists that the way forward is a methodical process of reducing debt, improving competitiveness and deepening European integration.

"We will have to continue along the road ... of having more control from Europe," she said. "And those who are not prepared to do that will see that it will then be very difficult to keep a common currency stable in the long term."