Merkel, Hollande urge Greece to stick to reforms

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Angela Merkel and Francois Hollande urged debt-wracked Greece on Thursday to push through with painful but crucial reforms to safeguard its eurozone future as they began talks here.

The German chancellor and French president sent the clear message as they went into a working dinner to discuss the euro crisis and Greece in particular before each meets the Greek prime minister separately in coming days.

"It is important for me that we all stick to our commitments... but I will encourage Greece to continue along its path of reforms," Merkel said in a brief statement after greeting Hollande with kisses on both cheeks.

Merkel, who has again topped the Forbes list of the world's most powerful women, added it was important to wait for a progress report next month by Greece's international creditors on its reforms before making any decisions.

Hollande, for his part, said he wanted Greece, which is struggling under crippling debt in its fifth year of recession, to remain in the 17-country bloc but that it was in the hands of the Greeks themselves.

"I want Greece to stay in the eurozone," he said, adding however: "It's up to the Greeks to make the necessary efforts so that we can achieve this goal."

Merkel said she and Hollande would also discuss how to implement decisions taken at the European level on banking supervision, the current crisis in Syria and a treaty marking 50 years of Franco-German cooperation.

"We won't be bored," Merkel quipped, referring to their packed agenda.

Samaras told the German daily Bild on Wednesday that Greece needed "a little breathing space" to make spending cuts and reforms that are a condition for the next tranche of a 130-billion-euro ($161-billion) bailout.

In return for the 31.5 billion-euro installment, Athens has committed to 11.5 billion euros of spending cuts for 2013 and 2014, a period that Samaras reportedly wants to extend by two years.

Merkel has repeatedly said Greece must stick to what it signed up to and the message was hammered home Thursday by her finance minister.

"More time is not a solution to the problems," German Finance Minister Wolfgang Schaeuble told SWR public radio, adding: "More time would, in case of doubt, mean more money."

After meeting Samaras Wednesday, Eurogroup chief Jean-Claude Juncker said Greece's place was in the eurozone but urged its government to redouble reform efforts to secure continued EU-IMF financial aid, warning it was Greece's "last chance."

"As regards the lengthening of the adjustment period, it will depend on the findings of the troika mission," Juncker said referring to auditors from the European Commission, European Central Bank and International Monetary Fund.

In another German newspaper Thursday, the Greek leader pledged his country would repay the aid it has received to keep it afloat and fulfil its commitments.

And in French daily Le Monde, he also warned Greece's exit from the euro would start a devastating domino effect that would hit other members of the common currency.

Europe is experiencing one of its worst crises, Merkel said in a video message Thursday.

"This crisis has built up over many years and will therefore take a long time to overcome. It will be difficult," she said.

"But I am deeply convinced that at the end of this path, we will have a sustainable and strengthened eurozone and European Union."

The foreign ministers of Germany and the three Baltic states have jointly warned the debt crisis risks splitting Europe between north and south in an echo of the Cold War division.

The chancellor, entering the countdown to elections by October 2013, faces resistance at home to granting Greece more aid after nearly three years of the eurozone lurching from one crisis to another.

But at the helm of Europe's effective paymaster, she has been under pressure to chart decisive action to shake off the debt crisis, inspire confidence in the markets and keep the bloc intact.

"It is about Europe as a whole this week, this is the spirit that guides me in my talks with the French president," Merkel said Wednesday.

Her relations with the new French president got off to a strained start as Merkel's insistence on austerity to fight the crisis was at odds with Hollande's emphasis on favouring growth measures.