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Greece, the country long at the epicentre of Europe’s economic crisis, has “turned a corner” said its finance minister Yannis Stournaras on Sunday after international lenders gave their strongest signal yet that the debt-stricken nation would be given more time to meet repayment targets.Following an informal summit of eurozone finance ministers in Cyprus, Stournaras insisted he was “more optimistic” about Greece’s prospects, even though it remains in a race against time to meet the onerous conditions that would unlock the rescue loans to keep bankruptcy at bay.
“I am more optimistic … we have turned the corner. There is more trust between us and our partners but we still have a long way to go,” Stournaras told the Guardian. “We have to have cleared up everything in the next two weeks so that everything can be put on the table at the [next] euro group meeting on October 8. If we can’t clear everything there can be no agreement,” he said referring to the €31.5bn (£25.5m) aid instalment Athens has been attempting to win since July.
Asked if relations had improved between Greece and Germany – ties that have been unusually stormy since the outbreak of the crisis in late 2009 – the Oxford-trained economist was unequivocal.
“There is a better chemistry in relations between Greece and Germany. That is what I feel, but they [the Germans] have to be asked as well.”
Stournaras made the comments as euro zone fiscal diehards appeared to cut the country some slack saying they would yield to Athens’ demand for more time to apply a gruelling fiscal adjustment programme.
In an interview published in Sunday’s edition of the Oesterreich paper, the Austrian finance minister, Maria Fekter, said Greece would be given more time to meet deficit reduction targets although she made clear the payment extension would not mean more money being injected into the €240bn EU-IMF-sponsored bailout already agreed with Athens.
“We are still awaiting the troika report,” Fekter said of the assessment of Greece’s fiscal progress that debt auditors are expected to deliver in October. “And Greece still has to get some things on track but we will achieve a cost-neutral extension.”
However, in a separate interview with Dutch newspaper Der Standard, Fekter suggested Greece might only receive “a few more weeks time”.
The Troika report – a quarterly review of the headway the country has made in meeting the terms of its international rescue package – is crucial to releasing funds to recapitalise Greek banks and the cash-starved Greek economy.
Conservative prime minister, Antonis Samaras, has repeatedly appealed for a two-year extension of the deficit-reducing programme, arguing that this would not only give Greece more time to narrow its spending gap but the leeway to enforce long overdue structural reforms deemed vital to improving the country’s competitiveness.
Austria, one of the loudest critics of Greek foot-dragging, had previously said the nation risked exiting the euro zone as a result of its failure to meet commitments.
Fekter’s change of heart reflects the shift in attitude in Europe at large, with the continent’s policy makers now calculating that a confrontation with Athens would likely backfire as Samaras’ fragile coalition attempts to muster the necessary support for a new round of budget cuts worth nearly €12bn.
After years of putting austerity policies first – measures that in Greece’s case have seen the economy contract by nearly 20% over the last three years amid soaring unemployment and poverty rates – EU governments are tilting increasingly towards favouring growth over belt-tightening, a shift inaugurated with the June election of socialist president François Hollande in France.
Their latest concession comes despite Stournaras’s inability to present counterparts with breakdown of the cuts – demanded in return for aid by creditors – following infighting in the three-party alliance over the measures.
But hardening his anti-bailout stance, Greece’s main opposition leader, Alexis Tsipras, said the government was “dangerously deluded” if it believed the extension would offer relief to the country. The head of the radical left Syriza party vowed on Sunday to step up opposition to cuts, which he said would once again fall on society’s most vulnerable. Calling for the international rescue package to be immediately annulled Tsipras said: “The slippery road towards catastrophe must be stopped now.”
“Our first concern is that society puts up a fight so that measures worth €11.6bn are neither passed nor implemented,” he told reporters in Thessaloniki where Greece’s annual international trade fair is taking place.
Tsipras argued that the three-month coalition should step down for failing to live up to pre-election pledges to abolish the loss of further benefits, pay and pension cuts – instead insisting on an “absurd fiscal policy” that relied on foreign aid injections to keep the economy afloat.
“From being a guinea pig where the most extreme model of neo-liberalism is imposed, Greece can become a leader in progressive solutions on a pan-European level,” said the leftist, without explaining what those solutions could be.
This article originally appeared on guardian.co.uk
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