Obama calls on Greece to balance growth, austerity

AP News
Posted: Aug 08, 2013 5:47 PM
Obama calls on Greece to balance growth, austerity

WASHINGTON (AP) — President Barack Obama called on Greece Thursday to balance austerity with growth as it seeks to recover from financial crisis, invoking a need for the Greek people to "see a light at the end of the tunnel."

Capping an afternoon meeting in the Oval Office, Obama commended Greek Prime Minister Antonis Samaras for pursuing bold, sweeping structural reforms to deal with its debt burden. The two leaders said they agreed that at the same time, Greece must find ways to grow its economy and create jobs to combat harrowing unemployment.

"We know from history that those countries that are growing, those countries where employment is high and people are increasing their productivity ... have an easier time reducing their debt burden than those countries where people are feeling hopeless," Obama said.

The Greek prime minister said his citizens have made huge sacrifices, but that those sacrifices are "not going to be in vain." He said if and when Greece overcomes its economic challenges, it will be European success story — a nod to the major international assistance provided to Greece and the parallel debt struggles faced by other European Union nations.

Greece is seeking to pull itself out of a 6-year-old recession but still faces major economic troubles. Since 2010, Greece has been surviving on money from a $319 billion bailout package put together by the Washington-based International Monetary Fund and European lenders.

Accentuating the dire joblessness plaguing the nation, new government data, released as Samaras prepared to meet with Obama, showed unemployment in Greece hitting a record high of 27.6 percent in May. For youth, the jobless rate approached 65 percent.

"The emphasis has to be on growth and on the creation of new jobs — especially for the youth," he said.

Obama's message to Samaras echoed the cries in Greece that austerity measures imposed by other European nations as a condition for bailouts has been too much, too fast.

Germany and other E.U. nations that had to bail out their neighbors to prevent further damage to the regional economy have pressed Greece and other high-debt nations to focus on reducing their debt to restore market confidence and lower government borrowing costs. But the Obama administration has argued those efforts must be tempered by more stimulus to boost growth and counter the high unemployment — and to increase global demand.

The IMF said last week that Greece has made "exceptional" progress in stabilizing its finances but still needs to undertake major structural changes to its economy, such as collecting more taxes and selling off state-owned enterprises to raise more revenue. The IMF also said Greece is facing an $11 billion shortfall in 2014-15 to finance its bailout program and will likely need more aid from its European partners to plug that hole.

Before heading to the White House, Samaras met with Secretary of State John Kerry. State Department spokeswoman Jen Psaki said Kerry "recognized the difficult, but essential reforms Greece is taking to restore market confidence and fuel economic growth" and expressed U.S. solidarity with the Greek people.

Defense cooperation, counterterrorism and a proposed free trade agreement between the U.S. and Europe were also on the agenda during the Greek leader's visit to the U.S. Amid major unrest in Egypt and Syria, and an al-Qaida threat emanating from the Arabian Peninsula that has shuttered more than a dozen U.S. diplomatic posts, Obama touted the role a secure Greece can play in mitigating tensions.

"As the prime minister put it, sometimes it's a challenging neighborhood," Obama said. "Greece can play an important stabilizing and partnership role" in the Middle East, North Africa and the Balkans.

Both leaders waxed optimistic about the prospects for progress in Cyprus, the ethnically split island facing its own dire financial crisis. Cyprus was divided in 1974 when Turkey invaded after a coup by supporters of union with Greece. The Greek Cypriot south is recognized internationally, except by Turkey, while Turkish Cypriots declared an independent state recognized only by Turkey.

Obama said there was a great opportunity for the decadeslong conflict to be resolved, adding that both he and Samaras were encouraged by recent statements from the Cypriot Greek and Turkish communities. And Samaras floated the possibility that Greece could align with Cyprus and Israel to meet Europe's demand for natural gas, alluding to a budding energy deal among the nations.


Associated Press writer Josh Lederman contributed to this report.