Vital week ahead for Euro economy

European leaders are gearing up for a high-stakes week of financial diplomacy that could determine Greece’s future – and the stability of the 17 countries that use the euro.

Vital week ahead for Euro economy

European leaders are gearing up for a high-stakes week of financial diplomacy that could determine Greece’s future – and the stability of the 17 countries that use the euro.

The first round of shuttle diplomacy began with Germany’s foreign minister, Guido Westerwelle, hosting his Greek counterpart, Dimitris Avramopoulos, ahead of a meeting in Berlin on Friday between their countries’ leaders, chancellor Angela Merkel and prime minister Antonis Samaras.

French President Francois Hollande visits Berlin on Thursday for discussions with Mrs Merkel and then will meet Samaras in Paris on Saturday. Jean-Claude Juncker, the Luxembourg prime minister who chairs the eurozone finance ministers’ meetings, is due in Athens on Wednesday.

Meanwhile, Greece’s finance officials were working to secure more spending cuts necessary for it to continue receiving the international funding that is protecting it from bankruptcy.

The eurozone is awaiting a report next month on Greece’s progress in implementing reforms and austerity measures demanded in exchange for two massive bailout packages. The report is being compiled by the so-called “troika” - representatives of the European Union, European Central Bank and International Monetary Fund.

Greece has been dependent on two multi-billion international bailouts from other eurozone countries and the International Monetary Fund since its debt crisis broke in 2010. But despite taking a series of harsh austerity measures that saw salaries and pensions slashed and repeated rounds of tax hikes, the results have not been what European and Greek officials hoped for.

The country has fallen behind on implementing the reforms and austerity measures, fuelling impatience in Germany and other eurozone countries and speculation that Greece will have to leave the euro – a move that would further destabilise the currency bloc and threaten the economies of countries such as the US and China.

Mr Samaras’ fragile three-party coalition government, formed after two elections in May and June, has said it hopes to renegotiate parts of the unpopular bailout conditions, mainly seeking an extension in the two-year austerity deadline. But German officials and MPs are making clear they have no appetite for granting Greece more time to comply with the terms of its rescue packages or other concessions.

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