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Angel Merkel to Face Protests on First Crisis Visit to Greece

By Dina Kyriakidou and Noah Barkin

Sun Oct 7, 2012 1:25pm EDT

ATHENS/BERLIN (Reuters) -

German Chancellor Angela Merkel will tell Greeks she wants to keep their country in the euro when she visits Athens this week, but she faces a hostile reception from a people worn down by years of austerity and recession.

Many Greeks blame Merkel, who has publicly chastised them for much of the past three years, for the nation's plight. Opponents, some of whom have caricatured her as a bullying Nazi, have promised protests on Tuesday during her first visit to Greece since the euro zone crisis erupted there in 2009.

"She does not come to support Greece, which her policies have brought to the brink. She comes to save the corrupt, disgraced and servile political system," said Alexis Tsipras, who leads the opposition Syriza alliance. "We will give her the welcome she deserves."

About 6,000 policemen will be deployed in the capital for her 6-hour visit, turning the city center into a no-go zone for protest marches planned by labor unions and opposition parties.

"We don't want her here," said Yannis Georgiou, 72, who has seen his pension cut by one third. "We will take to the streets against austerity and against the government. Maybe Merkel will hear something and see what we're going through."

Merkel's visit is a sign of Germany's support for the coalition government of Prime Minister Antonis Samaras as it struggles to agree new budget cuts with international lenders, overcome the objections of reluctant coalition partners and cope with rising public anger.

After toying with the idea of a Greek exit from the euro zone in the first half of 2012, Merkel has come full circle and decided the risks of the country leaving are too high, especially with a German election looming next year.

The trip is a sign of German solidarity, a message to the Greek leadership and people that Berlin does not want to cut them loose, and a signal to the members of Merkel's coalition who want Greece out that it's not going to happen soon.

At the same time, the trip shows Merkel's trust in Samaras. Aides to the chancellor say they have been positively surprised by his commitment to reform. One reason for not visiting Greece before was frustration with progress under his predecessors, technocrat Lucas Papademos and Socialist George Papandreou.

"In our view Samaras is really trying to get things done," one German official said, requesting anonymity. "Nobody should see this trip as a sign that all is perfect. But we recognize things are moving in the right direction."

The Greek government was ecstatic about the news, promising to treat Merkel with the honors befitting the leader of a great nation. Greek officials credited Samaras's charm offensive in Berlin in August for Germany's change of heart.

"Samaras showed a real will to change things. He stressed what Greece had to do, not what others had to do for Greece," a Greek government official told Reuters on condition of anonymity.

Merkel is scheduled to meet Samaras, President Karolos Papoulias and representatives of Greek industry.

In a measure of tension between Athens and Berlin earlier this year, Papoulias accused Merkel's Finance Minister Wolfgang Schaeuble of insulting the country by likening Greece to a bottomless pit.

BRACING FOR TROUBLE

Opposition parties, from the radical leftist Syriza to the right-wing Independent Greeks, have planned protests and police officials said they were bracing for violence.

For years, banner headlines and cartoons in the press have portrayed Germany as a bully and protesters burned Nazi effigies on the central Syntagma Square outside parliament.

The tone was more subdued in the newspapers on Sunday. To Proto Thema ran a "HEIL" headline but most others called on Merkel to take a hard look at the suffering of Greek people during her visit.

"Tell Merkel the truth," wrote Nikos Hatzinikolaou in Real News. "With unemployment at 25 percent and recession at 7 percent, for a fifth year, can lenders expect the country to survive and pay back its debts?"

The visit gives Merkel a chance to get a first-hand view of a country that could have a major influence on her own re-election hopes.

Greece is stuck in tough negotiations with inspectors from the "troika" of the International Monetary Fund, European Commission and European Central Bank over a fresh wave of 11.5 billion euros in cuts for the next two years, a condition for getting an installment of the 130 billion euro bailout which is keeping the country afloat.

As difficult as these talks are, lenders are now realizing Greece needs more time, money or both. The IMF wants official lenders such as Germany to take a "haircut" under which the value of the Greek debt they hold would be radically reduced. Private bondholders have already swallowed such a hit but EU partners prefer other measures than to suffer more losses.

In order to avoid going back to parliament to request a third rescue for Athens - a step Merkel allies acknowledge could be political suicide for her - Germany will probably have to agree to other concessions to plug a hole in Greece's finances.

These could include giving Samaras an extra two years to make painful cuts and agreeing to a reduction in the interest rates Athens pays on its EU loans.

Before making concessions that are sure to provoke a backlash at home, Merkel will want to look Samaras in the eye and make clear to him that she has done all she can - that it is now up to him. Politically, she will have next to no room to give the Greeks more before next year's German vote.

"She has to lay it on the line and make clear to the Greek government what the options are," Michael Fuchs, a senior lawmaker in Merkel's Christian Democrats (CDU) told Reuters. "Whether the conditions for additional help are met depends not on Germany, but on the Greek government alone."

(Additional reporting by Renee Maltezou and Andreas Rinke; editing by David Stamp)