Germany’s Schäuble Voices Doubts on Tentative Greek Bailout Deal
Finance minister says many in German government believe a Greek exit from euro is better for Greece
Asked by journalists about a Grexit, the German Finance Minister Wolfgang Schäuble said Tuesday “there are many people inside the German government…who believe that this would be, or could be the better solution for Greece and the people in Greece.” ENLARGE
BRUSSELS—Germany’s finance chief questioned a tentative bailout deal for Greece, saying that an exit from the currency union might be a better alternative for the country and its citizens.
Mr. Schäuble’s criticism of the deal now, a day after eurozone leaders agreed to new support for Greece, comes at an inopportune time for Chancellor Angela Merkel, who was central to hammering out the agreement and must now win support for the deal in Germany’s parliament.
Germany—and Finance Minister Wolfgang Schäuble in particular—have driven a hard line on Greece during months of rescue negotiations, even proposing over the weekend that it take a “timeout” from the currency union. But until now, the chancellor and her finance chief have publicly presented a united front.
His comments are likely to bolster critics of the new aid deal—which requires Greece to pass painful austerity measures and relinquish some fiscal controls in return for tens of billions of euros in loans—in Germany’s parliament. Lawmakers in Berlin are slated to vote on the deal, possibly later this week, once Greece’s parliament has passed the first round of measures, including pension cuts and sales-tax increases.
Asked about the idea of a Greek exit from the eurozone, Mr. Schäuble told journalists “there are many people inside the German government…who believe that this would be, or could be the better solution for Greece and the people in Greece.” He didn’t say whether he was one of them, although many European officials say the hawkish German finance chief has done little to hide his support for a currency union without Greece during crisis talks in recent weeks.
Mr. Schäuble said an exit from the eurozone would require “that Greece takes that decision itself.”
On Sunday, Mr. Schäuble insisted that a negotiated timeout for Greece from the currency union be included in a statement by eurozone finance ministers that served as the basis for discussions at an emergency summit of eurozone leaders Sunday. That section of the statement was later removed by the bloc’s leaders.
But Mr. Schäuble and Ms. Merkel pushed through a demand for Greece to set up a €50 billion privatization fund that would be supervised by European institutions. That requirement was seen as punitive and humiliating by many, including some eurozone policy makers, and would go beyond what was asked of other eurozone countries that received bailouts.
Despite the stringent requirements of the new deal for Greece, some lawmakers from Ms. Merkel’s center-right bloc, the Christian Democrats and their Bavarian sister party, the Christian Social Union, have already voiced opposition to a new bailout—Greece’s third in five years.
The Bundestag is almost certain to authorize negotiations for a new aid program later this week, thanks to the support of the government’s center-left coalition partner—the Social Democrats—and opposition parties. But large-scale defections from Ms. Merkel’s own faction would undermine the chancellor’s standing, both within her own party and with voters.
Many Germans now see Mr. Schäuble as the staunchest defender of his taxpayers’ money. This summer he jumped in front of the popular chancellor in public approval ratings.
His comments may also complicate Greek Prime Minister Alexis Tsipras’s efforts to foster support for a deal that contradicts his antiausterity platform and is much tougher than what voters rejected in a referendum a little over a week ago.
On Tuesday, Mr. Tsipras was trying to rally members of his ruling coalition, which along with his left-wing Syriza party includes the right-wing nationalist Independent Greeks. Opposition parties in Greece support the agreement, which would allow Greece to stay in the euro, but failure to maintain his own majority for new legislation could trigger fresh elections.
The International Monetary Fund, Greece’s biggest creditor outside the eurozone, has also voiced some doubts over Monday’s agreement.
Under the tentative bailout deal, eurozone leaders say they would consider giving Greece more time to repay and reducing interest rates on rescue loans if Greece delivered on promised economic overhauls and budget cuts. But the IMF says that even extending debt maturities deep into the second half of the century might not be enough to put Greece’s debt on a sustainable path.
The fund has said that Greece’s debt could only be made sustainable if the eurozone committed to debt-reduction measures that surpassed anything authorities have been willing to consider so far, including a possible write-down on the value of the country’s debt.
The IMF’s dour debt assessment could bolster Mr. Schäuble’s argument that a Greek exit from the eurozone might be a better alternative than the bailout.
Eurozone leaders made their own rescue loans conditional on continued support from the IMF. The fund’s loans, along with some access to debt markets and increased proceeds from privatizations, could reduce the currency union’s contribution to Greece’s €86 billion financing needs for the next three years. A European official said Tuesday that the eurozone portion of the overall bailout could be between €40 billion and €50 billion.
wsj
