Schäuble puts Grexit back on the agenda: If you want to stay in the Euro, make reforms

“Reducing Greece’s debt would not help”

In an interview published in Germany’s Bild am Sontag today, the German Finance Minister Wolfgang Schäuble adhered to his long-held belief that structural reforms, not debt relief, would contribute to Greece achieving a serviceable debt and remaining in the Eurozone, arguing that interest rates and repayments burden its budget only negligibly.


The Eurozone’s leading finance ministers will meet in Brussels Monday, December 5, to discuss short term relief measures to ease Greece’s debt burden as well as to evaluate the progress of reforms taking place in Greece as part of the third stimulus program being requested.


When asked whether he felt it was time to tell German voters that a reduction of Greece’s debt is unavoidable, Schäuble replied: “Doing so would not help Greece. Ultimately, Athens must implement the necessary reforms.  If Greece wants to stay in the Euro, there is no way around it, no matter what the debt,” he said.


Wolfgang Schäuble, a politician of tremendous influence within the ranks of the Christian Democratic Union, the major coalition party under conservative Chancellor Angela Merkel, also insisted that Greece’s budget is burdened only minimally by loan repayments because its Eurozone partners proceeded with easing its repayment debt schedule a long time ago.


Germany will be heading for the polls in 2017 and conservatives are bracing for a campaign in an increasingly polarized political scene, with the far-right party, Alternative for Germany, close in the opinion polls and close to gaining first-time entrance to the German federal parliament.


The official creditors of Greece – the European Stability Mechanism, the European Central Bank and the International Monetary Fund – have evaluated the implementation of reforms and the fiscal goals set in its support program of € 86 billion that were agreed last summer, the third in a row for Greece since 2010.


The Greek government is anxious for the assessment to be completed as quickly as possible in order to secure short-term debt-relief measures so that Greek government bonds can be included in the ECB’s quantitative easing program and the country can return to the financial markets before 2018, when the current program ends.

The main points of disagreement in the Greek government’s talks with its creditors concern labor reforms, especially those relating to collective bargaining, the creation of a mechanism for determining the minimum wage and granting more freedom to companies to lay off employees, measures that have encountered resistance from the work force.