August 24, 2012 in Business

Greece bailout extension opposed

‘More time is not a solution,’ German finance minister says
Geir Moulson Associated Press
 

BERLIN – Giving Greece more time to carry out reforms and spending cuts won’t resolve the debt-laden country’s problems, Germany’s finance minister said Thursday, a day ahead of the Greek prime minister’s meeting with Chancellor Angela Merkel.

Wolfgang Schaeuble’s comments came hours before Merkel was due to meet French President Francois Hollande, part of a round of high-stakes financial diplomacy as European leaders try to resolve how to deal with Greece and stem the wider eurozone crisis.

Greek Prime Minister Antonis Samaras, who meets Merkel today and Hollande on Saturday, is seeking to earn his nation more time to complete reforms that are a condition of it holding on to its bailout loans. Without outside help, Greece would be forced into a chaotic default on its debts and could be forced out of the 17-country eurozone.

Athens has faltered in the speed and effectiveness of implementing the reforms, fueling impatience among its creditors, notably Germany, which is the single largest contributor to its $300 billion bailout packages. A pair of indecisive elections this year, which ultimately brought a coalition government under Samaras to power, didn’t help.

Greece’s continued access to the bailout packages hinges on a favorable report next month from the so-called “troika” of the country’s debt inspectors: the European Union, European Central Bank and the International Monetary Fund. If Greece is found to have failed on key economic reforms that are conditions of the bailout loan, vital funds could be halted.

Germany’s Schaeuble kept up the pressure Thursday. He noted that it’s only a few months since creditors drew up a second bailout package and agreed on a massive debt writedown for Greece.

“You cannot just say after half a year, all of that is not enough, because then you will never win the confidence of financial markets,” Schaeuble said. “So more time is not a solution for the problems. The question is how we win back confidence.”

Schaeuble insisted that he wouldn’t speculate on what happens next before the troika delivers its report, but made clear his skepticism over Samaras’ argument that giving Greece more time doesn’t have to mean giving it more money.

The existing program for Greece “must be implemented, and in case of doubt more time means more money,” he said. “And more money would require a new program.”

Leading lawmakers in Merkel’s center-right coalition have made clear that they oppose drawing up a third rescue program for Greece.

“With the program last year for Greece we went to the limits of what is economically justifiable,” Schaeuble said. “It is not about more or less generosity – it is simply about finding a common way to lead this eurozone as a whole out of this growing lack of confidence on the financial markets.”

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