German Finance Minister: Greece Will Need Another Bailout
Things are starting to get sloppy in Europe again as predictions, declarations, and frustrations fly while politicians try to parse the tumultuous Greek situation. Wolfgang Schaeuble, the outspoken German finance minister, is making headlines again this week after insisting that Greece will need another bailout. Speaking at a political rally, he said that, “There will have to be another program in Greece.”
His remarks come at a rather crucial time in Greek’s healing as a 10.9 billion euro budget shortfall looms over the country for the fiscal year 2014-15 and European Central Bank executive board member Jörg Asmussen stops by Greece to inspect the state of reforms.
Reforms have been a sticky issue for the country as its ‘troika’ of lenders, the ECB, EU, and International Monetary Fund, all tired of doling out cash in exchange for a lackadaisical pace of change to the Greek economy. Privatization and public sector cuts have been slow to happen, the government continually proves inept at collecting tax revenue, and parliamentary feuds have shown that the country does not perform well under pressure. With its financiers watching, though, it has little choice.
Schaeuble’s remarks on the need for another Greek bailout follow earlier statements by Volker Kauder, another member of Chancellor Angel Merkel’s Christian Democratic Party, who told Bloomberg that a writedown for Greece was out of the question. If Germany isn’t fond of alleviating Greek debt through write-downs and public resentment towards bailing out Greece rises, the weakest country in Europe could be in for a rough ride as its options get smaller.
Asmussen has assuaged some fear of completely letting the country flounder, who downplayed Schaeuble’s certainty of another bailout. ”This is a decision taken in November last year, it is public knowledge, and there’s nothing new and there’s nothing to add. If we look at how things unfold, we will know not before spring next year if the country has reached a primary surplus on an annual basis,” he said.
The ECB and Angela Merkel have both tried to downplay bailout talk, especially for the German leader who is in the midst of trying to get reelected. Meanwhile, Germany isn’t the only country tired of bailouts. Greece’s opposition has had enough, and fears are rampant that if more loans from EU governments ensue, they will be made into a sort of “debt colony,” according to remarks made in one of Greece’s leftist newspapers.
Certainly, the price of the bailouts has been high for the historic and proud country, which has seemingly lost a fair bit of national sovereignty in the name of meeting the conditions of its lenders. And yet, as anger boils over throughout the land of Homer, this would seem to be the cost of staying in the EU.
As European taxpayers, most notably those in Germany, have stepped up the solidify Greece as a member of the economic union, asking for a bit of economic change in the meantime doesn’t seem all that unreasonable.