Germany tells Greece to stop asking for help and start cutting budgets
GERMANY has told Greece to stop asking for more help and get on with implementing the reforms it has already promised as tensions mount before this week’s crucial summit of European Union leaders.
In unusually blunt remarks, German finance minister Wolfgang Schaeuble said: “The most important task facing new prime minister [Antonis] Samaras is to enact the programme agreed upon quickly and without further delay instead of asking how much more others can do for Greece.”
His comments highlight Germany’s growing impatience with the eurozone’s problem nations in what is shaping up to be another significant week for the single currency bloc.
A formal request from Spain for up to €100bn of emergency funding for its banks is expected on Monday, while the week ends with a two-day summit in Brussels where German chancellor Angela Merkel is again expected to dig in her heels over the eurobonds championed by France’s new president, Francois Hollande. Such bonds would mutualise the debts of the 17 eurozone nations, effectively leaving Germany on the hook for more spendthrift members.
Greece’s new three-party coalition government took charge on Thursday, vowing to renegotiate the terms of its latest €130bn bail-out. It wants a two-year extension to the 2014 deadline for it to cut its budget deficit to 2.1pc of GDP from 9.3pc in 2011. Such delay would, however, require up to €20bn more foreign funding.
Mr Schaeuble added: “Greece hasn’t tried enough so far, that has to be said quite clearly… no one on Earth who has followed this issue would think that Greece has fulfilled what it has promised.”
Owing to ill-health, Greece’s new leaders will not be at the Brussels summit to hear that message personally. Mr Samaras underwent eye surgery on Saturday and incoming finance minister Vassilis Rapanos has been hospitalised with abdominal pains and dizziness. Their places will be taken by foreign minister Dimitris Avramopoulos and outgoing finance minister George Zanias.
The illnesses at the top of the new Greek government have also caused the postponement of Monday’s planned Athens visit of the troika of lenders – the European Union, European Central Bank and International Monetary Fund.
In a separate weekend interview, Mr Schaeuble reiterated Germany’s implacable opposition to eurobonds, saying: “Anyone who has the chance to spend someone else’s money will do that.”
There is growing momentum, however, behind the concept of a banking union across the eurozone that would restore confidence among depositors, reduce capital flight, allow the ECB to withdraw from its firefighting responsibilities and break the damaging links between lenders and governments.
European Council president Herman Van Rompuy is expected to push for such a union at the Brussels summit, hailing it last week as one of the fundamental “building blocks” required to show “the eurozone is an irreversible project”.
Such a union was backed by the Bank for International Settlements, which said in its annual report: “The conclusion is hard to escape that a pan-European financial market and a pan-European central bank require a pan-European banking system.”
How any such banking union is constituted and regulated could potentially put the rest of the EU on a collision course with Britain, however. Treasury sources said Chancellor George Osborne saw such a union as a “logical step” for the 17-nation bloc but would fiercely oppose any extension across the entire 27-country EU. That would risk ceding more control over banking to Brussels and the replacement of the London-based European Banking Authority.
Separately, former prime minister Tony Blair told the BBC: “The only thing that will save the single currency now is... a sort of grand plan in which Germany is prepared to commit its economy fully to the single currency.”