Ber­lin: Debt re­lief will not help

Schaeu­ble re­acts to Obama’s call for re­duc­tion of Greek ar­rears, say­ing it would weaken the re­form in­cen­tive

Kathimerini English - - Focus - BY SOTIRIS NIKAS

Ber­lin’s im­me­di­ate re­sponse to US Pres­i­dent Barack Obama’s call for Greek debt re­lief was to pour cold water on Athens’s as­pi­ra­tions, but the head of the Eurogroup did not rule out the pos­si­bil­ity of a dis­cus­sion next month on midterm debt re­lief mea­sures.

Pas­sauer Neue Presse daily re­ported late on Tues­day that Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble said, “Who­ever says ‘We will re­lieve your debts’ is do­ing Greece a dis­ser­vice,” a state­ment con­firmed yes­ter­day by the Fi­nance Min­istry in Ber­lin.

Schaeu­ble re­port­edly added that what Greece now needs is more re­forms to be­come com­pet­i­tive, say­ing eas­ing the debt would weaken the in­cen­tive for bud­get ad­just­ment.

Ber­lin’s re­ac­tion to Obama’s call for debt re­lief for Greece came also from an of­fi­cial close to Chan­cel­lor An­gela Merkel. Tabloid Bild wrote yes­ter­day that “Prime Min­is­ter [Alexis] Tsipras, who had hopes of a debt hair­cut, gained noth­ing from the Obama visit,” adding that an ad­viser to Merkel said in ref­er­ence to Obama’s talks in Ber­lin that “there is no point in Mr Obama try­ing, the [debt] eas­ing is ruled out and so it will be.”

“We have noted that Pres­i­dent Obama has pointed to the im­por­tance of debt re­lief. The Eurogroup agreed in May on a timetable on ex­actly that sub­ject, re­gard­ing mea­sures for the short term, and later in 2018 for midterm mea­sures,” Ger­man gov­ern­ment spokesman St­ef­fen Seib­ert told a news con­fer­ence.

Still, Eurogroup chief Jeroen Di­js­sel­bloem said in Lon­don that, “in De­cem­ber, we will have to talk about short-term debt mea­sures. There are some things we can do now and in the com­ing years a num­ber of mea­sures can be set up for the end of the pro­gram.”

He also noted: “The cur­rent Greek 1.0702 gov­ern­ment seems to be very com­mit­ted, and work­ing much more con­struc­tively than pre­vi­ous gov­ern­ments. There is a de­gree of op­ti­mism.”

Di­js­sel­bloem was more sym­pa­thetic to the de­mand for Greece to be given more re­al­is­tic fis­cal tar­gets for its fu­ture pri­mary bud­get sur­pluses: He said Greece must reach a pri­mary sur­plus of 3.5 per­cent of gross do­mes­tic prod­uct in the midterm, but added, “The ques­tion is, what does midterm mean?”

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