Schaeuble comments on IMF exit spur debate

Finance Minister Wolfgang Schaeuble’s suggestion in comments to a German newspaper that the potential withdrawal of the International Monetary Fund could necessitate a renegotiation of Greece’s bailout spurred speculation yesterday both here and abroad.

“A solution within the European currency system” would be an alternative if the International Monetary Fund “decided for some reason to stop participating,” Schaeuble said in an interview with Sueddeutsche Zeitung published yesterday. That would require new bailout negotiations with Greece, and “the Europeans would have to be sharply better at enforcing the agreed conditions,” he said. Schaeuble added that he would have to seek his MPs’ backing for a new program if the IMF withdraws even as Germany prepares for general elections in the fall. Athens sought to put a positive spin on his statements.

“The possibility of continuing the program without the IMF, or with its presence but without funds and therefore no central role, is a development which could lead to a way out of the structural impasse among the institutions,” a Greek government official said in response to Schaeuble’s comments. “The view that Europe has an institutional support framework by itself is not new,” the official added. “It keeps gaining ground among European institutions and it is welcomed by the Greek side as long as the initiatives and decisions are taken fast.”

In Berlin the mood was very different. The German Finance Ministry played down Schaeuble’s comments, noting that they were a response to a hypothetical scenario. It said that Berlin wants the IMF on board with the Greek program and that the Fund would take its decision on conclusion of the current bailout review.

The sense in German media circles is that the bailout review will finish no sooner than mid-March, after general elections scheduled to take place in the Netherlands. One journalist with close ties to the German ministry told Kathimerini that Schaeuble believes the demands of euro membership are weakening Greece both financially and politically. “In other words, the euro is too heavy for you,” the source said.