Ger­many's Schaeu­ble hails Greek deal ahead of key MP vote

The Pak Banker - - BUSINESS -

Ger­many's hard­line fi­nance min­is­ter Wolf­gang Schaeu­ble on Sun­day hailed a change in tone in talks with Greece over its next bailout but warned Europe would closely mon­i­tor the pace of re­forms in Athens.

Ahead of a key vote in the Ger­man par­lia­ment Wed­nes­day to ap­prove a third res­cue pack­age for its debt-mired eu­ro­zone part­ner, the in­flu­en­tial Schaeu­ble struck an up­beat, con­cil­ia­tory note.

"Af­ter truly ar­du­ous ne­go­ti­a­tions, they un­der­stand now in Greece that the coun­try can­not get around real and far-reach­ing re­forms," he told the Bild am Son­ntag news­pa­per. Schaeu­ble, who has driven a tough bar­gain through­out the cri­sis with Athens, called an agree­ment reached Fri­day among the eu­ro­zone fi­nance min­is­ters "re­spon­si­ble" and "in keep­ing with the com­mit­ments made at a euro sum­mit in July". He said that the eu­ro­zone coun­tries would now be keep­ing close watch to en­sure that the re­forms-for-aid deal "is im­ple­mented point-by-point" in Greece.

One of Schaeu­ble's deputies, Jens Spahn, said that he now ex­pects talks on debt re­lief given the in­sis­tence of the In­ter­na­tional Mon­e­tary Fund, one of Greece's key cred­i­tors, on mea­sures to bring Athens's debt moun­tain down to a man­age­able size.

But Spahn, seen as a ris­ing star in Chan­cel­lor An­gela Merkel's con­ser­va­tive Chris­tian Demo­cratic Union, told the Welt am Son­ntag news­pa­per it marked "a decisive step for­ward that there is a gen­eral un­der­stand­ing that this is pos­si­ble with­out a hair­cut" or debt write­down.

Ger­many has ruled out eras­ing any of Greece's debt from the books but has in­di­cated it would be open to giv­ing Athens more time to pay its cred­i­tors back if it con­tin­ues to im­ple­ment pro-mar­ket eco­nomic re­forms. As Europe's big­gest econ­omy and con­trib­u­tor to Greek aid, Ger­many plays a key role in the emer­gency pack­age ap­proved by eu­ro­zone fi­nance min­is­ters worth up to 86 bil­lion eu­ros ($96 bil­lion).

MPs from Ger­many's Bun­destag lower house of par­lia­ment will be called back from the sum­mer re­cess to vote on the bailout Wed­nes­day.

An­a­lysts say ap­proval is al­most cer­tain, given that Merkel's gov­ern­ing coali­tion of con­ser­va­tives and So­cial Democrats has 504 out of 631 seats in the assem­bly. The main in­ter­est is in the scale of any re­volt by deputies in Merkel's con­ser­va­tive bloc, they say.

On July 17, the Bun­destag was re­called from its sum­mer break for a first vote on giv­ing the green light to start ne­go­ti­a­tions on the bailout. It was op­posed by 60 out of the 311 leg­is­la­tors in Merkel's bloc, seen as a blow to the chan­cel­lor on her 61st birth­day. Schaeu­ble, who has re­peat­edly taken a more scep­ti­cal line than Merkel dur­ing the cri­sis, en­joys an ap­proval rat­ing of around 70 per­cent among Ger­mans, who have grown in­creas­ingly re­luc­tant to see their tax money go to­ward bail­ing out Greece. His endorsement of the latest res­cue pack­age comes af­ter Merkel's chief whip in par­lia­ment threat­ened con­ser­va­tive MPs with sanc­tions should they fail to toe the party line on Wed­nes­day.

An EU source re­ported that Merkel and Schaeu­ble, whose com­plex decade-long part­ner­ship in gov­ern­ment is a source of fas­ci­na­tion in Ber­lin, had "ma­jor dif­fer­ences" over the terms of the Greek res­cue last week. The fi­nance min­istry ar­gued for a bridg­ing loan for Greece to cover a 3.4-bil­lion-euro re­pay­ment due to the Euro­pean Cen­tral Bank on Au­gust 20 rather than sign off on what it saw as a hasty deal with Athens.

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