No sympathy for Greece as deadline gets closer
France: Eurozone will remain stable even if Greece defaults
WASHINGTON Greece isn’t winning much sympathy from its debt-racked European counterparts as the country draws closer to default for failing to make bailout repayments.
“We are not sympathetic to Greece,” French Finance Minister Michel Sapin said in an interview at the International Monetary Fund-World Bank spring meetings here.
“We are demanding because Greece must comply with the European (rules) that apply to all countries,” Sapin said.
France itself has struggled to reduce a national debt that’s nearly 100% of gross domestic product. The country is striving to cut its annual deficit to European Commission requirements by 2017 and has bristled at the agency’s pleas to accelerate the belt-tightening at the expense of economic growth. France’s economy grew just 0.4% last year.
Sapin said: “We are understanding because there has been a change in government (in Greece), and it is normal for there to be a change in policy.”
He said he’s open to Greek proposals to ease terms of its bailout that require it to slash spending and raise taxes, among other changes, even while its economy is reeling.
In Greece, “there have been decreases in wages and pensions and public budgets,” Sapin said. “I understand that the Greek people would want out of this situation of austerity.”
He added, “Greece must make proposals if (they) want to change or make modifications to its commitments and do so in a balanced way.”
Greece is scrambling to meet a loan repayment due next month to its European creditors — the IMF, the European Central Bank and the European commission — of nearly 1 billion euros ($1.1 billion). Greece and its creditors are also at an impasse over easing the overhaul to unlock another 7.2 billion euros ($7.6 billion) in bailout money.
International markets dove Friday on the prospect of a Greek default and exit from the euro.
“Greece cannot go into default,” Sapin said.
Italian Foreign Minister Pier Carlo Padoan said in an interview he’s confident the current crisis will be resolved. “I understand that markets may be nervous,” he said. “But I’m fully confident there will be an agreement.”
He added that Italy and other eurozone countries could weather a Greek default because the financial system is stronger than it was several yeas ago. “Countries’ finances are on a much stronger basis,” he said.
Sapin said, “The economic financial and social consequences would be the most dire to the Greek people, not the eurozone. The eurozone has a built-in tool for stability to face situations such as this one, but for Greece it would be an economic and social catastrophe. And for the other European countries it would be a political failure.”
IMF Managing Director Christine Lagarde said this week that the agency will not grant Greece a delay for the repayment.
“The eurozone has a built-in tool for stability to face situations such as this one, but for Greece it would be an economic and social catastrophe.”
Michel Sapin, French finance minister