The reports of Greece’s return to life may be greatly exaggerated.
Despite the impending release of a long-delayed 8.3 billion euro installment from international lenders and a primary surplus of as much as 2.5 billion euros, Greece may yet need a third bailout, German Finance Minister Wolfgang Schaeuble says.
Prime Minister Antonis Samaras, the New Democracy Conservative leader, said a recovery is looming and that Greece will return to the markets, even floating a small test bond imminently to test the reaction of investors.
In an interview with Kathimerini, Schaeuble – whose country is putting up the lion’s share of 240 billion euros ($330.7 billion) in two rescue packages from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to save Greece – ruled out any chance of a so-called “haircut,” but said a debt restructuring may also be necessary.
The government wants to revise the terms of the loans and get debt relief, the same tactic a previous government used to stiff private investors and diaspora bondholders with 74 percent losses.
“I despise the term ‘haircut.’ And I repeat: It was a unique case. That is what the heads of states and governments decided,” he said. But he said he agreed with it at the time. “The 53 percent writedown on privately held Greek debt was right for the time when it was decided.” The level became greater when extended over 30 years.
Instead, said Schaeuble, Germany is ready to go along with another “much smaller” sort of bridge loan to help Greece deal with funding gaps as most of the bailout money runs out this year.
In the interview, he also essentially dismissed the major opposition party Coalition of the Radical Left (SYRIZA) which said it if comes to power it would seek to revise the terms of the bailouts that came with harsh austerity measures or renege on the loans outright.
Germany has insisted on big pay cuts, tax hikes, slashed pensions and worker firings in return for the loans, from which it has profited handsomely. The measures have created record unemployment and deep poverty but Germany hasn’t backed off from keeping its foot on Greece’s neck and pushing for more reforms.
Schaeuble said: “Anyone who wants to stay in the Eurozone must follow the rules.” He also rejected any notion Germany would pay reparations for World War II even though the Greek government is preparing a case for it.
“The German President (Joachim Gauck) was here recently and he apologized on behalf of Germany and said that maybe we Germans have not understood how much Greece suffered at the hands of Germany during the Second World War. But the material reparations have already been settled through international treaties,” he said.
He also said Greece should get its act together instead of lamenting what has happened, and look to ways it can recover and grow instead of wringing its hands over austerity.
“Greece, for example, could produce solar energy at a more competitive price than Germany, on the condition that the relevant networks are built. Greece could become a strong communications hub,” he said.
He added that, “Shipping is an area where the Greeks have invariably done well. Tourism is growing again, but here too things could be much better.” He noted: “Many Germans came to Greece last year.”