German minister skeptical on giving Greece more time
CBC News
Posted: Aug 23, 2012 12:47 PM ET
Last Updated: Aug 23, 2012 3:25 PM ET
German finance minister Wolfgang Schaeuble says the existing rescue loans given to Greece are the limit of what is 'economically justifiable.' (Johannes Eisele/AFP/Getty)
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Giving Greece more time to reach its spending cut targets won’t do any good, Germany’s finance minister said Thursday.
Wolfgang Schaeuble noted that it's only a few months since creditors drew up a second bailout package and agreed on a massive debt writedown for Greece.
"You cannot just say after half a year, all of that is not enough, because then you will never win the confidence of financial markets," Schaeuble said.
"So more time is not a solution for the problems. The question is how we win back confidence."
Schaeuble’s comments came as the Greek prime minister, Antonis Samaras, warned European politicians who want to see his country leave the eurozone that such an event could trigger a domino effect throughout the 17-nation bloc.
“If a country is forced out of the euro, it would probably not be the last, at least that's what the financial markets would see,” Samaris said, “and to fight against that would be difficult."
Also Thursday, the German chancellor, Angela Merkel, hosted a meeting with French president Francois Hollande, a day before she meets with Samaras.
'We will make a spectacular comeback.'—Greek prime minister Antonis Samaras
The leaders are trying to head off the possibility of another crisis point that could come if a so-called "troika" of debt inspectors from the European Union, European Central Bank and the International Monetary Fund, come out with an unfavourable report next month on Greece’s attempts to reform its economy.
Meeting its targets is a condition to Greece receiving continued bailout funds.
Samaras wants more time – two years — to complete those reforms.
Going into today's meeting, neither the German nor the French leader mentioned Greece's hopes of winning more time.
Merkel said she will "encourage" Greece to pursue reforms and Hollande said he wants Greece to remain in the 17-nation euro and it's up to Athens to make the "indispensable efforts" to ensure that.
Without the bailout money, Greece would be forced into a chaotic default and could be forced out of the currency union.
Athens has faltered in the bringing in those changes, partly because of a pair of indecisive elections earlier this year, which ultimately brought a coalition government under Samaras to power.
The delay has fuelled impatience among its creditors, notably Germany, which is the single largest contributor to its 240 billion euro ($300 billion Canadian) bailout packages.
Merkel and Hollande must wrestle with the issue of whether to also give Greece some more breathing room, such as giving more bailout money up front than previously planned in order to help the cash-starved Greek government, or easing the interest rate burden on the loans.
Markets showing 'growing lack of confidence'
Leading lawmakers in Merkel's center-right coalition have made clear that they oppose drawing up a third rescue program for Greece.
"With the program last year for Greece we went to the limits of what is economically justifiable," Schaeuble said.
"It is not about more or less generosity — it is simply about finding a common way to lead this eurozone as a whole out of this growing lack of confidence on the financial markets."
Samaras met in Athens on Wednesday with Jean-Claude Juncker, who chairs meetings of eurozone finance ministers and is also Luxembourg's prime minister.
He heads to France on Saturday for talks with Hollande.
Samaras said that, given the opportunity, he was confident Greece would rebound.
"Greece has enormous economic potential that we need to use," he said. "We will make a spectacular comeback."
With files from The Associated PressShare Tools
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