• Germany's news in English
 
app_header_v3

Germany isolated as Greeks vote on bailout

AFP/DPA/The Local · 14 Aug 2015, 09:23

Published: 14 Aug 2015 09:00 GMT+02:00
Updated: 14 Aug 2015 09:23 GMT+02:00

Eurozone finance ministers will meet on Friday to decide whether to accept the bailout package agreed between the government in Athens and negotiators for Greece's creditors – the European Union, International Monetary Fund and European Central Bank.

In Finland, which has previously joined Germany in being tough on Greece, a key parliamentary committee voted in favour of the plan in advance of the finance ministers' meeting, leaving Schäuble looking short of allies in Brussels.

Greek MPs voted in favour of the deal on Friday morning after an all-night debate after Prime Minister Alexis Tsipras warned that failing to take up the deal would mean "a return to crisis without end".

Directing his comments at Schäuble, he said that rejecting the deal was "what certain people have been looking for systematically, and we have a responsibility to avert that."

But Schäuble's biggest worries are whether the IMF will lend its full support to the deal, how sustainable Greece's debt is (i.e. whether it can ever be paid back in full) and the role of a planned trust fund that will be set up to privatize Greek public assets.

The first two of those questions are connected, with IMF officials warning on Thursday that Greece would need to have its debt burden reduced to make it sustainable.

IMF demands restructuring – Germany resists

“The IMF will evaluate its involvement in any further financing for Greece as soon as the steps for the Greek authorities' programme and debt restructuring have been made,” said Delia Velculescu, leader of the IMF's Greece team.

According to the IMF's statutes, the Fund can't lend money to a country which it regards as having an unsustainable debt burden.

That makes things tricky for the German government, which wants the IMF on board – Angela Merkel was the first to invite the Fund into the first Greek rescue in 2010 – but has bitterly resisted any form of debt restructuring.

Both the IMF and the Germans have cause for concern in the Greek government's progress on getting its budget in order, with the latest deal proposal containing much smaller requirements for “primary” budget surpluses (before debt repayments) than past drafts.

And Athens may not even manage those, with a 0.25 percent deficit expected this year in latest estimates, while 2016's budget may see a 0.5 percent surplus, down from the expected two.

Weak economic performance will give the IMF further cause for concern over Greece's ability to pay – and make Schäuble's task of keeping them on board that much harder.

Jumble sale may not raise enough

The planned-for privatization fund is supposed to raise €50 billion in the next three years, with half of the proceeds going to paying off money that was lent to Greek banks to stop them going under.

But German Finance Ministry officials doubt that so much money can be raised in the time available.

One European official told the Süddeutsche Zeitung that only around €6.5 billion could be made from a privatization programme.

“It wasn't possible to evaluate potential buildings and plots in the short time available,” he said.

Nevertheless, the sale of the Piraeus and Thessaloniki harbours is set to go through by October, while 14 regional airports will be taken over by German operator Fraport on long-term lease.

German MPs told to be ready to vote

Bundestag (German parliament) president Norbert Lammert sent out a letter to MPs this week warning them to be ready to return from holiday for an extraordinary debate on the Greek bailout next week.

But that debate will only happen if the finance ministers agree to the deal at their Friday meeting.

Story continues below…

Otherwise, Greece may need a fresh bridge financing deal to keep the government limping along while negotiators thrash out the remaining details, which could be voted on by the Bundestag finance committee or the whole parliament, Norbert wrote.

After months of negotiation, the decision on whether to finally administer relief or keep Europe and the world on tenterhooks may come down to one man in a Brussels meeting room today.

But Wolfgang Schäuble has shown time and time again in the Greek crisis that he marches to the beat of no-one's drum but his own – even risking the wrath of his own Chancellor when his belief in fiscal rectitude is truly on the line.

Schäuble knows that it's not only him, or Merkel, or other finance ministers who have to believe the deal makes economic sense.

If he is to maintain his credibility and minimize the possible rebellion among MPs from Merkel's Christian Democratic Union (CDU), the deal will have to stack up in their eyes, too - which means keeping the IMF on board.

In the hours that remain before the finance ministers gather, everyone else involved will be hoping his stringent criteria have finally been met.

For more news from Germany, join us on Facebook and Twitter.

AFP/DPA/The Local (news@thelocal.de)

Your comments about this article

Today's headlines
Germany says 'won't let anyone take Europe from us'
Steinmeier called the European Union “a successful project of peace and stability”. Photo: DPA

German Foreign Minister Frank-Walter Steinmeier said on Saturday that the EU would weather the shock of the British vote to leave the union as he convened crisis talks.

Brexit vote
Brexit will turn Berlin into 'Europe’s startup capital'
A sign in Berlin's tech giant and startup-building company Rocket Internet. Photo: DPA.

London is currently thought of as the main hub for startups in Europe, but that will all turn around when the UK leaves the EU, tech industry experts say.

Brexit vote - Analysis
'Germany needs to make UK come to its senses'
British Leave campaigners celebrate Brexit result. Photo: DPA

Britain leaving the EU means trouble ahead for Germany - and its hardest task will be convincing the Brits to drop a self-defeating ideology, a leading foreign policy expert told The Local.

How to get German citizenship (or just stay forever)
Photo: DPA.

Considering a change of passport after the UK's vote to ditch the EU? Here’s how to do it.

Germany makes fracking verboten
A sign in North Rhine-Westphalia. Photo: DPA.

German lawmakers approved a law that essentially bans fracking, ending years of dispute over the controversial technology to release oil and gas locked deep underground.

Brexit vote
German far right 'cries for joy' after UK votes to leave EU
Left to right: AfD's Beatrix von Storch and Frauke Petry. Photo: DPA

The far-right AfD party called for a "new Europe" and the resignation of the EU's top two politicians in the wake of the Brexit vote.

Brexit vote
Merkel: Brexit has cut into European unity
Angela Merkel at a press conference after the Brexit vote on Friday. Photo: DPA.

Chancellor Angela Merkel said on Friday that the UK's decision to leave the EU has created a "cut in Europe" and the project of European unity.

Couple copulating on bridge shut down Autobahn
Kaiserlei Bridge in Frankfurt. Photo: Dontworry / Wikimedia Commons.

It was a highly unusual choice of location for a romantic rendezvous, police in Frankfurt point out.

Brexit vote
Germany: Brexit vote is a 'sad day for Europe'
A British flag along with other flags of European Union member countries flies in front of the European Council building in Strasbourg, France. Photo: EPA.

Top German leaders declared that it was a "sad day for Europe" after British voters opted to leave the European Union.

Viernheim hostage-taker wasn't carrying lethal weapon
A police officer stands guard in front of the cinema in Viernheim. Photo: DPA

The 19-year-old German man who took over a dozen people hostage in a cinema in western Germany on Thursday was carrying replica weapons, prosecutors have confirmed.

Sponsored Article
Why you should attend an international job fair
Features
How two gay dads cut through German red tape to start a family
Sponsored Article
Education abroad: How to find an international school
Features
Six odd things Germans do in the summer
Travel
These 10 little-known German towns are a must see
Sponsored Article
US expats: Taxes are due June 15th
National
Five things to know about guns in Germany
Sponsored Article
Avoid hidden fees when sending money overseas
Gallery
7 photos which show the aftermath of Bavaria's Autobahn bridge collapse
Culture
10 things you need to know before attending a German wedding
National
Eight weird habits you'll pick up living in Germany
Sponsored Article
Health insurance for expats in Germany: a quick guide
Lifestyle
Six reasons 'super-cool' Berlin isn't all it's cracked up to be
Society
Only one country likes getting naked on the beach more than Germany
Lifestyle
23 ridiculously fascinating things you never knew about Berlin
Culture
8 German words that perfectly sum up your 20s
Sport
How to sound like an expert on German football this summer
Lifestyle
Can't make it past the door at Berlin's most famous club? Help is at hand
Business & Money
Why Frankfurt could steal London's crown as Europe's finance capital
Features
6 surprising things I learned about Germany while editing The Local
Culture
Five sure-fire ways to impress Germans with your manners
Features
6 reasons Germany's summer is unbeatable for thrill-seekers
National
The future belongs to these 10 German regions
Society
How pictures of footballers on chocolates made Pegida really mad
Health
New father's tragic herpes warning touches 1000s online
National
Bayer's Monsanto takeover would be 'diabolical': environmentalists
7,910
jobs available
Toytown Germany
Germany's English-speaking crowd