Rösler plans for default ahead of Greece visit
Just days before he is due to travel to Athens, Economy Minister Philipp Rösler laid out a framework for orderly state bankruptcies, calling for it to be included in a contract for the permanent euro crisis management mechanism.
Rösler suggested that when a country within the eurozone can no longer service its debts it would have to surrender some of its sovereignty in a process which would be led by an independent committee to balance, organise and monitor negotiations between creditors and the debtor state. The country concerned would have to establish a sensible restructuring programme, he said.
A European Currency Fund could take on this role as a successor to the European Stability Mechanism (ESM), which is due to be introduced at the latest in 2013, Rösler said, while creditors would also have to accept some of the losses. The framework had been sent by Rösler to the Finance ministry with the demand it be included in the ESM contract, the Frankfurter Allgemeine Zeitung reported.
Rösler has been heavily criticised by other senior members of the government for openly airing the possibility of a Greek default – just as the German political body voted for an increase in the country’s contribution to the Greek bail-out.
Yet deputy head of the Christian Democratic Union’s parliamentary party, Michael Fuchs said on Tuesday he thought it made sense to plan the kind of intervention outlined in Rösler’s framework. He told SWR radio, he could not really understand why Luxembourg’s prime minister Jean-Claude Juncker, who heads the group which has political control over the euro, still believed that Greece’s bankruptcy could be avoided.
Rösler is due in Athens on Thursday, taking a group of German industry managers with him, to talk about possible investments. Yet Rösler’s finance ministry is said to be warning against expectations of any kind of quick fix, drawing parallels to the long-term changes effected in East Germany and other former socialist countries.
While Europe’s future seems to depend on what happens to Greece, the pressure is showing on its prime minister Giorgos Papandreou, who has recently been close to resigning, according to a report in the Financial Times Deutschland.
The paper reported on Tuesday that he had twice spoken about stepping down in the last three weeks. He offered his resignation both times, but then continued, the paper said, quoting sources from people close to him.
He is finding it difficult to deal with the demonstrations by tens of thousands of his fellow Greeks against the savings plans he is being forced to implement – and the pressure from European Union and the International Monetary Fund to increase the cuts. A sense of powerlessness is also making him feel terrible, an insider told the paper. “Greece is deciding nothing any more,” the insider said.
The FTD said the insider described as catastrophic, the effect of his potential resignation in the middle of the negotiations for new financial aid and the implementation of the widespread cuts.
“But when a weariness of holding office has planted itself in his head, he will take that step sooner or later,” he said.
The Greek government denied the report completely, with a spokesman saying, “The information that you have received is nonsense.”