Germany: Greece must take rocky austerity road

Visiting German Finance Minister Wolfgang Schäuble praised Greece Thursday for its progress on economic reforms, a day after parliament narrowly passed a sweeping austerity bill putting thousands of jobs on the line.

Germany: Greece must take rocky austerity road
Photo: DPA

Security was tightened during the minister’s visit, as Schäuble is a hate figure to many in Greece for championing the painful reforms that the heavily indebted country has had to undertake in exchange for billions in rescue funds.

Greece, now in its sixth straight year of recession, has been forced to undertake job, pay and pension cuts, in order to secure €240 billion in rescue funds put up by the European Union and International Monetary Fund.

“I am very impressed by what Greece has already achieved in rebalancing and modernising the economy,” Schäuble said, adding that Germany is ready to invest in a fund that provides liquidity to Greek companies.

Schäuble’s visit came just hours after the Greek parliament approved a new bill of reforms outlining the redeployment of 25,000 civil servants, despite days of street protests.

Under the bill, thousands of civil servants – including teachers and municipal police – have eight months on reduced salaries to find new posts elsewhere, or accept those offered to them. Otherwise, they will lose their jobs.

Greece needed to approve the bill in order to receive its next installment of €6.8 billion in rescue funds, which was approved by eurozone finance ministers last week.

Shortly before heading off to Athens, Schäuble told German public radio his visit “is a sign of encouragement that we support Greece on its difficult path.”

“We have confidence in what Greece is doing… we of course have to insist that Greece continue on this difficult path of pushing on with the agreed reforms,” he added.

Schäuble denied claims that Greece will face a financing gap of €50 billion by September, or that creditors would be forced to write off part of the debt. Instead, he said more financial help could be agreed next year if Greece stuck to the agreed path of reforms.

But public resentment is high in Greece after four years of austerity, which has sunk the country deep into six straight years of recession and sent unemployment soaring to a record 27 percent.

Many Greeks have blamed the EU’s biggest economy for not letting up in its push for reforms.

During Schäuble’s visit, police banned all public outdoor gatherings and demonstrations in a large swathe of the city centre including parliament, the seat of government and the German embassy.

The restrictions also applied to the entire route leading to Athens airport. Several metro stations were closed while traffic in the city centre was blocked.

Similar measures were taken for the visit of German Chancellor Angela Merkel in October.

On Wednesday, hundreds of protesters gathered outside parliament ahead of the late-night vote on the controversial reform bill, which also covers a partial overhaul of the tax system, including the introduction of new criteria for taxable income and the adjustment of tax thresholds.

The coalition government’s majority carried most of the tougher articles by a vote of 153 to 140. Greece is not expected to post growth before 2014.


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German war crime payments debated in Greece

Greece's parliament on Wednesday began a debate on a resolution to demand the payment of German war crime reparations, an issue long disputed by Berlin.

German war crime payments debated in Greece
Angela Merkel and Alexis Tsipras in Greece in January. Photo: DPA

“These demands are always active. They were never set aside by Greece,” parliament chairman Nikos Voutsis told reporters this week.

The chamber is expected to approve later Wednesday, with cross-party support, a resolution calling on the government of Premier Alexis Tsipras “to take all the necessary diplomatic and legal steps to claim and fully satisfy all the demands of the Greek state stemming from World War I and World War II”.

A parliamentary committee last year determined that Germany owes Greece at least €270 billion for World War I damages and looting, atrocities and a forced loan during the Nazi occupation in World War II.

Reclaiming war reparations has been a campaign pledge by Tsipras since 2015. He faces multiple electoral challenges this year, with his party trailing in polls.

'Historical responsibility'

During a visit to Greece in January, German Chancellor Angela Merkel said her country “recognised its historical responsibility.”

SEE ALSO: Merkel says Germany recognizes responsibility for Nazi war crimes in Greece

“We recognize our historical responsibility. We know how much suffering we, as Germany in the time of Nazism, have brought to Greece,” she said.

In 2014, ex-president Joachim Gauck had also sought public forgiveness in the name of Germany from relatives of those murdered by the Nazis in the mountains of northern Greece.

But when it comes to actual payments, the German government has always insisted that the issue was settled in 1960 in a deal with several European governments.

Germany's government spokesman Steffen Seibert reiterated Wednesday that “the reparation issue is judicially and politically settled”. 

He said Berlin is doing “everything it can so Greece and Germany maintain good relations as friends and partners”. 

During the Greek economic crisis, there was further tension in Athens over draconian EU austerity and bailout terms seen to be imposed by Berlin hardliners.

Relations have improved over the last three years after Tsipras' government endorsed conditions linked to satisfying its creditors.

Tsipras and Merkel also worked closely on finding common ground on migration and Balkans security.