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'Germany must give Greece more help'

The Local · 27 Aug 2013, 14:45

Published: 27 Aug 2013 14:45 GMT+02:00

An article in newspaper the Tagesspiegel on Monday argued that Greece must be given more help, either by writing off some of its debts or with a fresh bailout.

Commentator Harald Schumman argued: “The attempt to tame Greece’s debt by cutting the government budget has clearly failed.

“The Greek government has cut its budget by 24 percent since 2009. The economy has been so badly damaged that the debt burden – the ratio of debt to GDP – has increased to more than 160 percent.

“Changing tack is urgent. At the moment a third of the Greek population is living in poverty. The country doesn’t need more emergency credit but a proper programme of help which stimulates investment shifts perspectives.

“Investment will not come until the future of the euro is secure. Overcoming this insecurity must be the priority.”

BACK ON THE FRONT PAGE

Greece’s shaky finances and to what extent Germany is responsible for them, finally entered the election campaign last week when Finance Minister Wolfgang Schäuble admitted the country would need another rescue package from 2014, seen as marking a shift in Berlin's position.

Opponents seized on the admission by Schäuble playing up the image of the poor German taxpayer working hard to pay once again for the Greeks.

"Schäuble confirms what everyone knew," headlined the top-selling Bild daily, ever ready to defend the taxpayers of Europe's largest economy and the biggest eurozone paymaster.

For the Social Democratic Party (SPD) and Green opposition, the confession by a Merkel loyalist was a godsend.

Much of Merkel's huge popularity has been due to the perception in her country that she has managed the eurozone crisis prudently, looking after the German public purse.

For months she has enjoyed a personal poll lead of nearly 30 points over her Social Democratic rival Peer Steinbrück, who was her finance minister in a 2005-09 Grand Coalition government.

He accused the coalition government of Merkel's conservatives and the Free Democrats of having "distributed sleeping pills and trying to hide the fact that stabilising the eurozone will have a cost".

PLAYING DOWN THE COSTS

The conservatives have tried to extinguish the fire which Schäuble lit.

Schäuble insisted that the third European Union and International Monetary Fund programme of assistance for Athens would be "much smaller" than the previous two.

Greek Finance Minister Yannis Stournaras said on Sunday that if a third bailout was needed in 2014, it would be worth around €10 billion euros and would not be contingent upon new austerity measures.

Merkel, meanwhile, has said that Greece's debt and structural reforms would again be studied in 2014, as planned.

"I will certainly not weaken the incentive for Greece to implement further necessary reforms by commenting now on the outcome of a programme that is set to run for another year," she told the Tuesday edition of the Saarbrücker Zeitung.

Like Schäuble, she has insisted there will be no new 'haircut', warning that another Greek debt write-down could spark a "domino effect of uncertainty" and scare off investors in the eurozone.

Story continues below…

DO GERMAN VOTERS CARE?

Despite the war of words, the effect on the polls has so far been limited in the election race, where the future of the eurozone has not figured prominently.

According to a poll published Sunday, the conservatives and their junior partners would get a total of 45 percent, against a combined 37 percent for the SPD and their preferred allies the Greens.

Lothar Probst, a political scientist at Bremen University warned that Greece “spells a certain risk for the conservative Merkel, because so far the Germans have felt their savings were secure.”

But Professor Michael Wohlgemuth, director of think-tank Open Europe Berlin, told The Local that even Schäuble’s comments would not make Greece and a potential bailout from German taxpayers a decisive campaign issue.

“The SPD have not got a solution either,” he said. “People may even think that the SPD would be more willing to spend more money on Greece.”

AFP/The Local/tsb

The Local (news@thelocal.de)

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