German finance minister: Let’s get real here, Greece is going to need a third bailout

posted at 10:01 pm on August 20, 2013 by Erika Johnsen

The big news out of the eurozone of late is that the currency bloc has finally managed to wend its way out of the technical economic recession in which they have lately been languishing, but let that not be somehow confused with the notion that all of the zone’s underlying problems have been solved for the long term. Case in point:

Germany’s finance minister Wolfgang Schaeuble has said for the first time that Greece will need another bailout to plug a forthcoming funding gap. …

His boss is Germany’s leader is Angela Merkel, who said recently it was too early to talk about new funding.

But Mr Schaeuble told an election rally: “There will have to be another programme in Greece.”

Mr Schaeuble’s comments place him as one among many who believe Greece will have to be given new funding to balance its books, but they are at odds with his party leader’s public stance on the matter.

The amount of new money in question is likely to be far smaller than the 240bn euros (£205bn, $320bn) already granted by the International Monetary Fund (IMF), the European Central Bank and the European Union.

The IMF last month estimated Greece will need around 11bn euros in 2014-15.

The admission is kind of a big deal because Germany is barely a month away from their major national elections and Merkel, who’s running for reelection, has so far been holding such questions at arm’s length. As the bloc’s largest economy, Germans know full well that more bailout money for more flailing eurozone countries means that they’re the ones who’ll end up shouldering at least a plurality of the costs, and the European debt-crisis nightmare just refuses to end. The admission that more bailouts could be on deck is not a popular one, and Reuters reports that the minister’s comments have indeed spurred the much-feared commentary from the opposition:

Schaeuble’s comments played into the hands of the opposition, who throughout the election campaign have accused Merkel of failing to tell voters the truth about Greece.

“I have made clear that saving Europe and keeping the continent together comes at a cost, also for us Germans,” Merkel’s Social Democrat (SPD) challenger Peer Steinbrueck said after Schaeuble spoke. “Now it’s time that Frau Merkel tells people the truth.”

Greens leader Juergen Trittin said Schaeuble had exposed Merkel’s “deceit” and criticized the chancellor for advocating austerity policies in Greece that had failed to reduce its debt load. …

“Greece is a dangerous subject. It is not clever to bring it up again just as there was a general feeling of calm,” said Emnid pollster Klaus-Peter Schoeppner.

Alas, the veneer of calm is evidently just that — a veneer.


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