Monday

25th Sep 2017

Opinion

Schaeuble could destroy eurozone, not just Greece

  • A poster against German finance minister Wolfgang Schaeuble during the 2015 campaign for the Greek bailout referendum. (Photo: Eric Maurice)

The sudden suspension of Greece’s short-term debt relief measures on Wednesday evening (14 December) has sparked fierce criticism by a number of EU officials.

EU commissioner Pierre Moscovici, European Parliament president Martin Schultz, French president Hollande and finance minister Michel Sapin, along with many MEPs from the GUE/NGL, S&D and the Greens groups, have echoed support for Greece and prime minister Alexis Tsipras’s decision to give a one-time relief package to low-income pensioners.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Greek PM Alexis Tsipras is due in Berlin on Friday for talks with German chancellor Angela Merkel (Photo: Consillium)

In essence, there has been no official decision taken by the Eurogroup, the European Stability Mechanism (ESM), or the European Council.

Instead, there's been unilateral action from the head of the Eurogroup without prior coordination with his colleagues.

Creditors should respect their own part of the deal and conclude the second review of the bailout programme, and acknowledge that there are open issues that need be addressed.

The Greek government is fully implementing the bailout deal, moving on to needed reforms, providing safety nets for the vulnerable social groups.

It's possible Tsipras’s announcement was brought about by German finance minister Schaeuble and other circles pushing Greece to the limit.

But in truth, we need not investigate who has taken the decision but instead focus on substantial issues.

These issues include lowering primary surplus targets after 2018 and loosening tax rates so that the economy can become stable and growth can reach sustainable levels.

Even with such strict deadlines, the Greek government has achieved all fiscal targets for 2016, increasing public income and reaching a higher primary surplus than expected.

This positive development prompted Tsipras, a few days ago, to announce a one-time relief package for low-income pensioners; a substantive decision after 12 consecutive pension cuts between 2010 and 2014, a loss of more than 30 percent of national GDP, during the same period, with a considerable part of the population facing poverty and social exclusion.

The Greek government’s urgent measures are the least this government can do to temporarily do something for the worse off.

A short-sighted approach

At the same time, the Greek side is trying to explain common sense to the International Monetary Fund (IMF) and Germany.

The fund is demanding further pension and wage cuts, while Germany's finance minister is continuously asking for more reforms without specifying what kind of reforms are needed.

Since 2010, the IMF has failed completely in its projections for the performance of the Greek economy, something IMF officials admitted in July 2016, identifying that the fund’s financial policy mix had decisively worsened the domestic economy instead of saving it.

Nonetheless, it continues to ask for more austerity, rejecting any discussion on the reinstitution of collective bargaining in the labour market, insisting on the adoption of the same policy mix that caused recession in Greece.

As of Germany’s stance, nobody could expect such a biased, hypocritical and short-sighted approach by finance minister Schaeuble. He is the leading political figure that attempted in 2015 to force Greece exiting Eurozone.

He has never recognised the big reforms of the Greek government, nor the fact that during the last couple years Greece more than met its fiscal targets.

Schaeuble keeps insisting on the need for the domestic economy to be more competitive, ignoring the burden sky-rocketed debt relief poses towards that direction.

Keeping up the good work

Although it is true that the Greek economy needs to be more competitive, more of the same won't do it.

It is certain that the economy will not be more competitive without reducing taxes, by keeping primary surplus at 3.5 percent in annual basis for the next years nor by cutting pensions, wages and further minimising public spending on social benefits.

Things are simple. Greece is moving steadily down a very demanding and difficult path, making sacrifices and important reforms.

The government should keep up the good work so that positive financial figures can be translated into more production, more consumption, more benefits for the household and investors and the private sector.

Those who want Greece to fail will see themselves proved wrong.

Dimitrios Papadimoulis is vice president of the European Parliament and head of the Syriza party delegation.

Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

Watchdog urges creation of EU bad bank

EU growth is being held back by more than €1 trillion of bad loans, its banking regulator said, comparing the eurozone to 1990s Japan.

Time to de-escalate in Catalonia

Spain's apparent refusal even to allow for a dialogue on the referendum is giving the Catalan government less and less of an incentive to aim for a compromise.

Stakeholders' Highlights

  1. EU2017EEEU Finance Ministers Agreed to Develop New Digital Taxation Rules
  2. Mission of China to the EUGermany Stands Ready to Deepen Cooperation With China
  3. World VisionFirst Ever Young People Consultation to Discuss the Much Needed Peace in Europe
  4. European Jewish CongressGermany First Country to Adopt Working Definition of Antisemitism
  5. EU2017EEFour Tax Initiatives to Modernise the EU's Tax System
  6. Dialogue PlatformResponsibility in Practice: Gulen & Islamic Thought
  7. Counter BalanceHuman Rights Concerns Over EIB Loan to the Trans Anatolian Pipeline Project
  8. Mission of China to the EUChina Leads the Global Clean Energy Transition
  9. CES - Silicones EuropeFrom Baking Moulds to Oven Mitts, Silicones Are a Key Ingredient in Kitchens
  10. Martens CentreFor a New Europeanism: How to Put the Motto "Unity in Diversity" Into Practice
  11. Access MBAGet Ahead With an MBA Degree. Top MBA Event in Brussels
  12. Idealist QuarterlyIdealist Quarterly Event: Building Fearless Democracies With Gerald Hensel

Stakeholders' Highlights

  1. Mission of China to the EUPresident Xi Urges Bigger Global Role for Emerging Economies
  2. EU2017EEAre We Socially Insured in the Future of Work?
  3. European Jewish CongressFrench Authorities to Root Out "Societal Antisemitism" After Jewish Family Assaulted
  4. European Federation of Local Energy CompaniesClean Energy for All? On 10.10 Top-Level Speakers Present the Clean Energy Package
  5. UNICEFUp to Three Quarters of Children Face Abuse & Exploitation on Mediterranean Migration Routes
  6. Swedish EnterprisesEurope Under Challenge; Recipe for a Competitive EU
  7. European Public Health AllianceCall to International Action to Break Deadlock on Chronic Diseases Crisis
  8. CES - Silicones EuropePropelling the construction revolution with silicones
  9. EU2017EEEU 2018 Budget: A Case of Three Paradoxes
  10. ACCAUS 'Dash for Gas' Could Disrupt Global Gas Markets
  11. Swedish Enterprises“No Time to Lose” Film & Debate on How Business & Politics Can Fight Climate Change
  12. European Free AllianceSave The Date!! 26.09 - Coppieters Awards To... Carme Forcadell