BERLIN – German Finance Minister Wolfgang Schaeuble, whose country has supported bailouts on condition of harsh austerity measures staying in place, said his government is willing to back a plan for Greece to get out from under its deal with international lenders, with an emergency credit line as a buffer.
Finance Minister Gikas Hardouvelis got the commitment after a meeting in the German capital. Germany is the biggest contributor to 240 billion euros ($306 billion) in two rescue packages from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
Schaeuble, a hardliner who has insisted on tough terms for Greece in return for the monies, said Germany’s support is on condition of its Bundestag and at least some of the other 17 Eurozone countries Parliaments going along with it.
Prime Minister Antonis Samaras wants an early exit from the Troika memo because the attached big pay cuts, tax hikes, slashed pensions and worker firings have decimated support for his ruling New Democracy Conservatives and its coalition partner the PASOK Socialists.
Most of the bailouts, which began four years ago, run out this year but the IMF was set to continue supplying loans until 2016 when the next national elections are scheduled and Samaras’ party has been sliding further behind the anti-austerity major opposition Coalition of the Radical Left (SYRIZA) in polls.
Although Greece been making a tepid, toe-in-the-water return to markets, the country is paying almost twice as much in interest as it does with the Troika but Samaras wants to avoid the political fallout of staying tethered to the lenders and has pushed for the early exit.
But after his comments, and the high interest rates Greece paid on market loans rattled the Athens Stock Exchange, the Premier was forced to adopt an IMF proposal that the country have a precautionary credit line, which he said will be 11.3 billion euros from bank recapitalization funds that were supposed to be drawn from the bailout monies.
The exact nature of the credit line which would be extended to Greece remains unclear but its aim would be to provide Greece with emergency funding in the event that it is unable to tap capital markets.
Speaking after meeting Schaeuble in Berlin, Hardouvelis said the talks focused on the progress of economic reforms in Greece, where 700 remain unfinished, and the outlook for the country’s relationship with the Troika once the EU end of the loans finishes on Dec. 31.
“We have to enter a new relationship from January 1,” Hardouvelis said. “The German side understands this, that we must find a solution soon, and set the parameters for the relationship.”
But Hardouvelis insisted he and Schaeuble didn’t even mention the Troika, the dominant presence in Greece for 4 1/2 years and that the talk was a discussion between two states,” even though envoys from the lender are due back in Athens on Nov. 4 for more negotiations.
“Germany has its opinion, and has helped Greece repeatedly,” Hardouvelis said, adding that the two sides were now discussing a “mutually acceptable solution going forward.”
He was confident that Berlin would continue to help Greece, describing Schaeuble as “pro-European,” and said the German finance chief “wants a strong euro, a strong Eurozone, and it was emphasized during our meeting that in order to have a strong eurozone, we must have a strong Greece.”
A Finance Ministry source told Kathimerini that the new relationship would not involve the current “micromanaging” carried out by the Troika.
The head of the Euro Working Group, Thomas Wieser, said Greece would remain subject to some kind of monitoring, like Ireland and Portugal which both recently exited bailouts, but that it would be much less intensive than the supervision to date.
The prospects for an early bailout exit, and the conditions will be the subject of a meeting on Oct. 30 between Samaras and his Deputy Premier/Foreign Minister Evangelos Venizelos, the PASOK Socialist leader who occasionally barks objections to some austerity plans but then has relented.
The Labor Ministry reportedly wants to bring up the Troika’s demand for an overhaul to laws governing trade unions to minimize the unions’ power and make it harder for them to call strikes.
Authorities were said to believe they can secure a consensus within the coalition and with associations representing workers and employers. The aim is to offer the Troika progress on the trade union law while winning a reprieve on further pension cuts as Samara has vowed no more austerity.