Greece has mostly satisfied its international lenders, except for Germany which continues to be an obstacle in debt relief hopes, world press reports say.
Time to End the Greek Debt Tragedy
New York Times Editorial Board
It’s the season when Greece’s continuing debt saga approaches what has now become a familiar summer climax, with citizens protesting austerity cuts and international creditors squabbling over the terms of loans. It’s time to exit this cycle and face reality: Without relief, Greece’s economy will never recover, with repercussions the European Union can ill afford.
Last July, the government of Prime Minister Alexis Tsipras was forced to accept a raft of austerity measures imposed by international creditors in order to receive a bailout. This has taken a toll, and around a quarter of the population is unemployed.
Still, on Sunday, Greek legislators approved an additional 5.4 billion euros in austerity measures, the day before European finance ministers met in Brussels to discuss whether Greece was meeting the terms of last year’s bailout program and could qualify for an infusion of 5.7 billion euros. Greek citizens were in the streets protesting the idea of more cuts. .
But, Europe’s finance ministers failed to agree on whether Greece had made enough progress, putting off a decision until they meet on May 24.
They are also balking at an International Monetary Fund demand that Greece get debt relief when the bailout program ends in 2018. The I.M.F. is threatening to pull its support from the program if that relief is not offered.
The problem is Germany, Greece’s main national creditor: German federal elections will take place next year, and many German citizens feel their hard work and thrift should not be squandered on rescuing the Greeks from the pain of their fiscal sins.
Last year, Germany threatened to oust Greece from the European Union and the euro if it didn’t deliver on austerity measures.
Given Greece’s front-line position in Europe’s refugee crisis, Germany can no longer afford to threaten Greece. The last thing Europe needs is a “failed state,” as Greece’s finance minister, Euclid Tsakalotos, warned on Saturday, on its border with Turkey.
When Europe’s finance ministers reconvene, they would do well — for Greece, for the European Union and for Germany — to approve the July release of funds and agree to debt relief. Greece has gone a long way to satisfy austerity demands, but without debt relief its crisis will never end.
IMF Faces Pressure From Germany Over Greece
The Wall Street Journal/Marcus Walker
In Europe’s battle with the International Monetary Fund over Greece, Germany has a way to win.
Germany, Europe’s dominant economic power, is leaning heavily on the IMF to accept hypothetical assurances that Greece’s debt burden will be addressed in the future if needed, rather than the definite and far-reaching debt relief that the IMF wanted, according to people familiar with the talks.
Berlin believes the IMF will have to accept what’s on offer, even if IMF staff are unhappy about it, these people say. The IMF is also under heavy European pressure to accept Greek austerity policies that are less specific than the cuts the IMF wanted. An accord hasn’t been reached yet, and some warn it could take several weeks.
The IMF’s Achilles’ heel: Its board is controlled by Germany, other European Union countries, and the U.S., none of whom want a new crisis over Greece. That power reality weakens the IMF’s threat to pull out of the Greek bailout if it is unsatisfied …
Germany and other European governments have no appetite for another round of brinkmanship over Greece like in 2015, and want a deal in coming weeks that settles Greece’s future—at least for now.
Any deal is nevertheless likely to include some important concessions to the IMF. German Finance Minister Wolfgang Schäuble—who until recently adopted the hard-line stance in public that Greece needs no debt relief at all—has already permitted discussions to start this week about how eurozone loans to Greece might be restructured in the future.
A deal, which many European officials are now confident of reaching in late May or early June, is expected to include a promise by Germany and other eurozone countries to keep Greece’s debt burden below a certain threshold. That promise would entail easing the terms of Greece’s loans “if necessary.”
Germany Blocks Greek Bailout Over Populist Fears
The German government is blocking a Greek bailout in fear of being democratically replaced by the populist, Eurosceptic Alternative for Germany (AfD) Party.
In “AfD is the major hurdle in the Greek bailout”, Die Welt’s deputy economics editor, Jan Dams, has revealed that although it is “increasingly apparent that Greece cannot afford its debts”, the real reason the German government is blocking a bailout is fear of the Eurosceptic Alternative for Germany (AfD) party.
The International Monetary Fund (IMF) is commanding that the European Central Bank, which grants money for Eurozone bailouts, agrees to help Greece on the basis of more lenient reform requirements.
Both Greece and Germany are under enormous pressure, the former economic and the latter political.
Many members of the Christian Democratic Union (CDU) sister parties are not convinced by any of the arguments in favour of aid to Greece. Driven by concern about being democratically replaced by AfD politicians, they would not agree in parliament to softer conditions for the payment of billions of euros in aid.
The article notes the irony in the fact that the IMF, as a result of Angela Merkel’s insistence on the organisation’s centrality to the Eurozone’s economic affairs, has become one of the biggest obstacles to “every form of political compromise” involving the economic zone’s bailouts.
When the IMF calls for “more realism” in Greek plans for reform, Dams urges Europeans to “finally look facts in the face” and “realise the Greeks are neither socially, nor politically and economically, in a position to implement” agreed reforms.