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Schaeuble exposed: Full text of 5-year Grexit-plan. FinMin under fire in Germany

Old chap Wolfgang Schaeuble, the German Finance Minister has been exposed. His plan for a temporary Greek exit from the Eurozone explains the reasons why he has been completely ‘negative’ towards the  Greek proposals right from the start of the negotiations with the new Greek government. On Saturday and before the Eurogroup meeting,  Schaeuble delivered a show of his Grexit-obsession. Just when the German Finance Ministry was communicating its negative assessment of the Greek proposals to other Euro countries.

10 July 2015
Comments on the latest Greek proposals
On 9 July 2015 Greece has submitted a list of proposals. These proposals are based on and even fall behind the latest aide memoire that was drafted by the Troika to conclude the review under EFSF.
However Greece was not able to conclude the review.
These proposals lack a number of paramount important reform areas to modernize the country, to foster long term economic growth and sustainable development. Among these, labour market reform, reform of public sector, privatisations, banking sector, structural reforms are not sufficient.
This is why these proposals can not build the basis for a completely new, three year ESM program, as requested by Greece. We need a better, a sustainable solution, keeping the IMF on board. There are 2 avenues now:
1.
The Greek authorities improve their proposals rapidly and significantly, with full backing by their Parliament. The improvements must rebuild confidence, ensure debt sustainability upfront and the successful implementation of the program – so as to ensure regained market access after completion of the program.
Improvements include:
a) transfer of valuable Greek assets of [50 bn] Euros to an external fund like the Institution for Growth in Luxembourg, to be privatized over time and decrease debt;
b) capacity-building and de-politizising Greek administrative tasks under hospices of the COM for proper implementation of the program;
c) automatic spending cuts in case of missing deficit targets.
In parallel, a set of financing elements would be put together to bridge the time gap until a first disbursement under the enhanced program could be made. This means the existing risk of not concluding a new ESM program should rest with Greece, not with Eurozone countries.
2.
In case, debt sustainability and a credible implementation perspective can not be ensured upfront, Greece should be offered swift negotiations on a ti
me-out from the Eurozone, with possible debt restructuring, if necessary, in a Paris Club – like format over at least the next 5 years. Only this way forward could allow for sufficient debt restructuring, which would not be in line with the membership in a monetary union (Art. 125 TFEU).
The time-out solution should be accompanied by supporting Greece as an EU member and the Greek people with growth enhancing, humanitarian and technical assistance over the next years. The time-out solution should also be accompanied by streamlining all pillars of the Economic and Monetary Union and concrete measures to strengthen the governance of the Eurozone.
(copy-paste from PDF document, uploaded by Sven Giegold,Spokesman of The Greens fraction in the European Parliament)

According to German media – Die Welt -, Schaeuble had discussed his Grexit-Plan with Chancellor Angela Merkel, while the Vice Chancellor Sigmar Gabriel was briefed on the issue.

schaeuble's Grexit Plan

With 2-3 hours delay, the Gabriel’s party, the German SPD, came out and started to criticize Schauble’s non-paper claiming among others that

Schäuble spielt falsch: sein Grexit-Plan hat NICHT die Unterstützung der SPD.

translation: Schaeuble plays worng: his GREXIT-plan does not have the support of SPD

Vice Gabriel said first he had no idea and later admitted he knew about it, and said something like: such a temporary Grexit could only happen if the Greek government wanted so.

As for the German Greens who spread Schaeuble’s non-paper all over the internet, they now accuse the German coalition of  acting against the Constitution as they prepared a Grexit proposal without bringing the issue to the German Parliament (Bundestag)

“Germany’s grand coalition is destroying Europe’s unity. No to their #Grexit plan!”

German government risks Europe. It suddenly brought the exit of Greece from the euro zone this week. This initiative was not simply a one-man action by Wolfgang Schäuble, who would rather see Greece out of the euro for some time. Rather, Chancellor Merkel and Sigmar Gabriel were involved. However, this crucial change in position was not approved by the Federal government, neither was given opportunity to the Bundestag to comment. This procedure is unconstitutional. (more here in Giegold’s website in German)

German Greens-MP Sven Kindler revealed also on Sunday, that he has officially asked at the Federal Finance Ministry this week, whether there was a German proposal for Greece to introduce a parallel currency and Grexit. The question was based on a report by Kathimerini from 07.07.2015.

On Thursday [09. July], the Federal Ministry of Finance has responded to the Bundestag, that there is no such proposal. However today, Wolfgang Schäuble presented exactly such a proposal.”

Kindler accuses Schaeuble of lying to the Bundestag. Furthermore, he reminds of the German Bundestag/Government regulations that the government has to inform the Parliament before it brings any such proposal to the European level.

Schaeuble’s GREXIT plan is not new. Former Deputy Prime Minister Evangelos Venizelos told daily Kathimerini on 4. January 2015 that Wolfgang Schaeuble has tried to convince Greece to leave the eurozone already in 2011. Back then, Schaeuble had not submitted such “specific proposals” as on Saturday.

Specific proposals? Financial write Frances Coppola commented on Schaeuble’s plan:

Frances Coppola (@Frances_Coppola):

Schaeuble & Merkel’s plan is here. Poorly detailed and lacks reliable figures. Not credible as it stands.

If I were German, I would have thought that Schaeuble’s plan was written by a …Greek (:p)

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10 comments

  1. It is possible that Schaeuble has overplayed his hand. Although Germany has great financial power and political backing from N E Europe, there are also codes of conduct that are being broken and issues of level of competence. Germany is failing on both of these.

    Let’s see, if the Latin-based powers will defeat Germany and her allies in the EU crisis (this has escalated to become a crisis of the EU itself).

    • Not sure if it is still possible, but to win some for more in-depth discussions time maybe the proposals should be split into two:

      – The equivalent of the second bailout program completion (7-8 B euros in return for the measures proposed by the Greek government now, essentially also proposed by the creditors 2 weeks ago).

      – A third bailout program that will add much more funds (50 B euros being requested by Tsipras now, which might have to grow even more) in return to new measures

      To some extent that will roll back the situation by 2 weeks — before Tsipras called for a referendum. Of course, the impact on the Greek economy from the bank closures cannot be rolled back, but at least further deterioration can be reduced.

      • Giaourti Giaourtaki

        It was never 7.2 bln “bailout” but 5.3 bln!
        Banks closure that in fact is an embargo against Greece inclusive the pillage of Greek banks and companies on the Balkans, happened also cuz the Greek government wanted higher corporate tax on profits over 500.000 and one can see most “liberalizations” and “reforms” lobby for the rich and will be paid by invitations to yacht-parties.
        And then there are companies that make billions and “pay” their taxes in Dieselboom’s paradise like Eldorado Gold – OXI Chalikidiki! – and FAGE who “pay” in Luxembourg; in the end they can also say Greece produces nothing.

    • Giaourti Giaourtaki

      It’s all media, when Renzi says enough is enough, Germany should stop humiliating Greece, the second part gets “lost”; also his “pro-Greek”-statements when he visited Berlin, for them he’s just another peeing poodle at their feet.
      In this “5 year”-provo the leak was again gifted to the racist anti-Greek FAZ, and now they will play it all down to get a “compromise” including a technocrat government, so to improve the humiliation even into perfection.
      And on the other hand they use some daily mail article to prove that “the” Greeks voted NO because of 1941-44.
      Without cutting their electricity the propaganda show won’t stop and so we have to wait some years until all German energy comes from wind-mills and then Aeolus will stop them.
      BTW: Russia considering direct fuel deliveries to help Greece: minister

  2. Giaourti Giaourtaki

    Greece should suggest to cut the pensions to zero!
    All the time the Troika was called institutions and now as it doesn’t exist any more it’s called again Troika
    BTW: That the so called “humanitarian aid” is a hoax and blackmail suggests one stupid “question” by a German journalist of NTV this morning: no solution – no humanitarian aid! And one other was brilliantly blablurging from Syndagma and called it SYRIZA-SQUARE

  3. I believe, (1b – independent, depoliticized Greek bureaucracy to monitor agreement execution) and (1c – automatic, across the board spending cuts if the revenue collection falls short) were first proposed by Varoufakis. He wanted the creditors to have guaranteed debt repayment in return for flexibility the Greek government would retain in structuring their budget (e.g., decide that 93% of money for debt repayment should come from tax increases and 7% from spending cuts). I thought at the time it is a good idea and was wondering why the creditors did not push for it. It was not included in Tsipras’s proposal from 3 weeks ago as well. The only weakness of this idea I can think of: what to do if the automatic, across the board spending cuts become unacceptable to the Greek public.

  4. Schäuble is acting a role of a bad cop.

  5. Which brings us to what has been said time and again that schauble has not been negotiating in good faith.

    • Giaourti Giaourtaki

      What faith, what negotiations? Greeks brought 25 proposals, nobody so called “European” said a word, they never even read into it and the answer was always no. It took 5 months the jerky Kraut to learn the Greek word for no…

  6. For the first time I’m ashamed of my country’s current politics. It is not a good feeling.