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 2015Comments on the latest Greek proposalsOn 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 time-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.
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.
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)