German finance minister Wolfgang Schaueble has once again criticized the International Monetary Fund in the debt debate with the European creditors about Greece. Should the pessimistic growth assumptions of the Fund come true, all aid programs for Athens were in vain, he said at an event in Berlin on Tuesday.
“We are currently arguing with the IMF on what growth assumption is the right one for Greece for the next 40 to 50 years,” Schaeuble said n event organized by the Institute for Finance and Tax. “The IMF has so far not been willing to forecast more than 1 percent growth for the next 40 years – and this explains why all programs were in vain.”
“With a 1% growth, Greece will never be able to close the gap with the other member countries of the Eurozone,” Schaeuble concluded. By the way: the IMF does not forecast 1% growth.
The IMF considers debt relief as necessary because it considers the 3.5% as not achievable. Schaeuble hides behind the German Parliament (Bundestag) claiming he has no mandate to negotiate on debt relief and he would need a new mandate for this.
Weak Greece is torn between the two: it agrees with the IMF on the debt relief and sees Schaeuble’s 3.5% primary surplus demands as realistic.
But why Schaeuble insists on 3.5% primary surplus? He clearly cares less about the “gap among the eurozone countries” and “sticking to the euro rules.” The most striking example of how Schaeuble disregards his own rules is the famous German massive surplus and his stubbornness and intransigence in the face of persistent criticism.
Prominent economists have been rejected this Schaeuble’s austerity-to-death policy “has directly contributed to years of low economic growth and high unemployment in the EU, especially for other Eurozone countries.”
He doesn’t care. All he cares about is to secure that Greece repays the debt and the loans interest. And he wants to secure this repayment with a 3.5% primary surplus.
Last week, I heard on a Greek television channel, that the 3.5% primary surplus will secure that Greece will be paying 6.5 billion euros in interest per year. And I read somewhere that Greece will need to repay 100 billion euros of bailout loans in the next decade.
I cannot confirm whether these figures are true.
However, at the end of the dispute, this 3.5% primary surplus will be just numbers on a piece of paper. It will be allegedly binding Greece until 2060 or even 2080. Also on the papers. Schaeuble will not be on this earth to see the fruits of his struggle. Neither will all these Dijsselbloems, Junckers, Moscovicis, Draghis, Lagardes and Thomsens be wandering around. Nobody of all those insisting on unrealistic goals, imposing the impossible, making false promises and hopes or making wrong forecasts and never corrects them will be alive to see what their policies have achieved. Not even the current ‘German taxpayers,’ Schaeuble seems to care so much about. Their signatures will be faded away on the paper agreements gone in the wind.
But Schaeuble will have managed to grant Merkel and his CDU a victory in the September elections.
It’s all about politics and has little to do with economics.
PS Also KTG will not be here in 40 or 50 years from now. KTG will be 5 feet under. One feet of soil will be cut because of austerity.