The statements from Mr Schauble come at a sensitive time for the government that is attempting to shore up support following SYRIZA’s win in the European elections (with a combined loss of support of about 11% for coalition partners PASOK and New Democracy compared with the June 2012 general election result).
The administration is attempting to appease voters by preparing a cabinet reshuffle and indicating that measures to reduce the tax burden on struggling households and businesses may be imminent. However the statements by Mr Schauble appear to restrict even further the little room for maneuver the government has on fiscal measures.
Mr Schauble stated that it was likely that Greece would require a further loan of about 10 billion euros. He also once again raised the threat of a Greek exit from the eurozone if the country failed to implement the reforms demanded by the troika.
“Towards the end of 2012 we voted for the second programme for Greece. It was clear then that it would last for two years and that after this Greece would not be able to be fully financed by the markets. Greece’s debt, according to the forecasts of the troika, will in 2022 reach a level which could be described as sustainable. For this Greece may potentially need once again limited assistance. A precondition would of course be that it continues to meet the conditions of the IMF, the European Commission and the European Central Bank,” Mr Schauble stated.
When asked how much more radical reform and austerity the crisis stricken country could take, the German Finance Minister acknowledged the burden shouldered by the Greeks but added that the reforms were necessary if the country wished to stay in the eurozone.
“For the Greek people the reforms are linked to heavy burdens and even mishandlings, there is no doubt about that. For that we must show great understanding. But that does not help in one thing: the Greek people must go through this reform process if the country wishes to stay in the euro. The Greeks decide for themselves for their future. But a monetary union can only work if all obey the common rules.”
For its part the Greek Finance Ministry did not rule out a further bailout loan, writing in a statement, “The financing needs of the country, as is known and was accepted by the last Eurogroup, are covered until the middle of 2015. For the period 2015 – 2016 the financing needs of the country will depend to a significant degree on the results of the banking stress tests which will be conducted by the ECB at a pan-european level.”
In response to the comments by Mr Schauble the opposition party SYRIZA issued a statement which read:
“While the government is attempting to find illegitimate support to avoid the polls and the people’s judgment, the statements of European officials such as Mr Schauble, as well as the IMF report, bring home the harsh reality of the memorandum.”
“The government can hide neither its attachment to a catastrophic policy which is laying waste to the Greek people and entails the implementation of new anti-social measures, nor the fact that the public debt which is the pretext of the Memoranda is in no way being made sustainable.”
“Superficial moves such as the rumoured reshuffle cannot correct the image of governmental dissolution.”