German Finance Minister Wolfgang Schaeuble suggested the euro area could handle Greece dropping out, raising pressure on Greek political leaders struggling to form a government amid a rise in anti-bailout sentiment.
“We have learned a lot in the last two years and built in protective mechanisms,” Schaeuble told the Rheinische Post newspaper in an interview published today, when asked whether the euro area is girded for a Greek exit. His comments were confirmed by the Finance Ministry in Berlin.
“The risks of contagion for other countries of the euro zone have been reduced and the euro zone as a whole has become more resistant,” Schaeuble said. “The notion that we wouldn’t be able to react in a short time to something unforeseen is wrong.”
Evangelos Venizelos, the Pasok leader and former finance minister, will try to put together a unity government today as Greece enters a fifth day of post-election impasse. He is due to hold talks with Democratic Left leader Fotis Kouvelis on plans to keep Greece in the euro while attempting to negotiate a gradual “disengagement” from bailout austerity measures.
“The future of Greece in the euro zone now lies in Greece’s hands,” German Foreign Minister Guido Westerwelle said in a speech in the lower house of parliament in Berlin today. “Solidarity is not a one-way street” and aid to Greece can only be disbursed if Greece sticks to its part of the deal.
As Greece kicks back against the budget cuts and economic overhaul required under its financial rescue, anyone who tells Greeks there’s an easier, less painful way out is spouting “nonsense,” Schaeuble said.
While it’s firstly the responsibility of euro states to become more competitive to stimulate economic growth, the European Union can help, Westerwelle told lawmakers in a speech outlining government policy on the crisis. He cited better use of EU funds, tapping unused amounts in so-called structural and cohesion funds, improving access to European Investment Bank loans and expanding trans-national infrastructure networks.
“We have to tell our Greek friends and partners honestly, fairly and openly that there is no way other than the one we jointly agreed,” Schaeuble said. Other European governments and private investors have gone “extraordinarily far” in making concessions, so Greece “has to understand that must fulfill its commitments in return.”
“We want Greece to stay in the euro zone,” Schaeuble said. “But it has to want this and has to accept its commitments. We can’t force anyone. Europe won’t go under that quickly.”