Schaeuble ‘Agrees to Disagree’ With Greece’s Varoufakis

Updated on
The Whirlwind Week of Greece’s Yanis Varoufakis

The first direct talks between Greece and Germany since a new anti-bailout government took power in Athens last week yielded no agreement on narrowing their differences.

German Finance Minister Wolfgang Schaeuble said he and his Greek counterpart, Yanis Varoufakis, “agreed to disagree” in their Berlin meeting. ‘We didn’t even agree to disagree from where I’m standing,’’ the Greek responded.

Their encounter came hours after Greece lost a critical funding artery when the European Central Bank restricted loans to its financial system, raising pressure on the 10-day-old government to yield to German-led austerity demands to stay in the euro area.

The next move is up to Prime Minister Alexis Tsipras, who swept to power promising to reverse five years of spending cuts that accompanied 240 billion euros ($272 billion) of bailout loans. While he’s retreated from demands for a debt writedown, he’s so far sticking to promises to increase hiring, pensions and wages that breach the conditions for aid. Varoufakis said the endless belt-tightening has had unwanted consequences, making his point in a way that resonated among his hosts.

“Germany must and can be proud that Nazism has been eradicated here, but it’s one of history’s most cruel ironies that Nazism is rearing its ugly head in Greece, a country which put up such a fine struggle against it,” Varoufakis said.

ECB Limits

Following its move late Wednesday, the ECB set a limit of 60 billion euros on the funds that Greece’s central bank can provide under the emergency lending program, Die Welt reported. Greek banks borrowed about 56 billion euros in December, the newspaper said. Two euro-zone central bank officials called the report broadly correct. They asked not to be named because the discussions were private. An ECB spokesman declined to comment.

The new rules could add 510 million euros in funding costs for Greek banks, according to an analysis by Bloomberg Intelligence. Greek stocks and bonds fell, though pared losses during the day.

“I told my colleague Varoufakis that we respect the Greek electorate’s will of course, but that in every European Union member country, the electoral will of voters in all other countries also has to be respected,” Schaeuble said. “The reasons for the difficult path that Greece must follow -- and we didn’t disagree on that -- lie in Greece, not in Europe.”

In Athens, meanwhile, Tsipras told his party’s lawmakers his government will implement its campaign promises -- which included an end to the terms of the bailouts -- and present its own roadmap to exit the crisis and end the troika. He opposed what he called a “fire sale” of the nation’s assets.

Respecting Rules

“We’re bound by the rules of the EU and we’ll respect them even when we disagree with them,” Tsipras said. “We’ll respect the rule for a primary balanced budget. To be clear though, austerity is not a rule of the European Union.”

Schaeuble bristled at the Greek finance chief’s announcement last week that he was abandoning the country’s existing bailout deal and poured cold water on Greece’s calls for a debt restructuring and its plans to reverse austerity.

“I couldn’t hide my skepticism in the conversation that some measures announced by the new government -- but my colleague told me that they haven’t been decided yet -- don’t necessarily go in the right direction in our opinion,” the German finance chief said.

Varoufakis said Greece is looking for a financial lifeline to keep the country afloat for four months while it negotiates a “new contract” with the rest of the euro region.


“We set the scene for deliberations that would lead to an approach to put an end to this seemingly never-ending crisis that began in Greece and then unfortunately spread out to the rest of the euro zone,” he said.

Tsipras and Varoufakis visited seven cities between them this week after their Syriza party’s anti-austerity campaign swept them into office. While their demands for overhauling the terms of the bailout package were met with resistance in Berlin and Brussels, they haven’t lost their popularity at home.

A rally against the ECB’s decision is due to be held in central Athens at 6 p.m. tonight. The event, to be held in front of Greece’s parliament building, was set up through Facebook and had 6,200 attendees signed up on its page at 5 p.m. in Athens.

“We can’t be blackmailed, we won’t succumb, we are not afraid, we won’t back down,” the organizers wrote on the page.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE