Schaeuble Rules Out Greek Debt Cut as Violation of EU Rules

  • Greece would have to leave the euro area, Schaeuble says
  • German finance minister comments in broadcaster ARD interview

Wolfgang Schaeuble.

Photographer: Jason Alden/Bloomberg

German Finance Minister Wolfgang Schaeuble ruled out a debt cut for Greece as a violation of European rules, saying the country would have to leave the euro area to do so.

“We can’t undertake a debt haircut for a member of the European single currency, it’s ruled out by the Lisbon Treaty,” Schaeuble said on broadcaster ARD. “For that, Greece would have to exit the currency area.”

The German minister’s comments add to squabbling between Greece, euro-area creditors and the International Monetary Fund about the indebted nation’s performance and debt sustainability, which has stalled negotiations aimed at completing the second review of Greece’s 86 billion-euro ($92 billion) bailout program.

Greece pushed back on the IMF’s view that reform efforts in Athens are off track. The impasse has revived concerns over the country where the euro crisis began in 2009.

Read more: Welcome back, Greek crisis, it’s like you never left -- a Q&A

Schaeuble said Greece will be able to complete the current program if the country meets the conditions set by creditors, who must keep up the pressure on the government in Athens. Greece’s main problem isn’t debt, but rather competitiveness, he said.

“The pressure on Greece to undertake reforms must be maintained so that it becomes competitive, otherwise they can’t remain in the currency area,” Schaeuble told ARD in the taping for a talk show to air later Wednesday evening.

The yield on two-year notes inched closer to 10 percent on Wednesday after jumping 80 basis points the day before as the quarrel fueled concern the country is running out of time to complete the review before Europe’s busy election season begins. The yield rose another four basis points to 9.77 percent as of 12:38 p.m. in Athens.

Dutch finance minister Jeroen Dijsselbloem added to the tension Wednesday, saying the Netherlands won’t participate in the Greek bailout if the IMF withdraws support.

“The majority in parliament is very clear, that if the IMF will not take part or withdraws, then support for the program will be lost,” Dijsselbloem told lawmakers in The Hague.

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