Schaeuble Says Boosted ESM May Handle Future Euro-Area BailoutsBy
European monetary fund would tackle euro region ‘weak points’
Greece won’t get next bailout tranche unless IMF contributes
German Finance Minister Wolfgang Schaeuble said euro-area governments could decide to revamp the bloc’s financial backstop, the European Stability Mechanism, and convert it into a European version of the International Monetary Fund to bail out cash-strapped members.
Speaking to reporters in Brussels after a two-day meeting of European Union finance ministers, Schaeuble said the EU lacks institutions to enforce fiscal discipline among its members. Expanding the powers of the intergovernmental ESM is the only way to create such an institution, given the fact that there’s no majority for EU treaty changes, he said.
“If there ever were to be programs again, we may well return to an idea some had already in 2010, that we Europeans could do this ourselves, a European monetary fund,” Schaeuble said Tuesday. That would tackle the “obvious weak points” in Europe’s institutional setup and “is therefore a plan B we have to have.”
The revival of the idea, floated also by Eurogroup chairman Jeroen Dijsselbloem in an interview with Frankfurter Allgemeine Zeitung, comes as the IMF and Greece’s European creditors remain at odds over the need for an easing of bailout terms to ensure that the country’s debt remains sustainable. Schaeuble said the fund stands by its pledge to join the current bailout program and “has long adjusted to” making its contribution.
Euro-area finance ministers on Monday said Greek Prime Minister Alexis Tsipras has yet to comply with the terms attached to the emergency loans that have kept the country afloat since 2010. The government, which has more than 7 billion euros ($7.5 billion) in bond payments due in July, has balked at implementing mandated reforms to its energy and labor markets while also resisting calls for additional pension cuts.
Greece won’t get any money before the July deadline unless the IMF contributes to the current 86 billion-euro program and all payments depend on Greece’s compliance with the bailout conditions, Schaeuble told reporters, citing the terms of a May 2016 Eurogroup statement and the IMF’s pledge it contains.
“The responsibility for any delay, if there is any, lies not with the IMF, not with the Commission, not with the ECB, not with the ESM and not with the government of any member state,” Schaeuble said. A quick conclusion of a review of Greece’s compliance is in Greece’s economic interest “because the first signs that there is uncertainty again are unmistakable.”
— With assistance by Nikos Chrysoloras, Marine Strauss, Rae Hurring, Matthew Miller, Richard Bravo, Corina Ruhe, Jones Hayden, Alexander Weber, Ian Wishart, Patrick Henry, and Edward Ludlow