Schäuble’s requests for a new loan and debt haircut

Germany seems to be willing to make extensive concessions in exchange for expediting the necessary reforms in Greece, a Spiegel article reveals.

According to the authors of the report of the German Finance Ministry, which the German magazine cites, the shortfalls in Greece are enormous. Main problems of public administration have not been surpassed, the tax authorities are unreliable, the establishment of a land registry remains unchanged, the privatization plan is not progressing and the labour market is not as flexible as it should be.

Because of the shortfalls, the partners refuse to pay the two installments of 8.3 billion euros. But this amount should be disbursed no later than May, otherwise Greece will not be able to cover commitments of 10 billion euros, and the Greek government will have to save 2 billion for this year to meet the Troika’s conditions for its budget.

The measures being considered

Τhe German Finance Ministry would like to utilize these needs to push Greece to accelerate the implementation of reforms. But fronted by the risk of a new revival of the euro crisis and to support the political forces in Greece that are in favor of the single currency, Schäuble seems willing to make extensive concessions in the coming weeks.

The ministry report reports three measures which could also be combined with each other:

-       a limited supplemental program from 10 to 20 billion euros from the ESM without the IMF

-       Greece should again issue bonds with greater performance than those of the other European countries

-       despite denials by the German Finance Ministry, a possible new haircut of the Greek debt that will fall on the Member-States of the Eurozone is also reported

 
Deepening the bilateral cooperation

However, Germany is not intended to be limited only to the financial aid towards Greece. As Spiegel says, to show its "good faith," the German government wants to give new impetus to the existing bilateral cooperation via a new developmental program.

All German ministries must submit to the German Foreign Ministry concrete cooperation projects in the coming weeks. The Labour ministry will table proposals for vocational education and the Finance ministry for the function of the tax authorities.

It should be noted that just half a month after its formation the German government proceeds to a direct implementation of a relative binding that includes the support towards Greece and improvement of the Hellenic-German Assembly, a cooperation institution between Greek and German municipalities.