Schaeuble says Greek bailout shocker was designed to bring clarity

German Finance Minister Wolfgang Schaeuble said on Thursday that his blunt comments earlier in the week that Greece would need a third bailout had been aimed at reassuring people who feared the government was hiding bad news before next month’s election.

Schaeuble’s remarks at a small campaign event in northern Germany on Tuesday caused a political storm because they were at odds with the line of his boss, Chancellor Angela Merkel, who has said repeatedly that it is too early to discuss more aid for Athens.

Opposition parties, which have criticised Merkel for playing down the risks to German taxpayers from Greece to avoid a

pre-election backlash, seized on Schaeuble’s comments as further evidence that the chancellor had been less than honest.

“I saw a need to make clear that we are not hiding anything,» Schaeuble said at an election event near Koblenz in western Germany.

Greece has received two bailouts worth a combined 240 billion euros, but the loans will stop flowing at the end of 2014.

Schaeuble said in Koblenz that since Greece would not be able to raise sufficient funds on the capital markets by then, «there will likely be a need for action».

At the event on Tuesday, he had said: «There will have to be another programme for Greece».

The government has tried to play down those remarks, insisting that it will wait until the middle of 2014 to decide whether Greece needs further help. But many economists have long seen a third programme as inevitable.

Schaeuble said he felt the need to bring clarity to the discussion because of sense that people feared bad news after the election.

“This is dangerous not only for Greece and Europe. If the financial markets believe that another debt writedown is coming,

then we will quickly see general anxiety surrounding euro zone debt.”

Schaeuble repeated this week there would not be another debt «haircut» for Greece.