Greece a hot topic for German elections

Greece seems to be taking center stage in Germany’s fast-heating political debate ahead of the September 22 elections, with differences of opinion arising even among ministers. On Tuesday, even Finance Minister Wolfgang Schaeuble came under discreet criticism from Foreign Minister Guido Westerwelle for suggesting that Greece will need a new aid package.

Schaeuble on Tuesday made it clear that there will be no more Greek-style bailouts if Chancellor Angela Merkel’s coalition wins the election but all the same recognized that Greece will need more aid. According to statements he made to CNN, the aid would not be like the haircut which holders of Greek bonds were forced to accept on the value of their assets last year. He said this applied to Greece as well as other members of the eurozone.

Nevertheless Westerwelle described the debate on the issue of a third bailout package for Greece as counterproductive to reform and called for continued pressure on Athens. Despite noting that it was right not to rule out more aid to Greece before the election, he added, “It is also right not to present a new bailout package before all reform steps are taken.”

Merkel also argued on Tuesday that “Greece still has a lot to do and must consistently continue the implementation of reforms.” She also noted that discussions on the future of Greek debt “will resume in 2014, as agreed.”

The opposition SPD’s spokesman on budget issues, Carsten Schneider, said that, according to troika calculations, Greece’s financing needs total 77 billion euros until 2020, including an 11-billion-gap seen cropping up over the 2014-16 period. He called on Schaeuble “to put all the real figures on the table.” The figure he mentioned referred to Greek bonds maturing in 2020. The Association of German Industry (BDI) also weighed in to the debate. “Greece has public assets of many hundreds of millions of euros – for instance companies in the sectors of energy, ports, airports and other properties,” said BDI president Ulrich Grillo, reiterating an earlier proposal that these assets could be sold to repay the country’s debt. He also suggested that they be transferred to the European Stability Mechanism so that creditors would be secured against a Greek default.

Separately, Commerzbank said in a report that the problem of Greek debt could only be solved if the creditors wrote off a large part of it.