German Finance Minister Wolfgang Schaeuble said on Wednesday that Greece’s problems were of its own making and dismissed suggestions that Germany was being punitive towards a country that perhaps should not have joined the euro.
Speaking at the European University Institute in Florence, Schaeuble said he had, in the past, had very open discussions with the Greek government about whether it would be better for it to leave the euro zone, and the Greek authorities were 100 percent committed to doing what was necessary to remain members.
“We have shown a lot of solidarity with Greece,» Schaeuble said in response to some hostile questions from his audience about Germany’s approach to Greece’s debt crisis. «Everyone knows the real problems of Greek society are in Greece and not to be found abroad.”
Faced by students in pig masks and holding banners saying «No Austerity» and «We are all PIIGS», a reference to peripheral euro zone countries Portugal, Italy, Ireland, Greece and Spain, Schaeuble said it was «ridiculous» to say he wanted to punish Greece.
In Germany he often had to justify the billions of euros that his country was contributing to keeping Greece afloat, he said.
Greece is hoping to secure a new 130 billion euro ($172 billion) bailout package agreed last month with the EU, European Central Bank, and the International Monetary Fund, but first needs to reach a debt restructuring deal on Thursday with private investors.
Schaeuble said it could be argued that Greece should not have joined the euro and that it was only by tough structural reforms that it could now hope to regain the competitiveness needed to prosper in the single currency.
He noted that even after recent cuts in Greece’s minimum wage, salaries were no lower than in Spain and said that Greece’s situation was «totally unique» in the euro zone.
In other remarks, Schaeuble said cheap 3-year loans to the financial system by the European Central Bank had «bought time» for the euro zone, but it could only resolve its problems definitively by closing the gulf in competitiveness between its 17 members.
He declined to comment on a decision by Spain to raise its budget deficit target for 2012, saying a collegial euro zone response was needed. [Reuters]