German Finance Minister Wolfgang Schaeuble was back in the spotlight on Wednesday after breaking several weeks of silence on the issue of Greece to express his assurances that the markets have already priced in any eventuality in Athens’s ongoing bailout talks.
In short, what Schaeuble was saying was that no matter whether Greece is thrown out of the euro area or goes bankrupt, it will not have any serious effects on the common currency bloc nor, by extension, on the global economic system.
Schaeuble’s comments hardly come as a surprise. To begin with, he was speaking in New York and his primary objective was to respond to Washington’s fixed geopolitical position that a Greek default or a euro exit would pose a threat to the European system and the interests of the West as a whole.
Schaeuble also felt obliged to respond to the polyphony that resulted from comments made the previous day by European Union foreign policy chief Federica Mogherini. Even though finance is not in her purview, she called for more flexibility on Greece, saying that “if one falls, the whole system falls. I’m very much convinced of that.”
The German finance minister felt compelled to restore some order and ensure that Europe is on the same page when it comes to Greece. This is a mission assumed personally by Schaeuble and even if he unfortunately behaves in a manner that can be seen as autocratic and uncouth during negotiations with the amateur Greek government of SYRIZA and Independent Greeks, we have become accustomed to his ways.
On the other hand, we have Greek Finance Minister Yanis Varoufakis, whose colleagues at the Eurogroup have found somewhat hard to deal with. He will also be speaking on the issue of Greece’s negotiations with its international creditors in Washington today. This means that Schaeuble had to make sure to get in his argument against his Greek counterpart’s position well beforehand.
We have neither the knowledge nor the enormous experience of the German finance chief. But his belief that the markets are already prepared to respond to the consequences of a Greek default or euro exit may be somewhat risky. Maybe he’s right.
However, the different approaches adopted by Berlin and Washington in regard to how the problems of the global economy need to be addressed are not something that can be used by the government of a bankrupt country like Greece.
Thankfully, Greece is not the center of the world.