GERMANY IS hardening its stance in relation to any further request for bailout loans from Greece. Yesterday finance minister Wolfgang Schäuble said: “We will not be able to agree to further measures without clear conditions,” he said, insisting that Greece would have to do more.
Mr Schäuble’s remarks serve to intensify pressure on the Greek government even while Berlin says it awaits the outcome of the troika review. His intervention came as Greece’s sponsors have given their clearest indication yet that they are contemplating change to its bailout plan as the IMF and euro group chief Jean-Claude Juncker spoke of longer loan maturities.
While Germany is angling for time as a crucial EU/IMF troika mission to Athens continues its work, the signals from Mr Juncker and the IMF point to mounting anxiety about the progress of the troubled rescue plan.
“This programme has to be bolstered in coming weeks so that Greece can return one day to financial markets, which Greece with certainty won’t be able to do in 2012,” Mr Juncker said yesterday.
Euro zone governments should consider “stretching the adjustment time-frame” in Greece’s budget programme, he added. Mr Juncker, who has already conceded that the country needs a new rescue plan, said Athens needs to make “significant progress” on its €50 billion privatisation plan.
High-level euro zone sources say there are concerns that violent clashes in Athens between police and protesters will make it very difficult for the government of George Papandreou to realise good value for the assets targeted for privatisation.
Separately yesterday in Berlin, a senior Bundesbank official defended the strength of ongoing stress tests on major European banks. The tests, whose results are due next month, follow tests undermined by flaws in the examination of Irish banks. “The European Banking Authority tests are far better than their reputation in the press,” said Andreas Dombret.
“The press has mainly concentrated on the issue of sovereign risk in the banking book. Please note that the Irish banks did not get into distress because of their sovereign risk exposure but rather because of their bad housing loans.”
Mr Juncker, who is Luxembourg's prime minister, chaired a secretive meeting of top finance ministers last week to discuss Greece's plight. At the time his office denied any meeting was taking place. News of the meeting emerged in a Spiegel Onlinereport, which cited German government papers saying Greece was examining whether it should leave the euro. Germany and Greece each denied it. However, many European officials have questioned Mr Juncker's wisdom in deciding to deny that meeting.
He justified that approach yesterday by saying it was in the interest of people who use the euro. “The denial immediately prevented further speculation on the markets,” he said. “Speculation about an exit by Greece from the euro zone had to be avoided at all costs in the interest of the euro zone,” he added. “I decided to deny there was a meeting to avoid more harm, and immediately after the meeting I made a short statement to the journalists who were there to convey the real purpose.”