Euclid Tsakalotos

Greek Finance Minister on Berlin Tour

Euclid Tsakalotos SOurce Reuters
Pensions, promises and trust.
  • Why it matters

    Why it matters

    Greece’s finance minister will play a key role in whether or not the Greek euro drama heats up again this year.

  • Facts


    • Greece was given a third bailout totaling more than €80 billion last summer, in exchange for tough structural reforms.
    • The deal between Greece and the European Union helped keep the Mediterranean country inside the 19-nation euro zone.
    • Key elements of the deal, including on pension reform and privatization, still need to be implemented by Athens.
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Greece’s finance minister, Euclid Tsakalotos, was in Berlin this week for talks with German Finance Minister Wolfgang Schäuble and other top officials.

The tour, which also includes meetings with other euro zone finance ministers, came at a critical time for Greece, with some in Germany fearing the country is once again slipping back on its promises to reform its economy and government in exchange for a third bailout last summer.

Relations between Mr. Tsakalotos and Mr. Schäuble have warmed, despite the fact that the German finance minister was among those suggesting last summer that the best option for Greece might be to exit the 19-nation euro zone. The European Union and Greece eventually sorted out a tough deal that keeps Greece in the currency bloc, at least for now.

Mr. Tsakalotos sat down with Handelsblatt following his meeting with Mr. Schäuble.


Handelsblatt: Mr. Tsakalotos, Wolfgang Schäuble is still very unpopular in Greece because he was promoting a Grexit last summer. How was the meeting?

Euclid Tsakalotos: The meeting went well, it was very constructive. I gave him a paper which outlined every single reform that we have done since July. It is an impressive list.

Was Mr. Schäuble impressed too?

I found sympathetic ears. My feeling in all the meetings with my colleagues during this week was that I was listening to people who are looking for a solution and not trying to create problems. They might not always agree but I never got the impression that the people are fed up with the Greek government. I felt that all six finance minister accept that we have made a lot of reforms. We have credibility.

But you’re late again. The first review of the program should have been completed in fall 2015.

If you see the number of measures that we have passed since July, it is very difficult to say that we are late. People who say Greeks are dragging their feet would be very surprised with that list.

The institutions were surprised by your pension reform. They are not satisfied.

There should be some give and take. We don’t want to go back on our promises. The MoU says that we have to make one percent savings of GDP on pensions, this means €1.8 billion. But it doesn’t say exactly how it has to be done. We made savings already of €1.1 billion. So the question is where the €700 million should come from.

Greece has one of the most expensive pension systems in the European Union. Why is it so difficult to find savings of another €700 million?

For two reasons: Current pensioners have already had eleven successive reductions in their pensions. Secondly for social reasons: Pensions in Greece at the moment are not just about pensioners. You could have a grandmother who has a €600 pension and she is helping her unemployed son and her granddaughter who is trying to get into university. That is really not the job of the pension system. That is the job of unemployment insurance, or of the education system. So what I explained to Wolfgang and my other colleagues is: While we are working on these issues, we can’t hit the current level of main pensions.

An important issue especially for Mr. Schäuble is to set up a privatization fund. When will it be completed?

It’s defined in the Memorandum. It has to be up and running in the second quarter of 2016. One of the things we have learned in our first government is, the more advice you get, the easier negotiations become. So we are using the technical assistance of the European Union in a much more constructive way. Because by the time the political negotiations start, all the spadework has been done. For the privatization fund, we have gotten a lot of advice from France. And we are speaking with the Germans too.

Do you want to get rid of the IMF?

[Finnish Finance Minister] Alexander Stubb, [Eurogroup Chief] Jeroen Dijsselbloem and Wolfgang Schäuble made it quite clear that the IMF is a sine qua non. And they don’t mean just in terms of technical assistance but active involvement in the financial package.

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