Downplaying Debt

Damage Control Rules Greece Policy

File photo of German Finance Minister Wolfgang Schaeuble as he addresses a news conference to presents budget plan 2017 in Berlin
German Finance Minister Wolfgang Schäuble long supported a temporary Grexit, but has since campaigned for the next aid package, calling it an "opportunity for a new beginning in Greece."
  • Why it matters

    Why it matters

    With the looming possibility of a Brexit, the last thing European politicians want is more problems with Greece. They will likely approve another €86 billion in rescue funds for Athens despite its failure to make economic improvements.

  • Facts


    • German Finance Minister Wolfgang Schäuble long opposed continued aid for Greece but is now behind Chancellor Angela Merkel’s support for another aid package.
    • Greece’s donors have postponed payment of billions in promised rescue funds because Athens is months behind in implementing promised measures.
    • Since the first aid program, Greece’s debt has grown to 176 percent of its GDP.
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“We will not have a major Greek crisis this year,” German Finance Minister Wolfgang Schäuble recently declared. But the question, increasingly, is whether Mr. Schäuble’s statement was a promise or a wish.

In Greece, the unions are trying to shut down the country and protesters are once again throwing Molotov cocktails on Syntagma Square in Athens, while Prime Minister Alexis Tsipras risks losing his government majority by pushing through another austerity package.

In any other European country, all of this would amount to a crisis. But after six years of ongoing rescue and countless austerity packages, many Greeks have become fatalistic. There is no evidence out there that the situation might improve in the country. To the contrary, things seem likely to go downhill.

The option of withdrawing from the euro zone hovered above the country last summer as one possible solution. But to prevent this from happening, Greeks agreed to further austerity and reform measures in return for the promise of €86 billion ($98 billion) from the euro rescue fund.

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