debt crisis

Schulz Warns of Resurging Grexit Debate

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Martin Schulz, Germany’s Social Democratic Party’s candidate for chancellor. Source: Kay Nietfeld / DPA

In light of a resurging debate among German politicians about Greece’s future in the euro zone, Social Democratic Party (SPD) chancellor candidate Martin Schulz warned of serious damage to Europe.

“Whoever now toys with the idea of Grexit again, risks dividing the continent,” he told daily newspaper Die Welt. “This might be in the interest of Donald Trump or Marine Le Pen, but certainly not in the interest of Germany and Europe. This is immensely dangerous.”

Greek parliamentarians are interpreting Mr. Schulz’s statements as a rebuke of Finance Minister Wolfgang Schäuble. Hara Kafantari, who represents the governing Syriza party, told the Guardian newspaper, “It is a very strong message to Schäuble that his [yearning] for Grexit could lead to the dismemberment of Europe. It’s also a message to the euro zone that it should sit and think seriously about which way it wants to go because policies right now are like shifting sands, no one knows what is going to happen from one day to the next.”

Amid increasing uncertainty about Athens’ ability to solve its debt problem, German politicians recently raised the prospect of “Grexit” again. Campaigning ahead of September’s federal elections, some senior policymakers made it clear that the southern European country should no longer take a seat at the bloc’s bargaining table.

On Friday, reports surfaced that the euro zone and International Monetary Fund (IMF) had agreed on a common negotiating position on a tough reform package for the Mediterranean country. Athens still needs to agree to the terms. Without a new injection of cash, Greece will fail to make its next bailout repayment of €7 billion by the deadline in July.

Greece’s prime minister Alexis Tsipras on Saturday called on the IMF and Germany to “stop playing with fire” in the handling of his country’s debt, adding Athens would not accept “illogical” demands from its lenders.

Mr. Tsipras focused his criticism on Mr. Schäuble, calling on German Chancellor Angela Merkel to “encourage her finance minister to end his permanent aggressiveness” toward Greece.

As concerns persist over the latest round of talks for the €86 billion Greek bailout program, Ms. Merkel’s spokesman Steffen Seibert explained the federal government is committed to the success of the aid program. “We are working on the implementation of the existing third aid program,” Mr. Seibert said on Monday in Berlin. The aim was to help Greece return to a path to sustainable finances and economic growth. A foreign ministry spokesman said: “We want the euro zone to be fully preserved and this includes Greece.”

Meanwhile, the European Commission on Monday forecast that Greece will exceed its primary surplus target in 2018. According to Brussels, Greece will have a primary surplus in the budget of 3.7 percent of gross domestic product next year, exceeding the target of 3.5 percent agreed with its euro zone creditors.

Daniel Tost is an editor with Handelsblatt Global. To contact the author: tost@handelsblatt.com

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