German Interior Minister Hans-Peter Friedrich has said that Greece would have better chances of economic recovery if it left the euro zone. He told SPIEGEL that Athens should be offered a deal it couldn’t refuse, in order to encourage it to quit the currency union.
German Interior Minister Hans-Peter Friedrich has advised Greece to leave the euro zone — the first time a member of the German government has openly called for such a radical step.
“Greece’s chances to regenerate itself and become competitive are surely greater outside the monetary union than if it remains in the euro area,” Friedrich told SPIEGEL. He emphasized, however, that he did not support a forced exit. “I’m not talking about throwing Greece out, but rather about creating incentives for an exit that they can’t pass up.”Friedrich, a member of the conservative Christian Social Union (CSU), the Bavarian sister party to Angela Merkel’s Christian Democratic Union (CDU), made his comments ahead of Monday’s vote in the German parliament, the Bundestag, on the second rescue package for Greece. The European Union-International Monetary Fund package, which was agreed upon at a marathon Euro Group meeting in Brussels last Tuesday, foresees financial aid for Greece worth at least €130 billion ($174 billion), in return for far-reaching austerity measures by Athens and a private-sector debt haircut.
Norbert Barthle, the CDU’s budgetary policy spokesman in the Bundestag, also expressed skepticism about whether the expectations reflected in the rescue package are realistic, even though he supports the deal in general. “I have some doubts about whether the package’s stated goal of reducing Greece’s debt to 120.5 percent of gross domestic product by the year 2020 can be achieved,” he told SPIEGEL.
Demands on the IMF
At a meeting of the Bundestag’s Budget Committee on Friday, the opposition center-left Social Democratic Party and Greens signaled they would support the package in parliament. However, the CDU and its junior coalition partner, the business-friendly Free Democratic Party (FDP), plan to append an additional motion to the resolution on the rescue package. In it, the two parties are expected to call on the International Monetary Fund (IMF) “to continue to be financially involved in the program to the extent that is possible.” In contrast, previous resolutions have not relied on money from the Washington-based fund.
The IMF has stated it is prepared to contribute €13 billion to the second Greek bailout, about 10 percent of the total amount — a far lower share than the 27 percent of the total it contributed to the first Greek bailout. But even that sum is not certain: The money can only be paid out if the fund’s executive board agrees. The board is set to make a decision in mid-March, but resistance to providing further billions to Greece is growing, especially among board members from emerging economies.