BERLIN—Germany’s finance minister issued an unusually blunt warning that the euro zone might refuse to grant Greece a fresh bailout, pushing Athens into default unless it persuades Europe it can overhaul its state and economy.
“Greece needs to decide,” Wolfgang Schäuble said in an interview with The Wall Street Journal, when asked whether the euro zone would grant or withhold the second bailout package for the country since 2010, expected to be in excess of €130 billion ($172 billion).
Europe is “prepared to support Greece” with the new loan package, Mr. Schäuble said, but he warned: “Unless Greece implements the necessary decisions and doesn’t just announce them…there’s no amount of money that can solve the problem.”
The remarks came as German officials last week floated the radical idea of appointing a European “budget commissioner” with veto powers over Greece’s spending, partially suspending Greece’s national sovereignty over its budget, in return for aid.
“Perhaps we and our partners must look into ways to assist Greece in this difficult task in an even closer manner,” Mr. Schäuble said, alluding to the German oversight proposal.
Germany’s proposal met with skepticism from other European policy makers and got an angry response from Athens. In a statement on Sunday, Greek Finance Minister Evangelos Venizelos said “bigger nations” shouldn’t force Greece to confront a “dilemma of ‘economic assistance or national dignity.’ ”
Greece’s deteriorating finances and ever-growing funding needs are leading to renewed political tensions in the euro zone that threaten to reignite the region’s debt crisis, which has shown tentative signs of stabilizing so far this year.
In Germany and other northern European creditor countries, frustration is rising with Greece’s perceived failure to get a grip on public spending, improve tax collection or free up its economy. Many lawmakers in German Chancellor Angela Merkel’s conservative-led coalition are unhappy about risking billions more on financially stricken Greece.
