Germany is coming under increasing pressure to support involving the European Central Bank directly in efforts to restructure Greek debt and many want Berlin to back a larger firewall for the euro zone.
Both responses would be wrong, says German Economy Minister Philipp Rösler. Instead, Europe needs to keep up the pressure on Greece to implement reforms, conclude a plan to involve private-sector investors in restructuring Greek debt, and promote economic growth in Europe.
WSJ reporters William Boston and Andreas Kissler spoke with Mr. Rösler in his Berlin office.
Related article: Rösler Opposes ECB Write-Down on Greece
WSJ: What do you expect from the talks with Greece this week?
Mr. Rösler: I expect that together with Greece we will find a solution to assure the sustainability of Greece’s debt. This will require appropriate involvement of private-sector lenders as well as reforms in Greece, which must then actually be implemented.
WSJ: To what extent is Germany prepared to accept the involvement of public lenders and the European Central Bank in a haircut on Greek debt and is Germany willing to discuss increasing loans for Greece?
Mr. Rösler: That is not currently an issue for us. Neither one nor the other.
WSJ: But is there any way to avoid greater involvement of public-sector lenders?
Mr. Rösler: The current discussion is primarily about private-sector involvement. European states and their taxpayers already make a massive contribution to the restructuring process in Greece through their support efforts.
WSJ: How long can you remain patient with Greece
Mr. Rösler: We have to wait for the Troika report. Any further decisions depend on its conclusions.
WSJ: And if the conclusions are negative?
Mr. Rösler: Before there is any disbursement of money we need the conclusions of the Troika report, which may be available in the next few days.
WSJ: There was a lot of resistance in your party, the Free Democrats, against the European Stability Mechanism. If it becomes clear at the March review that the ESM needs more money, what will you tell your party?
Mr. Rösler: There is no need to talk about any increase now. Now is the time to ensure that the ESM is completely operational. It is decisive for me that the stabilization measures that we have already agreed–within the context of the fiscal pact, for example–are implemented so that we send a signal of confidence to financial markets. The more successful we are shoring up the credibility of our stability policies, the less we will need bailout funds.
WSJ: Will Greece be able to stand on its own two feet in the foreseeable future?
Mr. Rösler: It will take time. But the message from the (European leaders) summit was clear: We don’t only want to sign treaties, we also want to do more to promote growth in Greece. To do this, it is necessary to implement structural reforms, build a solid administration, privatization and reform social security systems. In order to improve competitiveness it is necessary to make fundamental decisions about the economy, such as increasing productivity and lowering unit wage costs. We have offered extensive support in order to make progress on these things.
WSJ: What is your view on the discussion about a budget czar for Greece?
Mr. Rösler: Budget control is in the hands of the Greek parliament and that’s where it will stay. But it is still the goal that agreed reforms do not just remain on paper, but are actually implemented decisively and in a timely fashion. That is the job of the Greek government. But it is completely legitimate that financial assistance is accompanied by a clear and strict monitoring process. We owe that to our taxpayers.
WSJ: What can Europe do if Greece is not able to implement reforms on its own?
Mr. Rösler: We are prepared to offer any form of technical assistance, advice, and support on the ground. For example, with the establishment of a Greek development bank. It is important for us to promote growth forces in Greece. There are a lot of good suggestions, which must now be implemented.
WSJ: Should Europe give Greece more time by slowing the pace of austerity measures?
Mr. Rösler: Program targets were agreed with the Greek government. It would simply send the wrong signal if we now were to deviate from these program targets. We want to do both: get the budget under control and especially improve structures so that the economy can grow.
WSJ: Germany is often told is should do more to fight the crisis. What more can Germany do?
Mr. Rösler: Through the dynamism of our economic development alone, Germany is contributing to the stabilization of the entire euro area. Our imports will grow stronger than our exports this year. As Europe’s largest economy, this alone is providing important growth stimulus for our European partners. The German current-account surplus is a sign of our competitiveness, and that is crucial for all of Europe.
WSJ: When do you expect the German economy to pick up steam again?
Mr. Rösler: We expect that the economy will pick up again after the pause in the winter months. We are expecting a growth rate of 1.6% for 2013.
WSJ: As economy minister do you feel that the fiscal pact restricts you in your maneuvering room?
Mr. Rösler: Quite the contrary: Sustainable economic policy is only possible on the basis of a solid financial situation. Citizens must be able to have the confidence that the government is spending money efficiently and prudently. That is the only way to create confidence in the future and support the initiative of individual citizens, which a growing economy cannot do without.
WSJ: Will you resign if the FDP does poorly in the election in the state of Schleswig-Holstein in May?
Mr. Rösler: We are committed to achieving a successful election result.
WSJ: And if you don’t?
Mr. Rösler: We are in love with success, not failure.
