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28/09/2016

German coalition in turmoil over Schäuble

Euro & Finance

German coalition in turmoil over Schäuble

Wolfgang Schäuble [European Council]

The conflict over Wolfgang Schäuble’s Grexit proposal is entering a new round, after Vice Chancellor Sigmar Gabriel accused the finance minister of being unreasonable. EurActiv Germany reports.

“Mr. Schäuble has provoked the Social Democratic Party,” SPD leader Sigmar Gabriel told ZDF. Introducing a temporary Grexit as a German proposal in Brussels was “unreasonable”, he said.

Schäuble is also in a “huge conflict” with the Chancellor, Gabriel added. Unlike Angela Merkel, Schäuble is in favour of a short-term withdrawal of Greece from the eurozone to mend the euro crisis in Greece. The finance minister’s recommendation has sparked outrage among Social Democrats.

Recently SPD vice party leader Ralf Stegner criticised Schäuble’s statements, which could be interpreted as an indirect threat of resignation. “Playing up supposed intentions for resignation” is “just as ineffective as Schäuble’s ongoing flirt with the benefits of a Grexit”, Stegner told the Süddeutsche Zeitung.

Schäuble’s behaviour shows that “the centre-right has lost its compass on European politics”, Stegner contended.

In an interview with Der Spiegel, Schäuble indicated that a minister can step down if he or she is forced to do something. But he said he does not intend to do so.

Several media outlets took the interview statements as a threat of resignation. However, the Federal Finance Ministry rejected speculation that Schäuble is entertaining the thought of resigning due to conflicts of opinion with Merkel.

Speaking to Der Spiegel, Schäuble admitted that he and Merkel have taken different positions on Greece in recent weeks. “Divergent opinions are a part of democracy,” he said.

Meanwhile, the finance minister rejected the idea of a “new German dominance”. “There is no German dominance,” he said. “Germany is in a good position economically. That is undeniable. But in contrast to France and Great Britain, Germany is not a member of the United Nations Security Council. For that reason, alone, you cannot talk about being in a position of political supremacy.”

>>Read: Merkel faces treacherous Greece vote in Bundestag

Schäuble harsly criticised Gabriel, who denied that he agreed to Schäuble’s plan for Greece to leave the eurozone for a period of five years.

“Every party has its own problems,” Schäuble pointed out. But “in a coalition government, you show consideration for the other. You should not try to solve your own problems by making inaccurate accusations against others,” the minister said.

We need Schäuble more than ever”

Meanwhile, Schäuble received backing from his centre-right alliance. In an interview with Deutschlandfunk, parliamentary group leader Volker Kauder called on those involved to put the “Grexit debate” behind them and focus on the negotiations with Athens now.

Speaking to the Süddeutsche Zeitung, MEP Manfred Weber, chairman of the European People’s Party (EPP), argued that “instead of taking aim at Finance Minister Schäuble, who is fighting for a stable euro, SPD leader Gabriel should have a word with his party colleagues in Paris”.

Greece stands as evidence that “strict compliance with rules of the Stability and Growth Pact [is] not an end in itself”, Weber argued.

Without rules, compliance and monitoring, Europe has “no good future”, he warned. The fact that the European Socialists are not so precise on this, Weber said, is demonstrated by France.

The socialist government in Paris is “long overdue to fulfill the necessary austerity and reform requirements”, Weber said. Europe should “not look the other way, even if it is a big country breaking the rules”.

Hans Michelbach, a member of the conservative Christian Social Union (CSU) called the finance minister indispensable. “We need Schäuble more than ever,” Michelbach said in the Düsseldorf-based Rheinische Post. “Schäuble involves the people who are very sceptical, for a united Europe,” said the chairman of the CSU’s union for medium-sized enterprises.

Along with 59 other centre-right politicians, Michelbach voted ‘no’ in the Bundestag on Friday (17 July), against negotiations with Greece over the latest bailout package from euro countries.

Background

Last Friday (17 July) the Bundestag voted in favour of initiating negotiations for a third bailout for Greece. 65 centre-right politicians refused to support Angela Merkel's Greece course.

On 15 July, the Greek Parliament passed austerity and reform measures issued by international creditors. As a result, it paved the way for new negotiations over a third assistance programme within the framework of the European Stability Mechanism (ESM). 

The special meeting of the German Bundestag was a must as the Federal Government is only permitted to negotiate further financial assistance through the euro rescue mechanism ESM if it has approval from the parliament.

Further Reading