A resounding “no” to World War II compensations and a second "haircut" to shave off parts of Greece's debt mountain marked the visit of the German finance minister Wolfgang Schäuble yesterday (18 July) in Athens. EURACTIV Greece reports.
Schäuble’s visit came hours after Greece's parliament narrowly passed a bill to sack thousands of public sector workers in an effort to secure an additional €7 billion in aid, while mass protests by teachers and municipal staff were taking place outside the parliament.
The government took draconian measures and the Greek police prevented protesters from gathering in central parts of Athens, banning any demonstration around the parliament and shutting central metro stations.
The German finance minister, considered as the champion of austerity in Greece, ruled out any suggestions of a second haircut on Greece's public debt, arguing that it would not be “in the interest of Greece”.
"My advice is not to continue this discussion," he said in a conference hosted by the Greek-German Chamber of Commerce in Athens.
"We have to stick to what we've achieved. Anything else is not in the best interest of Greece. Another haircut beyond the 53% for the private sector is not doable," he noted.
Schäuble continued praising Greece for its efforts to get its finances back on track and opened the door to new assistance “if necessary” when the current programme ends at the end of 2014.
“If Greece has implemented its reforms and has reached a primary surplus then we will negotiate further measures if necessary. My advice is that everyone concentrates on doing what we have agreed because only if we implement what we agreed step by step, can we regain reliability, trust and through that growth," he said.
Yiannis Stournaras, the Greek finance minister, replied that those countries in crisis urgently needed growth-enhancing measures, in addition to fiscal consolidation.
“For Greece and the other countries that are currently in crisis, the biggest challenge is the combination of further fiscal consolidation and economic growth. All of our instruments should aim towards this combination. If we don’t achieve this, then we will face the risk of marginalising big parts of the society and therefore leading all these efforts we have made up to date, to a failure," he said.
War compensations – a 'hot potato'
Schäuble reiterated Berlin’s opposition to discuss reparations for damage inflicted under the wartime Nazi occupation, estimated at €162 billion.
He underlined that the issue “is over” but admitted that there is a possibility to discuss the "war loan" which Greece was forced to grant to the German Reich during the Nazi occupation.
In a symbolic move, the leader of leftist Syriza party, Alexis Tsipras, accompanied by the war hero Manolis Glezos (who removed the Nazi flag from the Acropolis) yesterday visited the President of the Hellenic Republic, Karolos Papoulias, where they discussed the issue of war reparations and the loan.
Papoulias recalled that he was the first foreign affairs minister officially to put the two issues on the table back in 1995, while the opposition leader urged the government to revive discussion of the two issues.
“It is impossible that those who govern Greece publicly recognise the public debt of the country towards big banks and at the same time ignore Germany’s debt towards the Greek people," stressed Alexis Tsipras.
“We firmly believe that the request of the Greek people should be put on the table by the government. And if this government doesn’t do so, we promise that the Greek people will put it forward by electing another government willing to put an end to the catastrophe and claim the rights of the Greek people," he added.
Meanwhile, the Greek minister for growth and competitiveness, Kostis Xatzidakis, and the president of the German public bank KfW, Ulrich Schröder, signed the establishment of a “Greek Investment Fund” aiming to finance regional infrastructure projects and businesses, especially SMEs. The German KfM will invest almost €100 million and the Greek government will contribute with €350 million.
“We don’t take seriously the respect Schäuble shows for our country. It is extremely impressive that the dominant forces in Greece are determined to abolish the welfare state, reduce wages and workers' rights and restrict democratic procedures”, the leftist Syriza party of Greece said in a statement.
The Democratic Left, the former junior coalition partner in the Greek government, highlighted that there can be no more cuts in wages, pensions and benefits. “There is a need to change the austerity policy across Europe and take on great initiatives to jointly combat the European crisis, having as axis the growth and the social cohesion”.
“The Memorandum government of New Democracy and PASOK is satisfied with the 100 million € offered by the German side instead of demanding the immediate repayment of German reparations of €162 billion”, noted in a statement the right wing eurosceptic Party of Independent Greeks.
Greece's international lenders agreed in November on a package of measures to reduce Greek debt by €40 billion, cutting it to 124% of gross domestic product by 2020.
Greece will receive up to €43.7 billion in stages as it fulfills the conditions imposed by the troika of international creditors - the European Commission, the European Central Bank and the International Monetary Fund.
>> Read: Eurozone clinches Greek debt deal
Five years after the debt crisis started, people in Greece concede that the government's austerity plans do not aim merely to fix the economy, but to fundamentally alter the country's political system.
Unemployment in 2009 was estimated at 9.6%. Today, the country has the highest rate of unemployment in the EU, with an official figure of 27%. That means 1.5 million people are out of work. Three and a half million people live below the official poverty line and 35% of all workers are unable to clear their mortgages and bank loans.
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