Schäuble: If IMF exits Greek bailout, EU could take over

Schäuble warned that if Greece does not deliver on its commitments, it will be the end of the current programme and new negotiations will be required. [ / Flickr]

Berlin is weighing up the possibility of the EU taking over the Greek bailout in the event that the International Monetary Fund decides to end its role in it, German Minister of Finance Wolfgang Schäuble said on Friday (13 January). EURACTIV Greece reports.

In an interview with Süddeutsche Zeitung, Schäuble floated the idea that if the IMF decides to pull out, Europe could figure out its “own solution” within the eurozone.

He added, though, that such a solution must guarantee a strict implementation of the bailout’s terms.

“If we continue solely then we will have to better guarantee the agreements […] This role could be assigned to the ESM,” he emphasised, saying that if the absence of the IMF brings major changes [to the agreement] then the new conditions will need the approval of the German parliament – which is preparing for elections next autumn.

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However, Schäuble warned that if the Greek side does not deliver on its commitments, it will be the end of the current programme, and new negotiations will be required.

Radical shift

It’s the first time that the Merkel government has proposed a solution to the Greek crisis without the IMF. In Athens, this change of heart is described as unprecedented, because ever since the first bailout, Germany has insisted that the IMF must take part, on account of the European Commission’s supervisory mechanism.

During the negotiations for the third bailout, in the summer of 2015, the Germans demanded the IMF’s participation as a precondition in order to convince its sceptical parliament to approve new aid for Athens.

Satisfaction in Greece  

Greek government sources stated that the possibility of continuing the bailout program without the IMF, let alone with it, but without having a central role (financing), could be a way out of the structural problems that currently exist between the EU institutions and the Fund.

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Eurozone finance ministers on Monday approved new debt relief measures to alleviate Greece’s colossal debt mountain in the wake of its huge €86 billion bailout, but at levels far short of those demanded by the IMF.

For Athens, the deadlock between Brussels and Washington constantly blocks a successful completion of the second evaluation of the Greek bailout without new fiscal measures, as the IMF requests.

“The view that Europe has the proper institutional support framework is not new. This view is constantly gaining ground in the European institutions and the Greek side welcomes it, provided that the decisions will be made quickly,” government sources added.

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