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| Greece Might Be Better Off Outside Eurozone, German Finance Minister Says | Greece Might Be Better Off Outside Eurozone, German Finance Minister Says |
| (35 minutes later) | |
| BERLIN — Germany’s finance minister, Wolfgang Schäuble, suggested on Thursday that Greece might be better off leaving the euro, saying that a temporary exit from the common currency could give the country additional flexibility to reduce its crippling debt load. | |
| It was the second time this week that Mr. Schäuble has raised the idea in public. His statement, in a radio interview, came just hours after the Greek Parliament reluctantly approved a package of economic policy changes, demanded by Germany and other creditors, intended to allow Greece to remain in the eurozone and to qualify for a new round of bailout financing. | It was the second time this week that Mr. Schäuble has raised the idea in public. His statement, in a radio interview, came just hours after the Greek Parliament reluctantly approved a package of economic policy changes, demanded by Germany and other creditors, intended to allow Greece to remain in the eurozone and to qualify for a new round of bailout financing. |
| Mr. Schäuble’s statements, a day before the German legislature is expected to approve negotiations on the new Greek bailout, highlighted the continuing debate in Germany about the best path toward resolving the crisis. | |
| It also gave further credence to assertions by some Greek officials that Mr. Schäuble wanted Greece out of the eurozone all along, and underscored the divisions in Europe and beyond over whether Greece can recover from its long economic crisis without a substantial reduction in its debt. | |
| Mr. Schäuble emphasized that he would still support the new bailout plan, agreed to by European leaders early Monday after a contentious weekend of negotiations, when it comes up for a vote in Berlin on Friday. But he said that Greece’s debt is too high, and that the eurozone’s rules of membership would not permit debt forgiveness of the sort that many economists say Greece needs. | |
| “We have not said that we will impose this,” Mr. Schäuble said in an interview with Deutschlandfunk radio on Thursday when asked about allowing Greece to take a time out from the eurozone. “We can’t, we don’t want to, and no one has suggested it. But it would perhaps be the better way for Greece.” | “We have not said that we will impose this,” Mr. Schäuble said in an interview with Deutschlandfunk radio on Thursday when asked about allowing Greece to take a time out from the eurozone. “We can’t, we don’t want to, and no one has suggested it. But it would perhaps be the better way for Greece.” |
| He added, “Greece is in a very difficult situation.” | He added, “Greece is in a very difficult situation.” |
| Mr. Schäuble emphasized that no one was trying to push Greece in one direction or another, but he underlined that forgiving some of Greece’s public debt of more than 300 billion euros, or about $330 billion, is not compatible with membership in the eurozone. He also questioned whether the package that Greece is seeking would be enough to bring the country’s financial situation back into a manageable position. | Mr. Schäuble emphasized that no one was trying to push Greece in one direction or another, but he underlined that forgiving some of Greece’s public debt of more than 300 billion euros, or about $330 billion, is not compatible with membership in the eurozone. He also questioned whether the package that Greece is seeking would be enough to bring the country’s financial situation back into a manageable position. |
| The new bailout package would provide aid of up to €86 billion over three years, as well as an economic stimulus package for Greece. In return, Greece must put in place a broad series of policy changes, including higher taxes, pension cuts and other steps intended to promote economic growth and to help the government meet its debt payments. | |
| The package provides for further discussions about addressing the sustainability of Greece’s debt, but it is vague about what the European creditors might be willing to accept. Germany, which has said that adhering to the conditions of the bailout should allow Greece to meet it debt obligations in full, has ruled out any outright debt forgiveness. But it has left the door open to discussions about extending repayment periods or reducing interest rates. | |
| France, among other countries, has been pressing for a substantial reduction in Greece’s debt repayments, as has the International Monetary Fund, which said this week that its participation in the bailout plan would be dependent on Germany and the other creditors accepting a larger restructuring of Greek debt than they have been open to so far. | |
| Mr. Schäuble signaled on Thursday that it might be difficult to reduce the burden of the debt payments sufficiently without some debt forgiveness — a step that he said could not be taken while Greece is a member of the common currency area. | Mr. Schäuble signaled on Thursday that it might be difficult to reduce the burden of the debt payments sufficiently without some debt forgiveness — a step that he said could not be taken while Greece is a member of the common currency area. |
| “The more difficult question will be to reach sustainability of the debt, whether a package that is large enough can be agreed upon without any debt reduction,” Mr. Schäuble said. “Then we are back in the situation that debt reduction is not allowed in the eurozone.” | “The more difficult question will be to reach sustainability of the debt, whether a package that is large enough can be agreed upon without any debt reduction,” Mr. Schäuble said. “Then we are back in the situation that debt reduction is not allowed in the eurozone.” |
| There has long been an influential group of German economists who argue that Greece does not belong in the eurozone and that it would be better off using its own currency. In recent days, Mr. Schäuble appears to have come around to that way of thinking. | There has long been an influential group of German economists who argue that Greece does not belong in the eurozone and that it would be better off using its own currency. In recent days, Mr. Schäuble appears to have come around to that way of thinking. |
| The most vocal of those advocating Greece’s exit may be Hans-Werner Sinn, president of the Ifo Institute in Munich, an influential economic research organization. In a statement on Tuesday, Mr. Sinn reiterated his longstanding argument that Greece should adopt its own currency, which it could devalue to make its export products and tourism industry more competitive. | The most vocal of those advocating Greece’s exit may be Hans-Werner Sinn, president of the Ifo Institute in Munich, an influential economic research organization. In a statement on Tuesday, Mr. Sinn reiterated his longstanding argument that Greece should adopt its own currency, which it could devalue to make its export products and tourism industry more competitive. |
| “An exit is the only option,” Mr. Sinn said. | “An exit is the only option,” Mr. Sinn said. |