Scholz seen to pick up where Schaeuble left off

Despite the cordial meeting on Friday between Finance Minister Euclid Tsakalotos and his new German counterpart Olaf Scholz, Berlin made it clear that the key Greek demand of debt relief will only be discussed after Greece’s bailout program ends.

Taking a page out of the book of Scholz’s predecessor Wolfgang Schaeuble, German Finance Ministry’s spokesman Johannes Blankenheim added, moreover, that discussions on debt relief measures can only begin after a debt sustainability analysis is conducted and a report by the institutions is issued by mid-July.

Blankenheim also said that Berlin expects Greece to present a credible growth program.

Scholz’s comments dampened expectations among creditors and the European Commission that a comprehensive deal is feasible by the June 21 Eurogroup.

For its part, the Greek Finance Ministry said that the meeting between Tsakalotos and Scholz was held in a “positive climate,” that both sides exchanged views on “all matters of common interest” and that talks will continue. According to sources, the Greek delegation saw Scholz as “calm and thoughtful,” and low key.

Sources privy to discussions at the Euro Working Group on Thursday said that the German Finance Ministry is anchored to the view that any debt relief must hinge on the implementation of specific reforms and Greece’s adherence to its fiscal commitments.

This position is, however, opposed by the International Monetary Fund (IMF) and countries such as France, which believe that it will derail the implementation of debt relief measures as it will be stopped in its tracks every time Greece strays from its commitments.