EU officials mull Greek debt relief
European officials broached the thorny matter of Greece’s debt burden Thursday, suggesting that some relief is necessary.
German Finance Minister Wolfgang Schaeuble indicated that Greece will need some debt restructuring as part of a new program, but he stressed that a haircut violated European rules, suggesting Greece’s debt problem cannot be solved within the eurozone. “Debt sustainability is not feasible without a haircut and I think the IMF is correct in saying that,” he told a conference in Frankfurt. But he added that “there cannot be a haircut because it would infringe the system of the European Union.”
The German minister said there was scope for “reprofiling” Greece’s debt by extending loan maturities, reducing interest rates and lengthening a moratorium on debt payments. As for the prospects of a deal, Schaeuble called on Athens to show good will and legislate. “Just do it,” Schaeuble declared at the conference. “It would really win trust.”
European Council President Donald Tusk also referred to the issue of debt, noting that a “realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors.”
European Monetary and Economic Affairs Commissioner Pierre Moscovici said a deal was possible as long as Greece tables “concrete, complete” reform proposals. “I have the sense that the dialogue is established, or restored, and that there is a way out.”
French Finance Minister Michel Sapin said a Greek exit from the eurozone would shake the credibility of the bloc but so would Greece staying and violating the rules. “You can’t say stay in the Eurosystem just because you love it,” Sapin said. “We can’t have solidarity if you do not accept responsibility,” he said.
