Schäuble View on Euro Zone at Odds With US
Wolfgang Schäuble, Germany’s finance minister, has dismissed speculation about any Spanish request for euro zone support in buying its sovereign bonds, and ruled out making more concessions to help Greece, on the eve of talks on the euro zone crisis with Tim Geithner, US Treasury secretary.
The tough German resistance to launching any new initiative in the two most embattled member states of the euro zone looks set to clash with Washington’s constant appeal for action to stem contagion in the crisis.
In evidence to the US Congress last week, Mr. Geithner said the euro zone crisis was the “greatest danger” for the U.S. economy, urging European leaders once again to act swiftly and credibly in dealing with it.
The Treasury secretary’s trip to Europe, during which he will also hold talks with Mario Draghi, president of the European Central Bank, was announced at short notice, late on Friday.
In an interview ahead of his meeting with Mr. Geithner, published in Welt am Sonntag newspaper, Mr. Schäuble gave no hint of impending intervention, despite Mr. Draghi’s announcement last week that the ECB was “ready to do whatever it takes” to protect the single currency.
However, he did say no country had benefited as much from the common currency as Germany, and “that is why it is also right that we should make a contribution to solving the crisis.”
Asked about Greek hopes to renegotiate the terms of its 130 billion euro ($159.8 billion) rescue package, he said the program was “already very accommodating. I cannot see that there is any room for further concessions.”
But he criticized speculation among German politicians and economists about a possible Greek exit from the euro . “That achieves nothing,” he said. “It simply stirs up insecurity and provokes a corresponding market reaction. For the financial markets are everything — except rational.”
On Spain, he rejected a suggestion that the Spanish government was “desperate” because of the rising cost of borrowing. Madrid deserved respect, he said, for taking “all the necessary decisions” including raising value added tax and cutting civil servants’ pensions.
“The financial markets are not acknowledging these reforms yet, but that will come,” he added. “Trust can be lost quickly, but it can only be won back slowly.”
On speculation about a Spanish request to the European Financial Stability Facility to intervene in its bond markets, he said: “There’s nothing in it.”
A US Treasury official noted that US and Germany share the same goals of restoring market confidence and keeping the currency union intact.