The Worst of Euro Crisis Is Over: Germany's Schaeuble

German Finance Minister Wolfgang Schaeuble (AP Photo/Michael Sohn, Pool)
Michael Sohn
German Finance Minister Wolfgang Schaeuble (AP Photo/Michael Sohn, Pool)

The worst of the euro zone sovereign debt crisis is over, German Finance Minister Wolfgang Schaeuble said in an interview to be published on Friday.

Schaeuble said governments in heavily indebted countries such as Greece have now recognized that the crisis that began in Athens three years ago will only be overcome by implementing bitter reform measures.

"I believe the worst is past," Schaeuble told the daily newspaper Bild in comments released on Thursday ahead of publication.

"The government in Athens knows that it cannot financially overburden other euro zone countries. They are thus pushing forward with the reforms," he said.

Schaeuble also said he was optimistic about France, Europe's second major economy, and its efforts to stop its debt burden expanding.

"I am certain that France will fulfill its obligations," he said. "The government definitely knows that every country has to permanently pursue reforms to remain competitive."

Wolfgang Franz, the head of the "wise men" panel of German government advisers and of the independent ZEW think tank, was more cautious about calling a turnaround in the crisis that has spread to Ireland, Portugal and Cyprus and forced Spain to seek a bailout for its banks.

"Time will tell whether we have the worst behind us," he said in an interview on Monday with Rheinische Post newspaper. "There are several silver linings on the horizon. The current account deficits in Spain and Portugal are declining because they have become more competitive and they're exporting more.

"Greece is also undertaking considerable efforts and has sharply reduced its net new borrowing in relation to gross domestic product. What's also positive is that political leaders at the European Union level have established a series of rules for the currency union, such as the fiscal pact."

Franz said, however, he was now concerned about elections in Italy, one of the world's biggest sovereign debtors. "If a new government rescinds the reforms launched by (technocrat Prime Minister) Mario Monti, that will push interest rates for Italy up again," he said.