German Finance Minister Hints at More Aid for Greece

Europe might need to think about further aid measures for Greece, German Finance Minister Wolfgang Schaeuble said in a televised interview with the public broadcaster ARD.

Reichstag Parliment building, Berlin, Germany
Martin Child | Photodisc | Getty Images
Reichstag Parliment building, Berlin, Germany

“If it becomes clear in June that Greece will not be able to return to capital markets by 2012, we have to talk about further measures”, Schaeuble said.

He was referring to the outcome of the quarterly inspection in June by the European Union, the International Monetary Fund and the European Central Bank, who will decide whether Greece is complying with the conditions of the bailout.

For weeks there have been consistent rumors that Greece might need a second bailout worth up to 60 billion euros ($84 billion) but Schaeuble refused to comment on those.

Asked whether Germany is for extending Greek debt maturities, he said such a statement was speculation but added that in case the euro zone helps Greece to “buy time”, the “private sectors should share the burden as well. So if there is a debt maturity extension for Greece, than all investors will be affected.”

That means private creditors such as banks and funds would take losses.

Thomas Mayer, the chief economist of Deutsche Bank, told CNBC: “We will see a soft debt restructuring most likely this year and a bolder move next year. Greece will not get around debt restructuring.”

ECB governing council member Ewald Nowotny said in a Handelsblatt interview on Monday that “Greece is well in the position to get more money but these loans shall only be given under very strict conditions. Greece needs more time to tackle its problems as the country faces a long term task”.

The head of the IFO institute Hans Werner Sinn said in an interview with ARD that, “Greece needs to devalue either internally by slashing prices and wages by 20-30 percent or by introducing the Drachme again which than will devalue. An internal devaluation of that size is not realistic though.”

Schaeuble will have a tough time to convince the main street of the necessity of the rescue deals.

The more bailouts, the less Germans trust the euro. Now 58 percent of the population mistrust the euro according to surveys by polling firm Emnid.

And that is the case despite increased efforts by authorities to keep the reputation of the euro intact.

“There is no euro crisis. What we are currently observing in some euro zone countries is primarily a public finance debt crisis,” ECB President Jean-Claude Trichet told popular tabloid Bild am Sonntag.