'EU Should Admit that Greece Will Need Debt Cut'

http://www.spiegel.de/international/europe/german-press-comments-on-report-that-greece-will-need-more-aid-a-864010.html

Greece's international creditors have proposed that the country receive another debt writedown, this time from EU governments. That, say German media commentators, is hardly a surprise. Fresh aid for Athens, they argue, has been inevitable for months, but leaders have shied away from telling the truth.

SPIEGEL has learned that the troika of inspectors from the European Commission, European Central Bank and International Monetary Fund is proposing a further debt cut for Greece, in a move that would for the first time cost taxpayers money because public creditors, meaning EU governments, would be called on to write off a portion of their claims.

German Finance Minister Wolfgang Schäuble ruled out such a move in a radio interview on Sunday, but said a debt repurchasing program, in which Greece would get new loans in order to pay back old debt, could be an option.

A public debt write-off would be damaging for Chancellor Angela Merkel because she would likely face a rebellion among lawmakers in her coalition against providing further aid to Greece.

But several German media commentators say Greece will inevitably need more time and more financial help to meet its deficit-reduction pledges, and point out that this has been evident for months. It is high time that EU governments came clean and admitted it, they say.

Center-left Süddeutsche Zeitung writes:

"Credibility is what Greece lacks most. That's what German Finance Minister Wolfgang Schäuble says and his diagnosis is as correct as it is incomplete. Ordinary people and investors haven't just lost confidence in the crisis-hit country. European leaders too have got caught up in semi-truths and delay tactics. The way the truth is being dealt with in the euro crisis is bordering on irresponsible."

"Take this ominous troika report, for example. For weeks EU leaders, including Schäuble, have been telling people that they're waiting for the report from the technocrats of the European Central Bank, European Commission and International Monetary Fund. A decision can only be taken once the report has come out, they say. What they're not saying is that they themselves decided that this report must be submitted four times a year. They got the last one in March -- which means that the one expected now is months overdue. The truth is, the troika won't submit a technical status report but a report that lives up to the political goal that Greece should remain in the euro. And that's taking a long time to compile, given the extent of the problems."

"Besides, the public creditors, meaning euro-zone member states, have long been waiving debts to Greece -- through sharply reduced interest rates. You can read all about it in the troika report from March. And there's a plan to keep doing so. If Greece is going to get back on its feet, more of its debt will have to be written off. It's time that Schäuble and other leaders start admitting this."

Conservative Frankfurter Allgemeine Zeitung writes:

"The Greeks face a historic decision: they must choose whether to become impoverished with the euro or the drachma. This week the parliament in Athens will vote on another austerity package, and its acceptance will presumably provide another temporary respite ensuring that Greece's loss of prosperity will take place within the common European currency."

"The crucial issue remains whether the agreed reforms will be implemented. It's good news that (Prime Minister Antonis) Samaras is doing what he can to ensure this happens. Unlike (Prime Minister Giorgos) Papandreou before him, he's engaging in a lot of micromanagement. He turns up in ministries unannounced, gives his ministers deadlines, ticks off lists, checks whether progress is being made. This kind of governing is new by Greek standards."

Berlin daily Tagesspiegel writes:

"It's astonishing how quickly the political agenda can change sometimes. Just a few weeks ago, all main EU leaders were categorically ruling out the possibility that Greece would get more time to implement is budget consolidation. Now they appear to have already decided that Greece will get a further two years to get its budget in order. And it will probably get further loans as well. They want to get everything done very quickly now: the Euro Group finance ministers could seal the change of policy as soon as Wednesday at their telephone conference."

"The realization that the current rescue plans won't work has come pretty late. It has been evident for months that Athens can't meet the main goals. The country won't be in a position to push its budget deficit under the 3 percent limit by 2014 and it is inconceivable that its can reduce its debt to 120 percent of GDP by 2020."

"That's not due to any lack of austerity efforts by the government in Athens. It has spent €2 billion less in the first nine months of the year than it was obliged to in its savings program. But Greece will nonetheless miss its deficit goal at the the end of the year because tax revenues are slumping due to the dramatically shrinking economy. It is obvious that a consolidation program has to be amended if the macro-economic parameters have changed so fundamentally. Greece needs more time. The crux of the matter is that more time costs more money. The aid agreed so far runs out in 2014. If Athens gets until 2016, further money will be needed."

"It will be hard to get a third rescue package through Berlin. Little wonder: After Greece kept on breaking its reform pledges in the last three years, there's a lot of mistrust. The opening of markets, privatizations, cuts in bureaucracy, the fight against corruption: There hasn't been much progress in any of that. Greek politicians still shy away from conflicts with powerful unions and interest groups that want to closet themselves from competition. The budget consolidation will have to be delayed. And one will have to check how Greece's crippling debt burden can be lessened. But there can be no delay in the reform timetable."

Mass circulation Bild writes:

"We Germans have shown solidarity. We kept on helping when the need was greatest. But it came to nothing. It's a painful lesson. A country incapable of repaying its debts to its European partners simply has no place in the euro. If there really will be a second debt writedown, Greece must get out of the euro. No one can accuse us of not having tried everything!"

-- David Crossland