Germany’s Wolfgang Schäuble puts Grexit back on the agenda By Stefan Wegstyl Financial Times July 16 2015
Days after Greece appeared to escape crashing out of the euro, hawkish German finance minister Wolfgang Schäuble has put Grexit back on the political agenda, raising tensions in Berlin and across the EU.
Speaking before a key Bundestag vote on Friday, Mr Schäuble said voluntary departure from the eurozone “could perhaps be a better way” for Greece than a proposed €86bn bailout package, which was painfully assembled at a marathon eurozone summit in Brussels over the weekend.
Despite his misgivings, the 72-year-old German minister said he would still personally put the package to parliament. His hollow-sounding pledge was eerily familiar to one from Athens this week, where Greek premier Alexis Tsipras presented the same plan to Greece’s parliament while admitting he did not believe in it.
Mr Schäuble’s manoeuvre makes clear he is leaving open a Grexit option, even as he is formally backing the latest rescue plan to keep Greece in the eurozone. It is uncertain how much leeway he has been given by chancellor Angela Merkel to advance a historic rupture of the eurozone that he believes would ultimately strengthen both Greece and the single currency.
Ms Merkel, who celebrates her 61st birthday on Friday, has long given more weight than Mr Schäuble to the geopolitical costs of Grexit but has also said that a deal to prevent it cannot come “at any price”.
Her approach has hardened since June 26 when Mr Tsipras infuriated Greece’s international creditors by calling for a national referendum on their latest bailout offer.
It later emerged Mr Tsipras had informed the chancellor and French president François Hollande of his plans in a telephone call. But he neglected to say he would campaign against the deal. Ms Merkel only learnt the truth after Mr Tsipras announced his intentions on television. The chancellor’s complaints about the loss of trust in Athens have since multiplied.
Mr Schäuble said in a radio interview there was widespread concern — including at the International Monetary Fund — that Greece needed a debt cut for the rescue to work. But, he noted, a “debt cut is incompatible with membership of the currency union”.
Even if he favours a Grexit, Mr Schäuble may have to take a roundabout route to get there. He is wary of being seen to push Athens out the door for fear of breaking Germany’s decades-long commitment to European unity.
Such a move would also risk casting Ms Merkel as Europe’s bully — a claim many are already making after a summit in which she forced the capitulation of Greece’s defiant leftwing prime minister.
Berlin has already signalled that should Grexit come, Germany would generously support Athens, including with a debt cut.
Some EU officials believe Mr Schäuble’s repeated insistence that the IMF, which has partnered the EU in previous rescues, be included in a new bailout may be intended to engineer an eventual Grexit. The IMF has suggested it might not join a new Greek programme once its current rescue expires in March without heavy restructuring of existing eurozone loans. One EU official said Mr Schäuble could use this as “an excuse”.
Ms Merkel in the meantime seems certain to win the Bundestag vote on Friday on the proposed bailout. But about 60 MPs from her CDU/CSU bloc could rebel in protest against lending Athens even a cent more. The fact that Mr Schäuble will on Friday recommend the plan could win over some sceptics, thereby reducing Ms Merkel’s embarrassment.
The vote authorises only the start of negotiations, meaning Mr Schäuble will have time to manoeuvre before a second vote on the package itself, once negotiations are concluded.
Eckhardt Rehberg, the CDU’s budget spokesman, said: “The debate over a temporary Grexit has been important.”
But social democrats, also part of the coalition, are furious that Mr Schäuble harps on about Grexit and are urging him to stick to the script. Many suspect the finance minister is playing up Grexit partly to embarrass the leader of their SPD party, Sigmar Gabriel.
Mr Gabriel had agreed with Ms Merkel and Mr Schäuble that the Grexit option should be aired at the weekend summit as a way to put pressure on Athens. But now that a deal has been done, Mr Gabriel thinks Grexit should be off the agenda, not least because some SPD leftwingers are annoyed he backed it even as a negotiating tactic.
His discomfort suggests Mr Schäuble’s Grexit plan is already bringing him political gains, even if it never materialises.
Additional reporting by Peter Speigel in Brussels