Heard in Europe

German Minister of Finance Wolfgang Schäuble was prepared “to give Greece €50 billion” had Yanis Varoufakis, his Greek counterpart at the time, agreed to his country leaving the eurozone, a high level source who recently spoke to Schäuble has revealed.

The German minister was described by the source like “a true European” who had nothing against Greece, but favoured harsh medicine for a good cause.

Schäuble was reported to assume that the leftist Syriza government would favour leaving the eurozone, a move consistent with its ideology. And he was prepared to put money on the table to encourage it to take this step.

Schäuble was quoted as asking how much Greece wants to leave the euro by France’s Mediapart. This is said to taken place before the 5 July referendum, in which a vast majority of Greeks rejected the international creditors’ proposals.

But according to the information obtained by Heard in Europe, Schäuble had in mind a concrete figure – €50 billion – had Syriza opted for Grexit.

Schäuble apparently didn’t say where the money would come from. Part of such a package could be sourced from the €35 billion of EU money due to Greece until 2020, plus ECB profits from Greek debt sovereign bonds due to Athens.

Had Greece opted for a Grexit, more than €300 billion of its debt would be lost to creditors, but €50 billion of fresh money would come handy to the Syriza government to build a new financial system.

Under the bailouts, billions are disbursed to Greece, but the money goes mainly for servicing debt.

Regardless of his party’s ideology, at the extraordinary Eurozone summit on 12 July, Greek Prime Minister Alexis Tsipras chose to honour the wishes of the majority of Greeks, who want to keep the euro.

Tsipras’ decision was even more surprising given the creditor’s conditions, which our source described as “much, much more brutal compared to any country historically speaking”.

Schäuble is known to be in favour of a five-year timeout of Greece from the eurozone. The idea was rejected at the recent Eurozone summit, but it appears that the Commission is keen to put in place a procedure for countries to leave the EU, similar to the enlargement negotiations, Heard in Europe was told.

According to this logic, Greece or the UK, or any other country for that matter, would receive EU support if it leaves the family in an orderly way. And the exit procedure would be accompanied by benchmarks, like the accession path.

The money Schäuble was prepared to give Greece could be seen as a precursor to such support, similar to pre-accession financing.


Photograph courtesy of the European University Institute. Published under a Creative Commons licence.

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