Germans lament "never-ending story" of Greek aid

BERLIN Wed Nov 28, 2012 1:06pm EST

BERLIN (Reuters) - German lawmakers and media accused the government on Wednesday of deceiving taxpayers over the true costs of saving Greece and said the euro zone would eventually have to write off much of its Greek debt.

The Bundestag, the lower house of Germany's parliament, is expected to vote on Friday on the package of measures agreed by euro zone finance ministers this week which aim to cut Greek debt to 124 percent of gross domestic product by 2020.

The Bundestag's approval is not in doubt but the chorus of anger and frustration reverberating among German newspapers and lawmakers highlights the growing political risks for Chancellor Angela Merkel ahead of next September's federal elections.

The government insists a writedown of debt by Greece's official creditors would be illegal and is unnecessary, but the skepticism is growing, even within its own party ranks.

"Without a haircut Greece will never be able to service its debts," said Carsten Schneider of the opposition Social Democrats (SPD) on Wednesday in the Bundestag.

Norbert Barthle of the Free Democrats (FDP), the junior partner in the coalition, said he could not exclude a 'haircut', though he did not expect one before 2020. Green lawmaker Priska Hinz saw one coming as early as 2013.

German media took up the theme with gusto, arguing that Greece remains in a precarious position despite the fresh aid.

"The never-ending story," quipped Germany's best-selling Bild of the latest rescue plan, depicting Merkel, Finance Minister Wolfgang Schaeuble and other top officials as characters from the cult fantasy film of the same name.

In a commentary, Bild's Hugo Mueller-Vogg reached for a medical metaphor to restate the paper's long-standing opposition to euro zone bailouts it says German taxpayers cannot afford.

"The team of European doctors around the patient's bed justify the continually rising costs of the treatment with the hope that at some point the expensive medicines will prove effective," wrote Mueller-Vogg.

None of the doctors will admit that the costs of saving Greece will be great, he said.

The business daily Frankfurter Allgemeine Zeitung said the measures agreed for Greece, which include cutting interest rates and extending debt maturity dates, already amounted to a "haircut" for creditor nations holding Greek debt.

"After these crisis negotiations Finance Minister Wolfgang Schaeuble can no longer maintain that saving the euro costs no money," wrote Holger Steltzner in the paper.

"(The deal) cannot be described (as a haircut) so that the finance ministers of Germany, Finland and the Netherlands do not lose face," he said, referring to key creditor nations who require their parliaments to approve the package.

GERMANY "TIED TO A CORPSE"

London-based German academic Gunnar Beck, in a column for the online version of business daily Handelsblatt, said Germany was "tied to a corpse" and said it would be better to cut itself loose despite the benefits the euro brings for German exporters.

Other newspapers said the special treatment doled out to Greece was unfair on countries such as Ireland and Portugal that have made big sacrifices to get their public finances in order.

Bild said 25 Eurosceptic lawmakers from Merkel's coalition would vote against the Greece package. This would be embarrassing for Merkel but would pose no threat to its passage.

The opposition SPD has signaled it will not try to block the Greek package in parliament but say it must be properly debated and one senior SPD lawmaker warned the government not to take the party's support for granted.

"How we act is still open. Whether we back or reject (Greek aid) is not yet decided," Thomas Oppermann, SPD parliamentary floor leader, said, in comments aimed at pressuring the government to allow a full and open debate.

Schaeuble, in written answers to questions submitted by the SPD, said Greece could tap more structural funds from the European Union's budget already earmarked for it to help cushion its economy from the harsh austerity measures being implemented.

Greece can still draw on some 13.4 billion euros in such funds - used mainly for infrastructure projects - for 2012 and 2013 under the EU's current seven-year budget which began in 2007 and has assigned Athens a total of 20.4 billion euros.

(Additional reporting by Gernot Heller and Andreas Rinke; Editing by Anna Willard and Jon Hemming)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.