BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble denied on Saturday that this month’s Greek bailout deal paves the way for a future ‘transfer union’ in which euro zone countries are liable for each others’ debts.
Schaueble’s remarks in a newspaper interview to be published on Sunday follow his attempt earlier this week to reassure conservative political colleagues that a new euro zone rescue fund would not have ‘carte blanche’ to buy bonds of states in difficulty.
Bundesbank President Jens Weidmann warned last week that the 109 billion euro ($157 billion) aid package for debt-stricken Greece weakened incentives for euro zone countries to maintain solid finances and led toward a fiscal transfer union.
“I don’t like the term as it only leads to misunderstandings and has nothing to do with the outcome of the summit,” Schaeuble told the Frankfurter Allgemeine Sonntagszeitung, according to a transcript provided by the paper late on Saturday.
“We are not harmonizing interest rates. We are not collectivizing debt risk. We are creating effective crisis mechanisms — nothing more and nothing less. The requirement to make savings, which is tied to the aid, exerts a disciplinary effect on the states that receive it.”
German Economy Minister Philipp Roesler on Wednesday encouraged German firms to invest in Greece, likening the opportunities to those in Poland after the fall of communism.
Schaeuble offered a different analogy.
“Greece now has the toughest job to do,” he said. “Just ask people from the former East Germany what it’s like to suddenly face the competitive pressure of being in a common currency area.”
After German reunification in 1990, and the conversion of their currency at a greatly overvalued exchange rate to the mark, regions formerly in East Germany suffered massive unemployment as high costs and wages meant firms were unable to compete with their more productive western counterparts.
Twenty years later, and after billions of euros in subsidies from the former West Germany, eastern regions are still noticeably poorer than those in the west.
Reporting by David Milliken; Editing by Catherine Evans