Dutch, Germans Insist: No More Aid for Greece

The two northern European countries reject the possibility of a third Greek bailout.

Prime Minister Mark Rutte of the Netherlands answers questions from reporters in The Hague, March 18, 2011
Prime Minister Mark Rutte of the Netherlands answers questions from reporters in The Hague, March 18, 2011 (Rijksoverheid)

Germany and the Netherlands, among the European Union’s most hardline nations on financial assistance for debt stricken member states, insist that there can be no third bailout package for Greece.

Dutch prime minister Mark Rutte, who is fighting for reelection, said on Tuesday night that he is unwilling to provide more financial aid to Greece. “If they don’t take the necessary measures,” he said of peripheral eurozone nations that have received financial support, “the help should stop.”

The Dutch leader added that he was willing to give Greece more time to implement its austerity program, provided it wouldn’t cost more money. German finance minister Wolfgang Schäuble doesn’t believe that is possible. “More time means more money,” he told Südwestrundfunk radio last month.

European officials have estimated that a two year delay in Greece’s austerity program will cost creditor nations another €20 billion. Dutch finance minister Jan Kees de Jager previously rejected the mere possibility of “delaying reforms and budget cuts” as “not a good idea.” Schäuble added on Wednesday, “The costs for Greece are already very high so we cannot have a new program for Greece.”

French president François Hollande said more or less the same during a press conference with Italian prime minister Mario Monti in Rome on Tuesday. Greece could have more time to reach its fiscal targets “without giving any more money” to “reimplement the program and keep Greece in the eurozone.”

Greece had hoped that socialist leader Hollande, who replaced the conservative Nicolas Sarkozy in May, would be more flexible but it seems even the French are running out of patience. In the Northern European countries, a majority of voters is increasingly skeptical of financial support for ailing euro states. Political parties that oppose the bailouts, including the True Finns in Finland and the Freedom Party in the Netherlands, which advocates withdrawal from the European Union altogether, are doing well in the polls. Indeed, Rutte ruled out another bailout probably in part to persuade Freedom Party voters that they can trust his liberals in next week’s election to deny the Greeks more funds.

European Union member states and the International Monetary Fund pledged €110 billion in financial aid to Greece in May 2011 and another €130 billion in October of last year to prevent the Southern European country from defaulting on its debt obligations. Half of Greece’s €350 billion national debt was also written off.

The two bailouts were conditioned on Greek budget and economic reforms. However, on both fronts, it has repeatedly failed to meet its commitments.

The coalition government that came to power in Greece in June has committed to an additional €11.5 billion in spending reductions between 2013 and 2014. Among the austerity measures are layoffs of contractors in the public sector, a cap on pensions, cuts in welfare benefits, reductions in tax exemptions and lower salaries for government workers.

Structural entitlement and labor market reforms that should enhance Greek competitiveness in the medium to long term remain stalled. A comprehensive privatization effort has yet to be initiated. Business confidence is fading. More than one out of five Greek workers is unemployed. Youth unemployment has topped 50 percent.

Prime Minister Antonis Samaras has asked for a two-year extension to bring his deficit down to 2.1 percent of gross domestic product. “All we want is a little room to breathe, to get the economy going and to increase government revenues,” he said late last month. The Greek economy shrank about 6 percent last year and is projected to contact another 4 percent this year. “More time,” said Samaras, “does not automatically mean more money.” Other leaders are unconvinced.