Opposition parties in Germany and the Netherlands sharply criticized their respective governments on Tuesday after European finance ministers a day earlier agreed to push back Greece’s deadline for achieving its budget targets by two years.
Dutch prime minister Mark Rutte campaigned against increasing financial aid for Greece in September, saying he was willing to give the country more time to implement its austerity program, provided it wouldn’t cost more money. German finance minister Wolfgang Schäuble rejected the notion out of hand. “More time means more money,” he told Südwestrundfunk radio.
Now both governments have agreed to give Greece more time and the estimate it is it will cost them and the remaining European nations €44 billion more to keep Greece afloat.
European Union member states and the International Monetary Fund provided €110 billion in financial support for 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 has also been written off.
The two bailouts were conditioned on budget and economic reforms. However, on both fronts, Greece has repeatedly failed to meet its obligations.
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.
Left-wing parties in both Germany and the Netherlands believe that the current program is hopeless and further reductions in Greece’s debt should be made before the country can emerge from recession. It is why Frank-Walter Steinmeier, the leader of Germany’s Social Democrats, said after Monday’s deal was announced, “The haircut is not avoided, it has been postponed until after the election.” Elections could be called in Germany as early as September next year.
Conservatives are similarly critical but for the opposite reason. Der Spiegel complains that the German taxpayer is now footing the bill. “It is clear that Germany will for the first time renounce revenue that should have come from the Greek bailout,” it points out. An editorial in Die Welt on Tuesday laments Greece’s inability to enact market and tax reforms and argues that the country is being rewarded for it. “And what if it doesn’t stick to its agreements? Then there will be more night sessions and at the end of it — a haircut. Because that’s how a transfer union works.”
The right-wing De Telegraaf newspaper in the Netherlands chastises Rutte for breaking his election promise and quotes nationalist Freedom Party leader Geert Wilders, who seeks to withdraw from the European Union altogether, as accusing the premier of being “soft on Greece but hard on the Netherlands.” Sybrand van Haersma Buma, the leader of the Christian Democrats, who were thrown out of the ruling coalition in the last election, similarly argued that the prime minister was showing a difference “face” in Brussels than he was in The Hague even if his party supports the decision he made.