German Minister Laments Greece’s Broken Promises

Greek promises on austerity are no longer enough to justify continued financial support.

Greek promises on austerity are no longer enough for Germany to continue to pour money into the “bottomless pit” that is Greece, said the country’s finance minister on Sunday.

In an interview with the Welt am Sonntag, Wolfgang Schäuble said Greece could remain in the eurozone if it enacted the reform measures that are necessary to boost the nation’s competitiveness. “At least people are now starting to realize that it won’t work with a bottomless pit,” he said.

Greek political leaders last week agreed to a package of deeper budget and public-sector pay cuts as well as a reduction in the minimum wage to qualify for a second European bailout worth €130 billion. Athens has yet to reform its pension system which currently enables government workers to retire in their fifties, much to the chagrin of paymaster Germany where the pension age was raised to 67 several years ago.

“With a new austerity program they are going to first have to implement parts of the old program and save,” according to Schäuble. Despite planned spending cuts, the Greek economy remains mired in recession. Tax revenues have dropped as a result so there has been little progress in the way of fiscal consolidation. Privatizations, which were a condition of the first European bailout committed in 2010, have stalled.

In Greece, popular opposition to the second round of austerity is formidable. According to opinion polls, the current coalition government, which is composed of the country’s main conservative and socialist parties, might not even secure a majority of the seats in parliament if there were elections today.

“The realization that there is a need for change,” said Schäuble, “still needs to develop further with a lot of people in Greece.”

European leaders have repeatedly insisted that Greece is a special case and that other highly indebted economies in the periphery of the single-currency union are doing far better. Schäuble specifically praised the Portuguese government on Sunday for “doing a decent job.”