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'Grexit' could be the best way forward?

Elizabeth Schumacher
July 16, 2015

Germany's finance minister told national radio that while an important hurdle has been cleared, a "Grexit" may still be the most logical step. Schäuble said that debt relief and eurozone membership were "incompatible."

Image: picture-alliance/dpa/O. Hoslet

In an interview with Germany's Deutschlandfunk radio on Thursday, German Finance Minister Wolfgang Schäuble maintained his attitude that a change in government in Athens should not alter European agreements, and that a Greek exit from the eurozone might be the best for everyone if Athens cannot reduce its debt.

Speaking ahead of a conference call with his 18 other eurozone colleagues to discuss the Greek crisis, Schäuble said last night's parliamentary approval of the reform package in Athens was "an important step," though he reminded his interviewer that these terms were the "opposite" of what a "large majority" of Greeks had voted for in a referendum.

When asked if he thought the government of Prime Minister Alexis Tsipras could make good on its reform promises, Schäuble responded pragmatically, saying "Greece has obligated itself to do so." He added the caveat, however, that previous Greek governments had left similar pledges unfulfilled, and "Syriza used this [fact] to come to power."

Grexit could be the 'best way'

Schäuble was similarly straightforward about his earlier position that Greece should perhaps leave the eurozone, at least temporarily, saying "many international economists...also within the IMF and Greece itself…believe Greece can only overcome its debt if some of it is forgiven." However, he also said that Athens taking a haircut on its debt was "incompatible with membership" in the eurozone.

"If you think the best way for Greece" is debt relief, Schäuble explained, then "the best way forward" is to leave the euro. He added that it remains to be seen "if a way even exists to overcome the dramatically increased financial needs" of Greece while keeping it in the eurozone.

When the interviewer alluded to perceived differences of opinion on strategy between him and Chancellor Angela Merkel, Schäuble eschewed a detailed answer: "no one is right and no one is wrong…that's democracy." He did, on the other hand, praise her handling of an "extremely difficult" situation and maintain that he is a "loyal" member of the government. He remained emphatic that he would not campaign for or against approval of the bailout package in the Bundestag, the German parliament, which will debate the plan on Friday.

Asked about the differences of opinion between himself and Prime Minister Tsipras, Schäuble laughed and said "I don't think Mr. Tsipras would like to be compared to me!" before quickly adding that he, Schäuble, was "just a finance minister."

As to the future of the shared European currency and the stability of the "European project," Schäuble ended the interview by warning that "you can't discount" future instability in the eurozone, but that if national governments remained dedicated to the European Union, it would only get stronger in the years to come.