06 February 2015

New Greek Finance Minister Yanis Varoufakis came head-to-head with Germany’s formidable Wolfgang Schäuble in Berlin yesterday. Despite Varoufakis’ best efforts to get the Germans over to his way of thinking (including references to the perils of deflationary circles and Nazis), Schäuble refused to budge. But he really drove the point home in an evening interview with German broadcaster ARD. Here’s what he had to say:

Schäuble and Varoufakis: No common ground

At their joint-press conference, Schäuble announced that he and Varoufakis “agreed to disagree,” he then later told ARD:  “He told me his position – which he has verbalised a lot recently. And I tried to explain to him our position. We were not able to bridge the differences.”

Greece must work with the Troika

Despite SYRIZA heralding the end of Troika in Greece, Schäuble quite bluntly said: “Of course they will have to work with the three institutions [EU/ECB/IMF]. They don’t like the word ‘Troika’ – fine. But the conditionality of the programme can only be fulfilled with the three institutions. Without [the Troika] there is no programme [for Greece].”

Changing Greece’s bailout programme ‘not possible’

There will be no substantial change in the conditions of Greece’s bailout programme: “I would not put it to the German Bundestag [to vote] to change the conditions of the Greek programme, because I consider it to be wrong…We have been generous above and beyond with Greece. What would the other countries say –  to whom we gave tighter, stricter conditions? It’s not possible.”

Respect the will of other Eurozone voters

Schäuble made clear that while he respects SYRIZA’s democratic mandate, it does not mean they trump the wishes of other Eurozone voters, who are liable for the vast-share of Greek debt. “I told [Varoufakis] that we have great respect for the Greek voters’ will. But my respect for the will of the German voters and the will of voters in other European countries is just as great…It’s not as simple as [Greece] just saying, ‘Yes – we are following the will of the voters. We need more money’.”

Reform, reform, reform

And above all, reiterated Schäuble – Greece needs to continue down the path of structural reform. “Greece lived far beyond its means for many years, and when the finance markets wouldn’t lend to them anymore they needed help. Now they say we lent them too much much. Err, excuse me please…They simply have to get on the right path so that they will be trusted by other creditors. They’ve made big steps forward…but they are not over the hill yet.”