German FinMin: Troika Dictates If Greek Bailout Terms Change

Author: Market News International | Category: News

By Chris Cermak

WASHINGTON (MNI) – German Finance Minister Wolfgang Schaeuble
Saturday said the Troika’s mission to Greece will dictate whether the
terms of Greece’s second bailout program will have to be revisited.

The Troika, due in Greece next week, is expected to report on
whether Greece has done enough to receive the next EUR 8 billion tranche
of its first package. Schaeuble said a review of the second bailout
program agreed July 21 will likely be based on the findings of that
same mission.

“We will, on the basis of the Troika report, look at whether the
conditions of the program are still valid,” Schaeuble told reporters
after a meeting of the IMF’s steering committee, the IMFC.

Schaeuble also suggested he is open to ways of increasing the
firepower of the EUR 440 billion European Financial Stability Facility
(EFSF) once it is approved by all member states. He said the Eurozone’s
plan for dealing with the crisis had been met with approval by other
members of the IMFC.

“Of course, we want to use the EFSF in the most efficient way,”
Schaeuble said, though he would not discuss calls to leverage the fund.

Schaeuble said critical to solving Europe’s debt crisis is a
“durable, credible solution for Greece” that would succeed in calming
markets.

Representatives of the Troika — the EU Commission, ECB and IMF —
will be visiting Greece next week and are set to report back in early
October.

The German minister discussed the crisis with Greek Finance
Minister Evangelos Venizelos on the sidelines of the IMF meeting
Saturday. Schaeuble said the two remain in “constant contact” and he
believed Venizelos is committed to keeping his country’s commitments to
cut its debt levels.

If Greece holds to its commitments, the Eurozone members would do
“everything necessary” to keep it in the currency bloc, Schaeuble said.

In a later speech to the Institute for International Finance,
Schaeuble said private market participation in the Greek bailout have to
become “integral” to solving the European debt crisis. The balance
between private and public sector involvement is critical to the
“credibility” of western capitalism and democracy.

“Without a substantial contribution of financial institutions, the
legitimacy of our Western capitalized systems will suffer,” Schaeuble
said.

But Schaeuble wouldn’t say whether governments could still force a
greater haircut on private Greek bond holders as part of any revised
bailout conditions. Talks on any additional private sector involvement
in the Greek bailout program will only be discussed after the Troika’s
report in October, “and not a moment sooner.”

— Chris Cermak is a Washington reporter for Need to Know News

** Market News International Washington Bureau: 202-371-2121 **

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