German Finance Minister Wolfgang Schaeuble told Greece to carry out unpopular reforms if it wants to stay in the Eurozone, ruling out debt relief for Athens. The warning may signal yet another emergency in the continent already beset by multiple crises.
As Eurozone finance ministers prepare to meet in Brussels on Monday to discuss short-term debt relief for Greece, Schaeuble delivered an ultimatum to Athens: the country, which already has a staggering €330 billion ($349 billion) debt burden, must reform or face an exit from the EU.
“Athens must finally implement the needed reforms,” Schaeuble told Bild am Sonntag on Sunday. “If Greece wants to stay in the euro, there is no way around it – in fact completely regardless of the debt level.”
To secure new loans from European financial institutions, Greece has to ‘liberalize’ the labor market, particularly by allowing companies to fire employees more easily and with less legal obstacles. Among other unpopular measures is Brussels’ proposal to curb certain rights of Greek labor unions.
Schaeuble added that Athens must not rely on any assistance from international creditors at the moment, saying, “It will not help Greece.”
The German government has promised not to request their parliament for more money for Greece unless the International Monetary Fund (IMF) resumes lending to Athens.
The IMF in turn says that new loans are not an option unless it is reassured that Greece’s debt burden is sustainable. The Greek government, currently led by left-wing party Syriza, has long argued that the country’s overwhelming debt load is the main obstacle to sustainable growth.
Governor of the Bank of Greece Yannis Stournaras said new measures were needed to ease Athens’ debt burden. “We’ve made clear that there is no chance we’ll accept what the IMF demands on [austerity] measures and labor reforms,” Tzanakopoulos said, as quoted by Reuters.
Athens has received three international bailouts since 2010, and its debt, at about 180 percent of GDP, is still the highest in the Eurozone, amounting to over €300bn of emergency loans.
The news comes as Italian Prime Minister Matteo Renzi suffered defeat at the referendum he proposed, in which most bills would only need approval from the Chamber of Deputies to become law, with the exception of passing constitutional reforms or ratifying EU treaties.
During the campaign, Renzi argued the new reforms would boost economic growth and prevent Italy from going into political gridlock.