Thursday, 22 August 2013

Greece will need new bailout, says Germany's Schaeuble

Wolfgang Schäuble's confession is unlikely to be a game changer in the German election campaign.

First, polls suggest that voters expect the bail-out bill to increase and thus will hardly be surprised to learn that Greece needs more money.

Second, although it has sought to avoid the topic, the government has never explicitly excluded the possibility of a new programme.

Third, on the more controversial issue of debt relief—in the form of a cut in the principal—the government is still adhering to its long-standing position that this will not happen (although most observers think it is inevitable).

Fourth, the policies of the main opposition parties towards the crisis are not that different from those of the coalition. Indeed, it could be argued that the Social Democratic Party (SPD) and Greens would adopt a marginally more generous stance towards Greece. This makes it difficult for the centre-left camp to exploit voter unease about the current bail-out strategy.

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