W. Schäuble: Greece needs economic overhauls and not debt relief

German Finance Minister Wolfgang Schäuble said Thursday what debt-ridden Greece needs is economic overhauls, and not debt relief, because any easing of the debt burden would reduce the urgently needed willingness to reform the country.

His comments, which signal Germany’s persisting hard line against Greece, come after Mr. Schäuble visited earlier this month Washington, where talks with senior financial officials and the International Monetary Fund included Greece’s debt sustainability.

“They don’t understand that Greece’s problem isn’t its debt level but Greece’s problem is its lack in competitiveness and its inability to build up [functioning] administration,” he said at a book launch event.

“Everybody pretends as if some kind of debt relief would make anything at all better in Greece. The only thing that would change is trampling even more all over any willingness to tackle a couple of reforms.”

Earlier this month, the IMF signaled it isn’t likely to soon rejoin Europe in more financing for debt-worn Greece, if at all. The fund argues that eurozone governments need to restructure their loans to Athens to ensure Greece’s solvency.

Since July 2015, Greece has relied on financing from the rest of the eurozone, whereas the IMF’s participation as a lender has been on ice because the fund believes Greece’s debt isn’t sustainable and requires large-scale relief.

Germany has pushed hard for the IMF to rejoin the present third Greek bailout, with the government calling participation “of vital importance,” but the IMF has insisted on additional debt relief.