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Victoria Mindova

The German investment development bank KfW will fund the establishment of a new Greek development fund as became clear during the visit of German Minister of Finance Wolfgang Schaeuble to Athens this week. He announced not only the creation of the financial institution but also presented his views on the development of the recovery programme of Greece.

"The most difficult moment has passed but we are not out of the woods yet," the German Minister of Finance said allegorically at a business forum organized by the Greek-German Chamber of Commerce. He stressed that the Europeans’ plan to emerge from the crisis is to enable the countries with troubled finances to help themselves. In other words, to give support funding to the member states in trouble while they consolidate their public budgets. That is why Germany refuses to accept deviations from the programme.

Schaeuble stressed the need for Greece to continue the structural reforms, including the improvement of the performance of the public sector, more efficient revenue collection in the treasury and the need for a new and stronger support of small- and medium-sized enterprises. "The companies cannot create economic growth alone but this can happen with the help of a more efficient public sector."

He is clear that Greece should continue to properly meet its obligations to its foreign lenders, excluding the possibility of new cuts in the government debt held by private investors and the European Central Bank.

"You should continue to be focused on what we have agreed. Everything else is dangerous and against the interests of Greece," Schaeuble insists.The German Minister of Finance paid particular attention to the issue of new debt reduction. In his opinion, it is hypocritical for Greece to demand guarantees for loans from the European Financial Stability Facility (EFSF) and, at the same time, to insist on a new haircut of the obligations to it.

Schaeuble stresses that if the debt restructuring programmes are not implemented along with additional fiscal recovery measures, the debt burden will be transferred to the future generations which will not have a positive impact on the economy.
 
The Greek businessmen who attended the event stress that Schaeuble has categorically ignored the country's calls for lessening the draconian fiscal cuts. "You should continue to be focused on what we have agreed. Everything else is dangerous and against the interests of Greece," he insists.

Athens welcomed the German Minister of Finance with strict security measures. The whole area around the Hilton Hotel where the business forum took place, around the parliament, the Prime Minister's headquarters and the sections near the Ministry of Finance was closed off.

The public and private transport in the area around these institutions was stopped. There were police guards every two metres along the route of the German Minister and the roads around the central Syntagma Square were blocked by police armoured buses. There was an increased presence of riot forces as well.

The four central underground stations are also closed to prevent concentration of citizens as was done during the visit of German Chancellor Angela Merkel last October. Helicopters of the security authorities are circling the blocked areas, watching the movement of citizens. The opponents of the pursued fiscal consolidation policy, leftist organizations and trade unions have announced a protest under the slogan "Schaeuble, you're not welcome in Greece", which will take place at Klafthmonos Square at six o'clock in the evening.

The programme of the visit of the German Minister of Finance includes a meeting with Prime Minister Antonis Samaras and a visit to the Ministry of Finance. The visit will conclude with a press conference of the finance ministers of the two countries.

It became clear at the press conference that the German mission in Athens involved economists and financiers from the government and the development bank KfW which will provide not only guarantees and financing but also technical assistance for the new Greek investment fund.

Meanwhile, sources explained to GRReporter that Germany would allocate 100 million euro to KfW to invest in the development of small- and medium-sized enterprises.

"We believe Greece, we support it and together we are making every effort for the country to regain its economic development," said Schaeuble, stressing again that Germany will not accept deviations from the agreed programme.

The German Minister of Finance refused to answer the question of a Greek journalist as to whether the lenders would impose new fiscal consolidation measures from 2014 onwards. "I am neither the Troika nor am I a teacher who will teach from the rostrum how the Greek state should be governed. We know from the latest report of the supervisory Troika, which was released two weeks ago, that the implementation of the programme to the country is continuing. The decisions on the issue will be taken after the third quarter of the year when the next report on the state of the economy will be completed," said Schaeuble.

Regarding the problems of unemployment, the German Minister of Finance said, "What we are trying to achieve together is to create a single labour market in Europe." He stresses that all countries are trying to stop the brain drain in times of crisis. However, it is not the most significant problem as the experience of Germany shows that the professionals who seek opportunities abroad return to their country with new experience and knowledge. Schaeuble states that Germany was the "sick" part of Europe 10 years ago. It is aware of the medicine which Greece is taking today and of the fact that there is no other way to rescue the economy than through fiscal consolidation and structural reforms.