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German Finance Minister Backs Austerity, Slams Haircut Ahead of Greece Meeting

Date : 11/22/2012 @ 9:24PM
Source : Dow Jones News

German Finance Minister Backs Austerity, Slams Haircut Ahead of Greece Meeting

By Harriet Torry

BERLIN--There is "no alternative" to euro-zone member states cutting high sovereign debt and excessively large deficits, Germany's Finance Minister Wolfgang Schaeuble said Thursday, adding that pressure must be kept up on weaker member states to improve their competitiveness through structural reforms and lower wage costs.

Mr. Schaeuble's comments come days ahead of a second meeting with the Eurogroup of euro-zone finance ministers, the International Monetary Fund and the European Central Bank to thrash out a deal on Greece's bailout.

A meeting earlier this week ended without resolution. Disagreements remain between euro-zone finance ministers, and between the ministers and the International Monetary Fund over how to cover Greece's financing gap and reduce its long-term debt load.

Berlin continues to oppose a writedown of Greek sovereign debt. Mr. Schaeuble said Thursday that if Greece were given a so-called haircut, Germany wouldn't be able to grant it further aid as legally it can't give guarantees to any party deemed incapable of repaying debts.

"At a point in which we have to help Greece with guarantees because Greece doesn't have access to financial markets, it makes no sense to talk about a haircut," Wolfgang Schaeuble said at a trade congress in Berlin.

"It's not the case that we're throwing money at the Greeks, we are investing it in our better future," he added.

Mr. Schaeuble reiterated his calls to work toward a more stable currency union and win back trust in the euro. By having the euro, Germany is being spared "massive" currency appreciation, according to the German finance minister, who pointed to Switzerland as a negative comparison of an overvalued currency.

Write to Harriet Torry at harriet.torry@dowjones.com



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