Germany Rejects Debt Relief for Greece after Obama Offers Support

(Reuters) – Germany on Wednesday opposed calls for debt relief for Greece after U.S. President Barack Obama offered support for such a mechanism for the recession-hit euro zone state during a trip to Athens.

German Finance Minister Wolfgang Schaeuble said late on Tuesday granting Greece debt relief would do it a disservice.

“Whoever says ‘we will relieve your debts’ is doing Greece a disservice,” the finance ministry confirmed Schaeuble as saying after the Passauer Neue Presse daily reported it.

Schaeuble’s comments were not made directly in response to Obama, a finance ministry spokesman added.

Athens signed up to a third economic bailout package of up to 86 billion euros last year but wants long-term debt restructuring to exit its crisis.

Germany, which has long said there is no immediate need for debt relief for Greece as it would discourage much-needed structural reforms, said it noted the comments from Obama, who flies to Berlin later on Wednesday.

“We have noted that President Obama has pointed to the importance of debt relief. The euro group agreed in May on a timetable on exactly that subject .. regarding measures for the short term, and later in 2018 for mid-term measures,” said government spokesman Steffen Seibert at a news conference.

In May, euro zone governments offered Greece debt relief in 2018 but left key details to be decided later in a compromise between Germany’s tough stance and the International Monetary Fund’s call for decisions immediately.

A finance ministry spokesman said there was nothing new to say. “Our position is unchanged. Obama’s visit has not changed anything,” he said at the government news conference.

Asked about austerity, Seibert said that Obama’s stated view that austerity alone does not create growth exactly reflected the opinion of the German government.

“It has always been our view that for long-term growth, two things are needed – a sustainable budget and on the other hand, the need for structural reforms. That was always our view and that has been the basis of our policies towards Greece,” he said.