Another 2.5 Billion Euros: Greek Shortfall Growing Ever Larger

The Greek prime minister has spent weeks searching for ways to come up with 11.5 billion euros to satisfy international conditions for emergency aid. Now, though, SPIEGEL has learned that the shortfall may be as much as 14 billion euros. German politicians are becoming increasingly exasperated.

Greece may need to come up with 2.5 billion euros more than thought. Zoom
REUTERS

Greece may need to come up with 2.5 billion euros more than thought.

Athens has not been having an easy time coming up with the €11.5 billion in cost cutting measures over the next two years it has promised Europe. Indeed, Greek Prime Minister Antonis Samaras is reportedly set to request an additional two years to make those cuts during meetings later this week with German Chancellor Angela Merkel on Friday and French President François Hollande on Saturday.

But according to information obtained by SPIEGEL, the financing gap his country faces could be even greater. During its recent fact-finding trip to Athens, the so-called troika -- made up of representatives from the European Central Bank, the European Commission and the International Monetary Fund -- found that Greece will have to come up with as much as €14 billion to meet the terms for international aid.

According to a preliminary troika report, the additional shortfalls are the result of lower than expected tax revenues due to the country's ongoing recession as well as a privatization program which has not lived up to expectations. The troika plans to calculate the exact size of the shortfall when it returns to Athens at the beginning of next month.

The news of the potentially greater financing needs comes at a sensitive time for the country. Many in Europe, particularly in Germany, are losing their patience and there has been increased talk of the country leaving the common currency zone. Over the weekend, German Finance Minister Wolfgang Schäuble reiterated his skepticism of additional aid to Greece. "We can't put together yet another program," he said on Saturday, adding that it was irresponsible to "throw money into a bottomless pit."

'Must Abide by What They've Agreed To'

His warning was echoed by several senior parliamentarians from Merkel's center-right Christian Democrats. Both Norbert Barthle and Michael Meister told the Berlin daily Tagesspiegel that a third aid package for Greece would not be forthcoming.

Volker Kauder, who leads Merkel's conservatives in parliament, told SPIEGEL that Greece has little choice but to live up to its promises. "The Greeks must abide by what they've agreed to," he said in the interview (which will be posted on SPIEGEL International later on Monday). "There isn't any more wiggle room on this issue, neither in terms of the time frame nor the issue itself." He added: "I see little chance of a third aid package (finding support) in the coalition."

Indeed, it is not just Merkel's conservatives who are becoming less willing to finance Greece indefinitely. Her junior coalition partner, the Free Democrats (FDP), have likewise become almost categoric in their refusal to consider additional aid measures. German Economy Minister Philipp Rösler, who heads the FDP and is also Merkel's vice chancellor, told SPIEGEL ONLINE over the weekend that "those who don't stick to the rules and the promises made cannot expect financial help." Recently, Rösler triggered a European-wide debate by saying: "For me, a Greek exit has long since lost its horrors."

'We Also Violate Rules'

Despite the increasingly uncompromising rhetoric from Berlin, there have also been several recent attempts to tone down the debate. In response to the Austrian foreign minister's recent comments that he was interested in establishing a clause allowing for the expulsion of countries from the euro zone, Euro Group President Jean-Claude Juncker told the Austrian daily Tiroler Tageszeitung: "It will not happen, unless Greece were to violate all requirements and not stick to any agreement." German Foreign Minister Guido Weseterwelle also urged greater solidarity with Athens in comments to the Berlin daily Tagesspiegel. Even Schäuble himself acknowledged that "even we sometimes screw up, we also violate rules."

Samaras for his part insists that his recent efforts to find the additional €11.5 billion in savings demanded by Greece's international creditors are almost complete. He says further cuts are planned to pensions, civil servant pay, state-owned companies, clinics, insurance, education and defense. He hopes to have the package finalized before he travels to Berlin at the end of this week. His foreign minister, Dimitris Avramopoulos, is in the German capital on Monday for talks with Westerwelle.

Europe, in the mean time, is already working on a plan should Greece need more funding. In order to prevent the need for an unpopular third bailout plan, SPIEGEL has learned that euro-zone governments are considering other measures. Under discussion is a reduction -- or the complete elimination -- of the interest rates Greece must pay for its emergency aid loans.

cgh -- with wire reports

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1. Nothing Changes. Still a Disaster.
sbanicki 08/20/2012
Time would be better spent on planning the break-up of the Euro-Zone. The only way for the euro to survive is if parts of Europe politically unite under one constitution and one governing body elected by the citizens of the new amalgamated country. In order for anyone to believe this will happen, he must be one highly intoxicated optimist. There are 27 countries in the European Union from Germany with a population of 81.7 million to Malta with 417 thousand citizens in 2011. Only 17 of these countries use the euro. Europe, and the world, needs to plan for the end game. The dissolution of the euro is inevitable. We need to plan now to minimize the negative impact. The impact will be negative, it is the degree of impact that is yet to be decided. The six most populated countries of Germany, France, United Kingdom, Italy, Spain and Poland have combined populations of 355 million. This is slightly larger than the United States. In 2010 the GDP of these six countries totaled $12.7 trillion in nominal dollars while the GDP of the U.S. totaled $14.6 trillion. It becomes easier to trade between "countries" if they are all a part of one sovereign state. It is being Pollyanna to believe this will actually happen. There is much bad history between these countries, pride and tradition for each country runs deep, each country has its own taxing system and all have different social programs for their citizens.Read More: http://www.freeourfreemarkets.org/2012/07/united-state-of-europe.html#more
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