Germany’s finance minister has prepared to call for Greece to leave the eurozone for at least five years, a paper reported. The news comes as Athens tries to convince creditors that it can make good on reform promises.
In a position paper obtained by the “Frankfurter Allgemeine Sonntagszeitung” (FAS), German Finance Minister Wolfgang Schäuble has proposed that Athens either vastly improve its bailout-linked reform plan or take a five-year “time-out” from the eurozone, the paper wrote in an article made available ahead of publication on Sunday.
The position paper, which Schäuble sent to the other eurozone countries on Saturday, reportedly criticizes the latest round of reform proposals offered by the government of Greek Prime Minister Alexis Tsipras, saying they fail to address “vitally important reform areas to modernize the country and to boost economic growth and sustainable development in the long term,” FAS said.
A spokesperson for the German Finance Ministry would not comment on the FAS report.
The German proposal reportedly concludes that Tsipras’ latest proposals cannot serve as the basis for the new three-year loan Athens wants. Schäuble offers two alternative paths for proceeding forward: either Greece makes some swift and comprehensive changes to its proposals, or allow Greece to leave the eurozone for at least five years and restructure its debt.
For the former solution, Schäuble suggested that Greece could, for example, transfer 50 billion euros ($56 billion) worth of assets to a trust that could be sold to reduce the nation’s debt. If they opted for the second suggestion, Schäuble reportedly wrote that they could combine the five-year “Grexit” with “growth-enhancing, humanitarian and technical support” from the European Union.
The Greek government was skeptical of the report, however. In a tweet from Alexis Tsipras’ office, Athens said the FAS report “is completely denied.”
On the same day the position paper leaked, Greece’s new finance minister, Euclid Tsakalotos, was locked in talks with creditors, trying to persuade them that the Greek government can be trusted to deliver on reform promises just a few hours after a majority in the Greek parliament threw its support behind the latest proposals.
The other 18 members of the eurozone, however, implied that it would take more than a 13-page list of reform commitments to secure a third bailout worth billions of euros.