Schröder calls for more time on Greek reforms

Former German chancellor Gerhard Schröder has called on Europe’s current leaders to take a softer line towards Greece, saying that while Athens must continue economic reforms it should be given more time to implement them.

Germany has been at the forefront of countries pushing Greece to stick to a far-reaching €28bn austerity programme agreed in June, a demand that risks derailing the country’s €110bn bail-out.

International lenders pulled out of Athens on Friday, warning the Greek government to quickly implement the measures or they would withhold an essential €8bn aid payment due at the end of the month.

Mr Schröder until now has avoided weighing in on the crisis but in a rare, wide-ranging interview with the Financial Times and Le Monde, Mr Schröder was careful not to criticise the recent handling of the crisis by his successor, Angela Merkel. But he said he did not believe it was in Europe’s interest to press Greece so hard.

“What we expect of Greece right now, the question is can that really be achieved? The Greek government is trying to introduce austerity programmes that are unprecedented,” he said, warning social unrest was a “great possibility” given the country’s continued economic contraction.

“Europeans in general should not stop expecting reforms from Greece, but Greece should get more time to introduce them.”

Although he did not single out Ms Merkel for the current approach to Greece, Mr Schröder did criticise his successor for her performance early in the crisis.

Ms Merkel inappropriately played on German resentment towards Greece, he said, a mistake that now prevents her from winning public support for measures he believes are necessary to solving the crisis, including the creation of bonds backed by all 17 eurozone countries.

Mr Schröder specifically singled out Ms Merkel’s widely reported assertion that Greeks worked less hard and took more holidays than Germans, a claim he said was wrong and was “a huge mistake” politically.

“In the first months of the Greek crisis, Merkel looked too much at public opinion and she participated in this bashing of Greece,” he said. “Her position has definitely changed but it is now very difficult for her to introduce that kind of thing in her own party.”

Asked whether he believed German public opinion would be changed on so-called “eurobonds”, he said leaders must sometimes adopt unpopular policies, noting that he was ousted from power after pushing through unpopular overhauls in Germany’s social insurance system.

“These common bonds are part of the solution,” he said. “It is the task of governments not only to look at the public opinion but also to work at changing the public opinion.”

Mr Schröder was also chancellor when Greece was let into the euro, however, a decision many economists now argue was premature. He also pushed for Germany to be allowed to breach European Union budget limits in 2005, which many critics now argue created a EU-wide apathy towards the fiscal strictures.

The former chancellor defended those decisions, saying Germany was not alone in supporting Greece’s membership and adding that it would have been hard to omit Athens when Italy had been accepted into the euro with similarly high debt levels.

“I think the accession of Greece was not a mistake by only one government,” he said. “The figures were not examined by the member states. They were examined by the [European] Commission.”

He added that breaching EU debt levels in 2005 was necessary to overhaul Germany’s social insurance system.