German Finance Minister Wants Budget Watchdog With Teeth

Shutterstock photo

By Andrea Thomas

BERLIN--German Finance Minister Wolfgang Schäuble called Tuesday for the eurozone's bailout fund to assume a watchdog role over countries' budgets, saying the euro will only be regarded as a trustworthy currency if member countries respect self-imposed rules.

"The European rescue system has been successful in Portugal, Ireland, Spain, Cyprus, and also in Greece," he said during a speech to a conservative think tank, noting that the countries might not have liked the conditions attached, but they had to accept them.

Mr. Schäuble has repeatedly said political motives play too big a role in how member states' budget plans are considered by the European Commission.

Earlier this year, the commission gave France leeway on its budget plans, a move that angered Berlin. Brussels gave Paris more time to bring its budget deficit in line with European budget rules, even though these would have required the country to implement more austerity measures than planned.

Germany is one the strongest proponents of applying budget rules requiring countries to keep their budget deficits below 3% of gross domestic product and the national debt below 60% of GDP.

A single monetary union without a joint fiscal and economic policy "is incomplete," and in the absence of such a joint policy, the eurozone "can only function if it has certain rules and sticks to these rules," Mr. Schäuble said. "This isn't German stubbornness but is a result of the design, the peculiarity, of the monetary union."

While Mr. Schäuble has urged creation of a fiscal and economic policy union in Europe to strengthen the eurozone, he has acknowledged that it is difficult to find unanimous backing for such integration.

In 2010, Mr. Schäuble appealed to set up a European Monetary Fund that would assume watchdog tasks and provide struggling countries with emergency liquidity aid under strict conditions.

Instead, the eurozone got the International Monetary Fund on board to monitor bailout packages for Greece and other struggling countries.

The Washington-based IMF's supervisory role is one of the reasons Germany says it is "of vital importance" for it to join the third Greek bailout package.

But the IMF said earlier in October it isn't likely to soon rejoin Europe in providing more financing for debt-worn Greece, if at all, while in the midst of a disagreement with Berlin. The fund insists on additional debt relief for Greece while Berlin wants to delay such a decision until 2018, once Greece has completed its economic overhaul and once Germany's 2017 elections are out of the way.

Write to Andrea Thomas at

  (END) Dow Jones Newswires
  Copyright (c) 2016 Dow Jones & Company, Inc.

This article appears in:

More from Dow Jones Business News


See Dow Jones News

Follow on: