Germany’s Gabriel Attacks Schäuble Over Greek Bailout Talks

In a parting shot before leaving his post as German economics minister, Sigmar Gabriel wrote a letter to Chancellor Angela Merkel sharply criticizing the country’s policy toward Greece.

In the letter, sent at the start of January and seen by Handelsblatt, Mr. Gabriel said he was following with “great concern” the ongoing discussions over Greece’s third bailout program, and that the government should be playing a “more constructive role.” In particular he warned that the positions between Germany’s finance ministry and the International Monetary Fund were “apparently so far apart that an agreement at this time seems impossible.”

Mr. Gabriel, a Social Democrat who in the past week switched from the economics ministry to the foreign ministry, urged the government in Berlin to ease its budget demands on Greece, something the IMF has also called for. He suggested requiring Athens to run a primary budget surplus of 3.5 percent for only the next three years, rather than up to 10 years as the finance ministry has demanded.

Finance Minister Wolfgang Schäuble, a member of Ms. Merkel’s conservative CDU party, rejected the criticism in a written response in mid-January, warning that easing back on budget demands would increase calls for forgiving some of Greece’s debt, something Germany also opposes.

Sources in Mr. Schäuble’s finance ministry said he was prepared to wait until June to reach a deal on the ongoing inspection of Greece’s third bailout program, as Athens will be able to manage without another bailout installment until then. The finance minister is not pushing for a Greek exit from the euro, the sources insisted.

Read the full story in Handelsblatt Global.