Schaeuble's `Wrong Message' Barb on Greece Triggers a Spat

(Bloomberg) -- German Finance Minister Wolfgang Schaeuble rebuked a fellow cabinet member for sending the “wrong message” to Greece by suggesting a relaxation of fiscal austerity, triggering an election-year dispute in Chancellor Angela Merkel's coalition.

Schaeuble, a Christian Democrat like Merkel, was responding to Foreign Minister Sigmar Gabriel, who suggested that Germany contribute a greater share of the European Union's budget and called for “ending the reduction of European stability to a pure austerity policy.” His opinion piece appeared in Frankfurter Allgemeine Zeitung on Wednesday, the day he traveled to Athens for talks with Greek leaders, including Prime Minister Alexis Tsipras.

“Europe isn't suffering from a lack of money, much less from a lack of debt,” Schaeuble told Deutschlandfunk radio on Friday. “What we're suffering from is member states not doing what they have to do and some relying too much on others.”

“I was irritated that Mr. Gabriel in Greece sent the Greeks a message that doesn't help them,” Schaeuble said.

In his newspaper op-ed, Gabriel, a Social Democrat, said countries carrying out reforms should get help with investment and “more time to reduce deficits,” a swipe at bailout terms championed by Schaeuble that oblige Greece to overhaul its economy in return for European emergency loans.

The clash exposes a fault line in Merkel's coalition exactly six months before Germany's election. While the chancellor's party bloc says austerity is the path to sustainable finances and keeping Greece in the euro, many Social Democrats say the measures are unnecessarily harsh and criticize a lack of government spending as holding back growth in Europe. Sniping over policy aside, both sides backed Greece's third bailout in the German parliament in 2015.

Bad Reputation

Gabriel gave his riposte later Friday, saying “spending certainly isn't helpful all by itself, but neither is saving.”

“If you can't applaud the efforts of the Greek people without being scolded by the CDU finance minister, then it's clear why the Germans have such a bad reputation in the EU,” Gabriel told Bild newspaper.

Asked on Friday about Schaeuble's comments, Finance Ministry spokeswoman Friederike von Tiesenhausen told reporters in Berlin that it's “not always about more money.” Foreign Ministry spokesman Sebastian Fischer, in contrast, cited Greece's “very painful reforms” on its “very, very long path” since the start of Europe's debt crisis.

“What unites us is a great respect for what a broad swathe of the Greek population has gone through economically and financially,” Merkel's chief spokesman, Steffen Seibert, told reporters at a regular government news briefing. “We're aware that many people there have paid a high price.”

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Tony Czuczka, Richard Bravo