BERLIN — As another day passed with Greece no closer to a working government, European officials suggested Wednesday that they had a new tool in their mission to keep the shared euro currency with all its partners: time.
A ticking watch may be the most powerful bargaining chip Europe has against the possibility that anti-bailout voices in Greece will push it off the euro. Every day that ends without new European bailout money for Greece to pay its bills heightens the pressure on its leaders to comply with the austerity measures that come as a condition of the $171 billion rescue package.
But German officials signaled Wednesday that they may be willing to relax some of the nation’s payment deadlines if a pro-bailout government comes to power, still an uncertain prospect. They may even be willing to consider reducing the interest payments on Greece’s emergency loans, sweetening the deal without abandoning any of the fundamental overhauls hey say Greece needs to get its economy on track.
After Sunday’s elections, in which almost two in three Greek voters picked parties that oppose the bailout deal, even the nation’s pro-bailout leaders said they wanted to renegotiate some of the terms of the rescue package. Germany’s openness for small compromises could be enough to give those politicians a scrap of political cover.
But in Berlin, the main funder of Europe’s rescues and by far the most powerful voice, officials also said they will hold a hard line against changes to the core of the bailout and that it wis Greece’s choice whether it keeps using the euro.
“It’s very important that Greece fulfills all the rules and agreements they have made in the last months. It’s very important for the stability of the euro,” said Norbert Barthle, an ally of German Chancellor Angela Merkel who is the parliamentary budget spokesman for her party, the Christian Democratic Union. “We decided on a second aid program for Greece just a few months ago. We are not so fixed on all the times in this program and all the conditions in this program, but we have to believe in the fundamental aims and we have to believe that Greece itself will do its part.”
Barthle said he was referring to the interest rates that Greece is paying on the long-term emergency loans it receives from the European Union and the International Monetary Fund. Those rates were already reduced once in March, when the bailout deal, Greece’s second, was signed.
“It is up to Greece to decide” whether it stays on the euro, German Finance Minister Wolfgang Schaeuble said at a conference in Brussels, Agence France-Presse reported. “We don’t need to discuss a Plan B.”
Europe has found itself approaching Greece with new leisure after agreeing two months ago to write off most of the country’s privately held debt as part of the bailout and requiring Greece to take measures to open its labor markets and push down salaries to make its economy more competitive. Until the debt write-off, a Greek default would have triggered immediate financial panic, with European banks taking sudden losses on their loans to the troubled Mediterranean country. Now officials say they can afford to wait for payments, noting that the brunt of the pain of bankruptcy would fall on the shoulders of Greece’s own citizens.
If Greece was to leave the euro, concern would grow that still-at-risk European countries such as Portugal, Ireland, Spain and Italy could be next. Also, governments would not be able to recoup their investments in the emergency loans to Greece, although the consequences of that happening are less dire for the international financial system than if the default fell on private shoulders. But analysts say Europe is far better equipped now to isolate Greece’s problems to its own peninsula than it was just a few months ago.
Europe’s main markets have slid modestly since the weekend elections — London’s FTSE 100 by 2.2 percent and Germany’s DAX by 1.3 percent — but the declines have not approached the plunges seen in earlier incarnations of the Greek crisis. Greece’s main stock index, by comparison, has dropped 10.8 percent.
“The big costs and turbulence is going to be for Greece itself. It’s not going to be for other countries,” said Fredrik Erixon, an economist and director of the Brussels-based European Centre for International Political Economy. But he said some of the discussion about holding Greece’s feet to the fire may simply be posturing.
“I’ve yet to meet one politician that believes Greece with the second bailout package is actually going to become fine,” he said.
For the time being, Greek finance officials say they have enough money to last them until the end of June, according to local news accounts in Athens. European finance officials say that even without extra money beyond the $6.7 billion bailout installment that the Greek government expects to receive Thursday, Greece can probably stretch its savings to the end of summer.
That would give Greece’s political uncertainty a little more time to reach resolution, even if the country is forced into new parliamentary elections in June, as is widely expected. The leaders of the two pro-bailout parties hope that they will gain more support the second time around, after the prospect of being kicked off the euro is clearer in voters’ minds. But it is also possible that bailout foes could simply secure their power.
Greece’s bailout administrators have said they do not plan to make any decisions about releasing another tranche of aid until a new government is in place. If the new government fundamentally opposes the bailout’s terms, the administrators say, they will not send any more money.