As finance ministers from around the world gather in Washington, DC this weekend for the annual meetings of the IMF and World Bank, Brookings hosted two of them, separately, in back-to-back events yesterday: Germany’s Wolfgang Schäuble, and Greece’s Yanis Varoufakis. The convergence of the two ministers is of particular interest because the government in Athens is out of money, is unable to borrow on global bond markets, and is dependent on loans from the rest of Europe and the IMF. But Greece’s creditors, including Germany, are reluctant to lend Greece more money unless Athens institutes firm commitments to make Greece economically more competitive.
Against this backdrop, the two foreign ministers gave remarks and answered questions in the two events at Brookings. Senior Fellow David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy, participated in both events, and spoke on NPR this morning about what he heard. “Both sides say they are looking for common ground,” Wessel told NPR’s David Greene,”but right now it’s hard to see what policies will fly politically in Greece and satisfy the conditions set by the IMF and Europe. It’s a game of chicken: each one expects the other side to blink first. And Greece is taking a hard line, expecting the creditors will flinch because they are afraid that if there is an implosion in Greece that will produce a lot of problems in other vulnerable countries.” You can listen to the interview below this video, which highlights various remarks of the two finance ministers.
It’s hard for me to see how [a no deal Brexit] would benefit the EU at all. By nature of the single market, you’ve got a heavily integrated economy that would come to a screeching halt.