Wolfgang Schäuble bails out Spain, Portugal

Politico.eu —  Ahead of last  Wednesday’s meeting of the EU’s 27 commissioners, Spain and Portugal looked to be headed for the eurozone’s version of politically embarrassing fiscal purgatory.

There was no question that the Iberian duo’s budget deficits were in blatant breach of the single currency zone’s rules. Momentum was growing for the Commission to impose, for the first time ever, a fine totaling in the millions of euros. Even Jean-Claude Juncker, the Commission chief, had seemingly changed his previously skeptical views on sanctions, pushing his colleagues in recent weeks to enforce the rules and shore up Brussels’ credibility on eurozone governance.

Then salvation arrived from an unlikely source: Wolfgang Schaeuble.

The German finance minister, curmudgeonly fiscal hawk and scourge of spendthrift southern Europeans, broke with public type in a concerted, last-minute campaign to stop the sanctions, according to people familiar with his actions. Over the past weeks and days, Schaeuble worked the phones and used personal encounters, pressing commissioners on the fence, mostly from his own center-right political block, to cancel the threatened fine.

The behind-the-scenes intervention was driven by political considerations particular to this moment that trumped Schaeuble’s long-standing demands for the eurozone nations to keep their budgets in order and abide by commonly agreed rules.

“We must not be more Catholic than the Pope, but please make it known that the Pope wanted a fine of zero” — said Jean-Claude Juncker.  In this analogy, the Pope is Schäuble.

Two vice presidents, Valdis Dombrovskis and Jyrki Katainen, the German Commissioner Günther Oettinger and his Swedish peer Cecilia Malmström were among those who supported fines. Vice President Frans Timmermans, Commissioner Pierre Moscovici and the commissioners from Portugal and Spain, Carlos Moedas and Miguel Arias Cañete, argued loudly against it.

German magazine Der Spiegel criticized Schaeuble for his double standard approach: treating Spain and Portugal mildly, while he pushed for tough austerity measures that strangled Greece’s economy and people. 

“In case of Greece, Schaeuble vehemently rejected any proposal for mild treatment.”

The reason? Mariano Rajoy is one of Schaeumbe’s political allies and he is at the moment facing difficulties in forming a government in Spain. On the other hand Greece’s SYRIZA government is not favoured by Schouble who has openly expressed hostility against it.