How Germany Made Money from Greek Crisis

Germany made €1.34bn from various financial schemes meant to aid debt-stricken Greece, according to finance ministry reports shared with the Green Party.

One loan by the German government-owned development bank KfW in 2010 to Greece yielded net gains of €393m through interest, according to a report published by German newspaper Süddeutsche Zeitung on July 11.

Frankfurt’s European Central Bank (ECB) also launched its now-defunct Securities Markets Programme (SMP) to purchase government bonds to help financial crisis-hit countries like Greece. As reported by The Local, the profits earned by these bonds each year are distributed by the ECB to central banks of eurozone states.

Since 2015, the German SMP profit share reportedly totalled €952m.

In 2012, Eurozone states agreed to pay out profits from the bond purchases to Greece. But since the second Greek relief package expired in 2015, the profits from 2014 were blocked and placed in a special account.

Revenues from interest since 2015 were no longer transferred out of the account. Parliamentary State Secretary in the Federal Ministry of Finance Jens Spahn told the Green party that the German government was not planning any transfer.

"The interest gains must at last be paid out to Greece,” said Green party EU expert Manuel Sarrazin. "It cannot be that [German Finance Minister] Wolfgang Schäuble can refurbish the German budget with Greek interest profits.”

In a similar vein, Green party budget policy spokesman Sven-Christian Kindler criticised the findings.

"It is in fact legally possible for Germany to earn from the crisis in Greece,” Kindler said. "But it is not legitimate in the moral sense of solidarity.”

According to The Local, the good news for Athens is that if it completely implements reforms demanded by lenders in 2018, it will receive the profit made from the SMP in 2017.

In June, EU officials and Greece agreed to a debt deal worth €8.5bn in cash, in the latest tranche of Greece’s €86bn bailout agreed in 2015.

In a separate report, Germany’s Handelsblatt noted that eurozone governments, together with the International Monetary Fund (IMF), have so far participated in three bailout programmes for Greece totalling more than €240bn, with Germany bearing nearly 30% of the contributions.