Contrary to German politicians' claims that their taxpayers have paid the tab for Greece's economic woes, the Greek crisis has actually benefited Germany financially, suggests a new analysis from a leading German economic think tank.
In fact, the authors estimate that even if Germany forgave the entirety of Greek debt on its books, the country would still come out ahead.
The report, from the Halle Institute for Economic Research, examines the relative savings Germany has enjoyed due to depressed interest rates on its government bonds. As frightened bond investors have fled Greece and other troubled economies since 2010, they have piled heavily into German debt, which is seen as relatively safe. That increased demand has sent interest rates on German debt issues falling.
If one adds up all the savings from lower government financing costs, the Halle Institute argues, it comes out to 100 billion euros ($110 billion) -- more than the 90 billion-odd euros ($99 billion) Germany has committed to the Greek bailout. "Even if Greece indeed does not repay any of its loans, Germany comes out ahead," the authors write.
German lawmakers tend to cast the Greek debt crisis as a liability to their citizens' own pocketbooks. As Greece has appealed for debt relief in the form of principal writedowns or restructuring, hardline officials like German Finance Minister Wolfgang Schäuble have argued that such a move would come at the expense of German taxpayers. An increasing proportion of German citizens support the idea of Greece leaving the monetary union of European countries using the euro.
But the Halle Institute authors write that these political calculations should factor in the financial benefits Germany has enjoyed from being a safe alternative as other European economies foundered. "When discussing the costs to the German taxpayer of saving Greece, these benefits should not be overlooked," the report argues.
Greece is reportedly in the final stages of negotiating a major bailout deal with its European creditors. Prime Minister Alexis Tsipras and his left-wing government have made major political concessions in an effort to secure the new loans after months of economic turmoil. Greek banks were shuttered through the first three weeks of July as the economy ground to a crawl.
Along with the International Monetary Fund and countries like France and Italy, Greece has pushed for debt relief to be part of any bailout deal. Even Schäuble has agreed that Greece's debt burden is unsustainable without some form of restructuring, though as a matter of policy he refuses to entertain the notion.
Greece faces a $3.5 billion debt repayment Aug. 20.