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'Greece out of euro' calls multiply in Germany

The Local · 9 May 2012, 17:10

Published: 09 May 2012 12:45 GMT+02:00
Updated: 09 May 2012 17:10 GMT+02:00

It must stick to a March deal agreed with its international backers and enact promised reforms to remain within the eurozone, Finance Minister Wolfgang Schäuble said on Wednesday.

"If Greece wants to remain in the eurozone, there is no better solution than the path it has already taken," Schaeuble said, referring to austerity cuts and reforms in return for a 240-billion-euro debt bailout. "You can't have one without the other," he said.

Others were a few steps ahead. “We should make Greece the offer to leave the eurozone in an orderly fashion, without leaving the European Union,” said Klaus-Peter Willsch, budgetary expert for Chancellor Angela Merkel’s Christian Democratic Union.

He told Wednesday’s business daily Handelsblatt it was not up to the Germans to tell the Greeks how to live, but the election results indicated that the Greeks were not willing to make the effort required to make their country competitive.

“The dogma that no country can leave the eurozone has already caused too much political damage in Europe,” he said.

He was joined by the deputy chairman of the CDU’s parliamentary faction, Michael Meister, who told the paper that although it was not the aim of EU partners to throw Greece out of the common currency, “it is clear that if the new Greek government, contrary to expectations, does not keep to the contracts, it will have to accept the consequences already announced.”

Frank Schäffler, a finance expert from the CDU’s coalition partner the Free Democratic Party, also said he was open to a possible exit of the Greeks from the eurozone. He told the Handelsblatt that although the Greeks must be given time to sort themselves out, “one must be prepared.”

He said dozens of private studies had been carried out into the possibility. “The government should now, at the very latest, draw up a plan B,” he told the paper.

This idea was enthusiastically supported by the head of economics at the Ifo Institute for Economic Research in Munich, Kai Carstensen. “It is absolutely correct to develop a Plan B which would enable the exit of Greece in the most orderly fashion,” he said.

“At the moment that which many have feared is happening – the necessary internal devaluation through wage and price reductions is politically barely tenable,” he added.

Merkel and European Union leaders have already warned Greece that it must stick to euro rescue package agreements, even though it was these that led to the huge protest vote in Greece at the weekend.

Greece is in its fifth year of recession with unemployment at 20 percent – and has committed itself to earmarking in June another €11.5 billion in savings over the next two years.

It was also made clear this week that the next tranche of bailout money from the EU would depend on those agreements being kept.

Story continues below…

But before then, a new government has to be formed – by May 17 – or new elections will be triggered. The two mainstream parties, the conservative New Democracy party and left-leaning Pasok, were severely punished at Sunday’s vote, garnering just 32 percent between them, while a raft of anti-austerity parties profited, including the Golden Dawn neo-Nazis.

Currently the radical left under Alexis Tsipras is trying to form a government after New Democracy failed to do so and handed him the task on Tuesday.

The Local/hc

The Local (news@thelocal.de)

Your comments about this article

14:10 May 9, 2012 by Eastard
It looks to be the beginning of two major events in Europe... The creation of a new Greece with all the good and bad associated with it... It also becomes a huge opportunity for Russia and China to compete for their favor as is the case for most countries following socialism failure. Neither suitor holds much of their debt and when Greece is assimilated they will be a whole new level of puppets. Their aversion to fiscal discipline and cultural blame for someone else are exactly what predator nations want.. I do hope I'm wrong...
15:40 May 9, 2012 by Bushdiver
How quicky the Germans change there mind. It was only a few months ago before they wiped out a 100 million in Greek debt and poured more money into a hopeless cause that the Germans were saying that they were trying to save Greece at practically any cost. Now just a few days after elections in France and Greece the Germans are finally seeing the light. Greece leaving won't save the Euro though.
16:21 May 9, 2012 by Navigator_B
The German politicians are talking as if they'll be punishing Greece by kicking it out of the Euro club. The reality is that Greece will benefit by becoming more competitive with a new devalued currency of its own. It's Germany that will suffer in the end because a stronger Euro (or maybe Deutsche Mark) will make its own exports more expensive. At least the Germans will be able to have cheaper holidays in Greece. 
17:16 May 9, 2012 by starsh3ro
i hope the greece people will realize that leaving the eurozone is not a solution.

they would get a new currency but that wont change anything.

a lot of governments would be afraid to make future deals with greece, because nobody wants to lose money.

also with a new/old currency, the main problem remains, billions of money just dissapear in the corrupt system.

and me as german, i would never blame the whole greec population for their incompetent leaders.-
18:33 May 9, 2012 by Hibernicus
Eleven European governments have now collapsed since 2008 as a result of trying to implement the insane austerity policies advocated by Angela Merkel and her neo-liberal Gurus in the EU. Repeating the same methods in the hope of different results is the definition of insanity. Her wobbly Coalition is also on a train heading for the buffers of political extinction.

Reducing state spending and taxing lower incomes in the middle of the worst recession since 1929 is now proven to be the colossal mistake it always was. The growing revolt against these necronomics of the madhouse is not motivated by irrational desire to overspend but, because the ordinary working population have nothing more to give. Wage cuts and reduction of public services in health, education and social welfare have not produced any growth at all but 17 Million unemployed across Europe.
23:50 May 9, 2012 by Bushdiver
Personally, I still fail to see what the Euro has done for anyone other than big business and banks. To the average citizen very little. With the introduction of the Euro in Germany all I saw was my wages cut in half and within a year the prices on practically everything doubled. Maybe someone can explain it to me and don't give me it makes Germany's exports cheaper. What has the Euro done for the average citizen. In my eyes, nothing. To end this whole mess would be easier if everyone went back to their own currencies.
00:07 May 10, 2012 by lenny van
Almost everything is going according to plan in the Euro Zone viz-a-viz Greece and Germany. Greece can now leave the Euro Zone in a quiet orderly way and there will be new criteria for EU countries to join or rejoin it.

The world focus will now shift on Japanese and American debt issues, while Europe is creating new institutions to gradually build a more centralized democratic social-market Federal economy. When the 99% revolt against laissez faire capitalism, those of us living in Europe will be glad that we are.
08:07 May 10, 2012 by Barnel
Comment removed by The Local for breach of our terms.
17:35 May 11, 2012 by AlexR
Another brilliant idea from the very same finance "experts" (sic) and politicians from CDU/FDP who brought us into this mess. Instead of taking any responsibility for the harshest austerity program (in any post-war country) that pushed Greece to the brink of social and political collapse, they come up with new brilliant recipes.

Here is a revealing article about the timeline of the events that led to this mess with many unbelievable details, like the deliberate intention of Merkel that the "aid program had to hurt" because she wanted "to make sure nobody else will want this"!


Now that their recipes about the bailout program have completely backfired, they come up with another idea that is nothing but an aspirin to treat cancer. I wonder if those people ever read what they sign or read the reports handed to them.

First, according to the European treaties that those same people have signed, there is no way that a country could be "thrown out of Euro" and no way that a country could "leave Euro by its own" - a country can only quit the European Union as a whole. And Greece certainly doesn't want to do that.

Second, even if they change the treaties so a country could leave the Eurozone without leaving the European Union, this will establish a dangerous precedent. If Greece leaves the Eurozone, how they are so sure that other countries won¦#39;t follow, creating a domino effect? Who will then take the responsibility for that?

And last, if they propose that the best is for Greece to leave the Eurozone, why they don't tell the German tax payers what would be the financial consequences for that. The reports are there waiting to be studied. For example, in case of a domino effect, each German citizen will have to pay "between €6,000 and €8,000, with costs of between €3,500 and €4,500 in subsequent years. By comparison, if, after Greece, Portugal and Ireland each had to be given a debt haircut of 50 percent, it would only cost around €1,000 per German citizen -- and it would be a one-time cost."

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