Greek euro exit would be 'manageable' says ECB

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20 Aug, 2012 Updated Mon 20 Aug 2012 12:45 CEST
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Greek politicians headed for talks in Berlin as a top member of the European Central said a Greek exit from the eurozone would be "manageable", although expensive and result in higher unemployment.

In an interview with Monday's Frankfurter Rundschau newspaper, Jörg Asmussen, a German member of the ECB's Executive Board, was asked about the possibility of debt-wracked Greece being forced out of the eurozone.

"First: My preference is clear. Greece should stay in the eurozone. Second: It is in Greece's hands to achieve that. Third: A Greek exit would be manageable. Fourth: An exit would not be as orderly as some imagine," he said.

Such an exit would spark a slump in growth, job losses and would be "very expensive. In Greece, in Europe and in Germany," said Asmussen.

Asmussen's comments came at the start of a crucial week for Greece as it bids to persuade its European partners to release a further slice of aid to keep its economy on life support and enable it to stay in the 17-nation bloc.

Prime Minister Antonis Samaras holds talks with German Chancellor Angela Merkel in Berlin on Friday and with French President Francois Hollande the day after.

Greek Foreign Minister Dimitris Avramopoulos was in Berlin Monday for a meeting with his German counterpart Guido Westerwelle to prepare the talks.

All are waiting for a key report due in September from Greece's international creditors - the European Commission, the ECB and the International Monetary Fund - known as the troika.

The report will assess Greece's reform progress demanded to unlock some €31.5 billion ($38.9 billion) desperately needed to keep the country afloat.

On his foreign tour, Samaras is expected to discuss the possibility of having two more years to achieve the required cuts.

Berlin has until now insisted that Athens must stick to the timeline and reforms agreed in return for its aid package.

But Bild newspaper reported on Monday that some concessions could be made to Greece within the agreed timeframe.

Steffen Kampeter, a top finance official, told German radio there would be no bilateral decisions taken on Friday between Merkel and Samaras, "but decisions taken in an ordered, fair and transparent manner at the European level."

The German government also on Monday poured cold water on a reported plan by the European Central Bank to set a cap on the borrowing costs of debt-wracked eurozone countries, terming it "very problematic”.

"Purely theoretically and speaking in the abstract, such an instrument would of course be very problematic but I am not aware of any plans in this direction," said Martin Kotthaus, a spokesman for Germany's finance ministry.

"You know that we basically do not comment on the ECB, which is an independent institution, but I can still say that I do not know about these plans," added Kotthaus.

Der Spiegel magazine reported on Sunday that the ECB was planning to set a limit on the borrowing costs of individual countries and intervene on the markets to maintain this level.

Spain and Italy have seen their borrowing costs shoot up during the eurozone crisis to levels that forced Greece, Portugal and Ireland to seek a bailout.

AFP/The Local/hc



2012/08/20 12:45

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