Wednesday

2nd Dec 2020

Germany: eurozone would survive Greek exit

  • There are no provisions in the EU treaties for a country leaving the eurozone (Photo: YoungJ523)

German finance minister Wolfgang Schauble has said the eurozone would survive if Greece left it, with the single currency structures more robust than two years ago.

"We want Greece to remain in the eurozone. But it also has to want this and to fulfil its obligations. We cannot force anyone. Europe will not sink that easily," he said in an interview with Friday's edition of the Rheinische Post.

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"The idea that we would not be able to react quickly to something unforeseen is wrong", he said. "We have learned a lot and built defences."

He said that the contagion risk for other euro countries had lessened and that the eurozone as a whole was more resilient.

"European countries and private creditors have made extraordinary moves towards Greece. We did what was possible."

His words come as the likelihood of Greece's departure from the eurozone increased after Sunday's parliamentary elections in which almost two thirds of voters chose parties that said they want to either renegotiate or scrap entirely the conditions attached to EU-IMF bailouts.

Politicians are now on their third attempt to form a government and the country may have to return to urns in June for a second election.

Time is pressing as there is an end-of-June deadline for Greece's parliament to approve a further €11.5 billion in cuts in return for the loan money.

For his part, Schauble said it was "dangerous" to allow Greek citizens to believe that there is a simpler way that avoided "hardships" to get Greece back on a healthy economic path.

Legally the exit issue is a quagmire. There are no provision for countries either leaving the single currency voluntarily or being booted out. Under EU rules, a country would normally have to leave the EU to leave the eurozone.

First coalition attempt fails in Greece

Greek Conservatives failed to cobble together a coalition on Monday, with leftist leader Alexis Tsipras set to try and form a government opposing the "barbaric" bail-out, a move that would put into question the country's future in the eurozone.

Germany asks capitals to give a little in EU budget impasse

European Parliament negotiators are demanding €39bn in new funding for EU programmes such as Horizon research and Erasmus, in talks with the German EU presidency on the budget. Meanwhile, rule-of-law enforcement negotiations have only just begun.

EU budget talks suspended in fight for new funds

MEPs are requesting additional, new funding of €39bn for 15 EU programs. The German presidency argues that budget ceilings, agreed by EU leaders at a marathon summit in July, will be impossible to change without a new leaders' meeting.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

Budget deal struck, with Hungary threat still hanging

Ultimately, the European Parliament managed to squeeze an extra €16bn in total - which will be financed with competition fines the EU Commission hands out over the next seven years, plus reallocations within the budget.

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