Euro Zone Talks Revive Specter of Greek Exit

Have Greece’s eurozone partners resigned themselves to seeing Europe’s most distressed economy pull out of the single currency? As talks on Greek crisis resume after a summer lull, it really sometimes sounds like that. The prospect of a “Grexit,” once billed as a doomsday possibility for the euro enterprise, is now being described not only as a “possibility” but also as a “manageable” one. The tone has been set by fiscal hardliners in 17-member currency zone who are showing increasing frustration at pace of Athens’s efforts to institute changes they say are needed to tackle the debt crisis and meet terms of Greece’s bailout. Erkki Tuomioja, Finland’s foreign minister, said last week: “We have to face openly the possibility of a euro breakup.” It was not something Finnish government was advocating, he told The Daily Telegraph of Britain, “but we have to be prepared.” His comments prompted The Sun, another euro-skeptic British newspaper, to conclude: “Europe is secretly preparing for the breakup of single currency.” The reality may fall short of a secret plan, and the official view within the eurozone is Greece should stay. But the latest signals from some quarters could prove unnerving for Antonis Samaras, Greek prime minister, as he prepares for a meeting with Chancellor Merkel of Germany on Friday. Ms. Merkel’s political ally, Michael Fuchs, deputy parliamentary leader of her Christian Democratic Union (C.D.U.), told BBC on Wednesday that if Greece were to leave the Euro, “I don’t believe it is going to have a great impact any more.” In an interview with German newspaper Bild on Wednesday, Samaras said Greece stood by its commitments to its partners but appealed for a breathing space to institute the promised overhauls. “Let me be very clear, we are not asking for any more money”. “We stand by our obligations to meet all requirements. But we must spur growth, because that will shrink the holes in our finances. All that we want is a little breathing room to get the economy going and increase revenue. More time does not automatically mean more money.” The interview was published ahead of Mr. Samaras’s meeting in Athens on Wednesday with Jean-Claude Juncker, the president of the Eurogroup committee of eurozone finance ministers. Mr. Juncker has dismissed talk of a Greek exit, telling the Tiroler Tageszeitung, an Austrian daily: “I have said that an exit would be manageable, by which I meant that it would be technically manageable but it would be politically impracticable.” But the Eurogroup chief was expected to respond to any request for extra time by telling Greeks that there was little leeway. Volker Kauder, the C.D.U. leader in the German Parliament, has already warned: “There is no room for maneuver there, neither in terms of the time frame nor in terms of the substance because that would be another breach of the agreements.” Amid the uncertainty, Jean Pisani-Ferry, French economist writing in Financial Times, said on Wednesday that Greece’s eurozone partners should make up their minds once and for all whether they wanted Greeks in or out. Blasting Europeans for being inconsistent in their approach to the Greek crisis, he wrote: “If they really think they would be better off with Greece out they should offer it an exit package.” If they decided, however, that a Greek exit was not in their interest, “they should recognize the efforts made, give it a real chance to adjust further and recover within the euro.” (source: NYTimes – 23/08/2012)


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Consultor Internacional

One Response to Euro Zone Talks Revive Specter of Greek Exit

  1. Professor Uziel Nogueira says: US media pundits, including Paul Krugman, got it wrong on the euro zone crisis. They assume that in order to preserve the euro, Germany will do whatever it takes to keep the weakest link countries within the euro zone. An incorrect assumption and far from the evidence so far. In fact, in order to preserve the common currency, Germany MUST get rid of the weakest link economies, starting with Greece, for a simple reason. Germany’s political leadership made a huge mistake when weak economies were allowed to join the common currency in 1999. Countries in the euro zone periphery do not possess (and never will) the advanced economic structure to share a common currency with one of the most competitive and advanced industrial-technological economies in the world, Germany. If Greece leaves the euro, there won’t be any financial catastrophe in the EU or the eurozone. The euro be strengthened in relation to other currencies because money will simply flee Greek banks to neighboring countries. Besides, if Greece leaves, other countries such as Portugal, Ireland, Spain and Italy will be put in a short notice. Keep fiscal discipline, reform the economy and be more efficient or follow Greece. The only way to save the euro is to reduce the number of countries sharing the common currency. From the current 17 member countries, a few probably will be forced to abandon the euro in the next few years.


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