Greek insolvency would have 'gigantic' consequences, German minister says

Leaders hold secret Berlin meeting to prep 'final' offer for Greece

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The Independent Online

A Greek insolvency would have 'gigantic' consequences for Europe, creating a 'completely different aggregate state', according to Angela Merkel’s second in command.

Sigmar Gabriel, vice-chancellor and economics minister of Germany, spoke passionately about the need to keep Greece in the Eurozone in order to maintain the single currency.

"I think it’s absolutely right that Germany and France once again try to find a solution, because the political consequences of Greece’s insolvency within the eurozone would of course be gigantic," Gabriel said at a conference, according to the Wall Street Journal.

"Many people seem to have somewhat the impression that it’s better to make a painful break than to draw out the agony. The truth is, that if the first brick were to break out of the European house, Europe would be in a completely different aggregate state."

His comments come after Europe’s most powerful ministers met in Berlin on Monday to try and break the debt deadlock.  German Chancellor Angela Merkel, German President Francois Hollande, EC President Jean-Claude Juncker, ECB President Mario Draghi and the head of the IMF, Christine Lagarde flew to Berlin for an emergency summit to find a middle ground between the IMF’s perceived ‘tough line’ on Greece and the EC’s more generous terms, aimed at keeping the union intact.

No longer content to wait for proposals, Europe’s political leaders sent a draft text of necessary economic changes needed in Greece before they would agree to release more cash. One person involved in the talks reportedly said the offer was final’.

Greece is wrangling over reforms to pensions and its labour market as well as on the size of its primary budget surpluses.

Meanwhile the head of Greece’s central bank has said he is 'very optimistic' that the country will stay in the euro, simply because no one has the power to take Greece out of the euro, even if they wanted to.

"Nobody has a mandate to take the country out of the euro... so I am very optimistic that a Grexit will not occur," Yannis Stournaras  said.

The emergency Berlin meeting follows months of talks between Alexis Tsipras, leader of Greece’s radical left wing Syriza party, and its creditors: the EC, the ECB and the IMF.

But the real crunch time is not until June 30, when the currency bail-out deal ends. The tone of EU ministers suggests it is in everyone’s interests to find a solution before then.