Angela Merkel: Greek Euro exit would be 'catastrophic'

 


The departure of Greece from the eurozone would be a "huge political mistake", according to German chancellor Angela Merkel.

In an interview for tonight's edition of BBC television's Newsnight, she said it would be "catastrophic" to ask the country to leave the 17-nation group of single currency member states.

After two multibillion-pound bail-outs for Greece - largely funded by Germany - and amid fears that Athens will not be able to stick to severe austerity measures which have triggered months of violent public demonstrations, Chancellor Merkel insisted: "Greece has time and again explained that it wants to remain in the euro. It has major weaknesses but it is trying to overcome them, be they in the administration or the competitiveness of their business community.

"It is going to be a long and arduous road.

"We have taken the decision to be in a currency union. This is not only a monetary decision, it is a political one. It would be catastrophic if we were to say to one of those who have decided to be with us, 'We no longer want you."'

She said the EU treaties made no provision for excluding a eurozone country, but: "People all over the world would ask, 'Who will be next?' The euro area would be incredibly weakened."

She continued: "It would be a huge political mistake to allow Greece to leave. That is why we will be clear with Greece, we will say 'if you want to be part of a common currency you have to do your homework but at the same time we will always support you."'

The German chancellor, in her first UK broadcast since becoming leader in 2005, said the crisis in the eurozone - and in the wider EU - was not over: "Over the past two years in Europe, particularly in the eurozone, we have learnt a lot. We must reflect time and again, why are we together in Europe?

"It is a very tense situation right now. Europe and particularly the euro area, is in crisis. It has slithered into crisis as a consequence of the global financial crisis and this has brought about very tough discussions in many countries."

The German leader praised Prime Minister David Cameron's austerity drive: "It is something that each country in Europe can do because we will all learn that no country can live beyond its means.

"Once the markets lose confidence, we pay a heavy price.

"All European countries have understood this lesson and have to pave the way for political decisions.

"In Britain there have been protests, and protests have started in other countries.

"But we in the eurozone are convinced that together, we are so much stronger. We get so much benefit from the common currency that we want to respect the common rules as they are set out in the fiscal pact, for example."

Even outside the eurozone, the UK was playing a "very important role" in Europe: "The UK is part of the single market and the common climate policy.

"Britain has a lot of common ground with Germany on how we see the future of free global trade, we all benefit from it.

"At the end of the day the British have to decide for themselves to what extent they wish to be part of Europe.

"It is a discussion that we have seen unfortunately taking a painful turn on the fiscal pact (which David Cameron refused to join) but Britain needs to know that we in Germany want a strong Britain in the EU, we always have and we always will."

She added: "In Germany we will try to see that there is less red tape, more political decisions and more transparency. I think that we are at one on this with Britain."

PA

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