EU, ECB working on Greece exit contingency: trade commissioner

BRUSSELS Fri May 18, 2012 11:58am EDT

1 of 2. European Union trade commissioner Karel de Gucht talks with a Reuters reporter in Phnom Penh March 30, 2012.

Credit: Reuters/Siv Channa

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BRUSSELS (Reuters) - The European Commission and the European Central Bank are working on scenarios in case Greece has to leave the euro zone, EU trade commissioner Karel De Gucht has said.

Speculation about such planning has been rife, but the comments in a newspaper interview, confirmed by a person close to De Gucht, appear to be the first time an EU official has acknowledged the existence of contingency plans being drawn up in case Greece has to drop out of the currency bloc.

"A year and a half ago there maybe was a risk of a domino effect," De Gucht told Belgium's Dutch-language newspaper De Standaard, referring to the threat of Greece leaving the euro.

"But today there are in the European Central Bank, as well as in the Commission, services working on emergency scenarios if Greece shouldn't make it."

He added: "A Greek exit does not mean the end of the euro, as some claim."

The source close to De Gucht said the commissioner was explaining that EU institutions had not been sitting on their hands for the past two years, and that they were now better prepared than they had been.

Concern has grown that Greece may decide to leave or be forced out of the 17-country currency bloc after a rise in popular opposition to an EU-IMF program of fiscal austerity and structural reforms undermined attempts to form a government after May 6 elections.

Greeks are scheduled to go the polls again on June 17. A victory by the far-left, anti-bailout coalition SYRIZA - which some opinion polls suggest is likely - would increase the possibility of the country leaving the euro.

However, one opinion poll on Thursday showed the pro-bailout New Democracy party in first place, several points ahead of the SYRIZA, which has pledged to tear up the bailout agreement.

The prospect of SYRIZA winning the election has sent the euro and markets across the continent tumbling this week.

Earlier this week, the country's president said Greeks had withdrawn up to 800 million euros ($1 billion) from banks as the political uncertainty deepened.

In a further blow, the European Central Bank said it had halted liquidity operations with some Greek banks because their capital was too depleted.

De Gucht told De Standaard he thought Greece would stay inside the euro zone, but that the crucial question until the next election was what conditions the ECB would set for guaranteeing the liquidity of Greek banks.

"The endgame has begun, and how it will finish I do not know," he said. "The question is can everyone maintain their sangfroid over the coming weeks."

Asked earlier this week about any contingency planning for a Greek exit, the spokeswoman for the European Commission replied:

"There are many, many questions arising and many questions open about Greece and most answers have to come from Greece and we have to respect the ongoing political process.

"Clearly, the future of Greece is in the euro zone. We are working on that.

(Reporting By Ben Deighton and Sebastian Moffett; Editing by Ruth Pitchford)

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