PARIS, Oct 18 (Reuters) - Jacques Delors, the man who laid much of the groundwork for the introduction of the euro, said on Tuesday that European treaties should be modified to allow countries to be kicked out of the single currency.
In an interview with French daily Le Monde, the former European Commission president said the euro was teetering on the brink of an abyss and the fault lay with dithering European leaders and a lack of coordination within the currency bloc.
He welcomed French President Nicolas Sarkozy and German Chancellor Angela Merkel’s plans to modify the European treaty, but said they needed to take a harsher stance with countries who failed to meet the bloc’s economic conditions.
“The new treaty should make it possible to kick a country out of the euro zone if a majority of 75 percent are in favour,” Delors told Le Monde. “Having a single currency means having to meet stricter requirements.”
He said if the region had set up an economic coordination unit years ago the troubles with Greece that now threaten to bring down the currency could largely have been avoided.
“The euro council would have asked questions about the situation in Greece when there was still time to act, and about the worrying increase in private debt in Spain, Ireland and Italy. They could have reacted,” he said.
Euro zone countries are battling to save Greece from an outright bankruptcy, a scenario that threatens to spread to other countries in the region and bring down banks exposed to sovereign debt.
Economists have speculated that Greece might be forced to quit the euro, a solution currently not possible under the terms of the European treaty.
Euro zone leaders are trying to agree on a way to shore up banks’ capital to weather a Greek default, and leveraging the bloc’s rescue fund to prevent contagion to other countries.
Ratings agency Moody’s said on Monday it could place France’s Aaa debt rating on negative watch if slower growth and the cost of a bailout for banks and other countries put its budget under too much strain.
Delors voiced exasperation that leaders had taken so long to act decisively on the debt crisis and said talk of a bank recapitalisation was jumping the gun.
“We’re moving onto the next step — recapitalisation of the banks — before we’ve applied the terms of the July 21 agreement,” he told Le Monde. (Reporting By Vicky Buffery)