July 8, 2015 / 3:47 PM / 4 years ago

UPDATE 2-France says 'No' to Greek euro exit - PM Valls

(adds comments from Hollande, Sarkozy)

By Mark John

PARIS, July 8 (Reuters) - France will do all it can to stop Greece leaving the euro zone, a move that would have geopolitical consequences and hurt the world economy, Prime Minister Manuel Valls said on Wednesday, in the strongest statement of intent from Paris against a ‘Grexit’.

President Francois Hollande later said France would encourage Greece to deliver a “precise plan” that would inspire confidence in its euro zone partners.

“Keeping Greece in the euro and therefore in the heart of Europe and the EU is something of the utmost geostrategic and geopolitical importance,” said Valls in a keynote speech to the French parliament on the Greek crisis.

“Allowing Greece to exit the euro zone would be an admission of impotence - France refuses that,” Valls said, adding that a deal between Athens and creditors remained “within grasp”.

While calling on Alexis Tsipras’ government to make reforms to its tax and pensions systems, Valls said Athens also needed to have a “clear perspective” on how its creditors intended to handle its debt.

In contrast to many German counterparts, French officials have repeatedly said that talks on Greek debt, including a possible re-alignment of maturities, should not be taboo.

In his speech, Valls sketched out more than a century of political and cultural ties linking France and Greece, which he described as a “great European nation”.

A stable Greece was strategically important for Europe’s ties with Turkey and given the continued fragility of the Balkans and tensions on Europe’s eastern border, Valls said in reference to the Ukraine conflict.

He described Greece as Europe’s outpost to the Middle East and as a front-line player in the growing immigration crisis as Europe struggled to deal with thousands of people fleeing poverty and conflict in Africa and the Middle East.

“Weaken Greece and we are all weakened. It would weaken Europe and have repercussions for the world economy,” he said.

Hollande’s government has long portrayed itself in a mediation role between Tsipras’ leftist administration and the rest of a euro zone increasingly alienated by his rejection of austerity policies.

But Paris is equally keen not to burn bridges with Germany, where ruling conservatives have taken a much tougher line on Greece and in some cases publicly evoked the possibility of a “Grexit”.

“France’s role, notably with Germany, is to build the future of Europe together. When the chips are down ... it’s France and Germany together with a duty to rise to the occasion,” Valls said.

Valls said the Greek crisis showed among other things the need to speed up efforts to improve governance of the euro zone, for example by forging common policies to nurture social and economic convergence in the region.

Main opposition leader and former French President Nicolas Sarkozy also backed the government’s efforts, even though he said the ground should be prepared for a “plan b” should a rescue fail.

“I share this point of view expressed by Mister Hollande and Mister Valls but there is a red line, which is that the compromise must not destroy the credibility of the 18 other member countries of the euro zone,” he said on TF1 television.

“There are only bad solutions,” he added.

Additional reporting by Yves Clarisse; and Andrew Callus; Editing by Digby Lidstone

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