BERLIN (Reuters) - Eurogroup Chairman Jean-Claude Juncker warned on Saturday against a further drifting apart of euro zone economies in an interview with a German newspaper.
“We must take care that the divergences do not get wider still. A currency zone cannot exist in the long run if the differences in the current accounts of the economies get too big,” he told the Sueddeutsche Zeitung, adding he did not believe the euro zone would fall apart.
The Greek government had to understand it was its job to bring its budget into order but if Athens did everything it could, Europeans would stand by in an act of solidarity.
He declined to say, however, exactly how the EU could help Greece.
“I cannot today name an exact instrument... We have many instruments ready and will use them if necessary,” he said.
European leaders sought to help Greece with words of support at a summit on Thursday but offered no specific steps, sending Greek debt yields higher and the euro down against the dollar.
Greece has struggled to convince investors it will get its budget under control and markets are jittery about the prospect of a default. Euro zone finance ministers are expected to discuss the issue again at a meeting on Monday and Tuesday.
Juncker also said he did not believe the EU’s Stability and Growth Pact needed to be reformed to respond to a possible state bankruptcy.
“The basis of the Maastricht Treaty is that a state bankruptcy does not come into question. If we had thought a euro zone member could go bankrupt, we would have devised instruments to deal with that. This is not envisaged,” Juncker said.
He did not think a clause allowing the euro zone to throw out a member would be a good idea.
“Because throwing (a state out) would have momentous, uncontrollable consequences. We must prevent a state from getting close to bankruptcy.”
Financial markets would react very negatively if a country like Greece were to leave the euro zone, added Juncker.
“An exit would be the end for Greece. And it would be absolutely negative for the image of the euro zone.”
Juncker said there was no appetite to change the criteria for new countries wanting to adopt the euro but euro zone states and the European Central Bank had to make sure criteria were fulfilled for the long term.
However, in a separate newspaper interview, the EU’s new Energy Commissioner Guenther Oettinger said the bloc might have to consider changing its rules.
“EU states must start cutting their debt in 2011. If they refuse, the Stability Pact must be changed so EU authorities can better crack down,” Oettinger told the Welt am Sonntag.
“The stability of the euro must be guaranteed,” He said, adding taxpayers should not pay for exploding state debt.
Juncker declined to say whether he backed Germany’s Axel Weber or Italy’s Mario Draghi to succeed Jean-Claude Trichet as president of the European Central Bank next year.
Euro zone finance ministers are expected to recommend either Luxembourg’s Yves Mersch or Portugal’s Vitor Constancio for the number two job at the ECB next week.
Some diplomats think the two top jobs may be shared between northern and southern euro zone states. So if Mersch were to get the number two job, Draghi would be seen as front runner for the presidency, while if Constancio were chosen, it could bolster Weber’s chances.
Juncker said Mersch had a proven track record as a central banker.
“If Mr Mersch does not win backing for reasons that lie in the future, one has to ask whether it is a good thing for the euro zone. To oust Mersh so as to have someone else in the chairman’s seat does not show much vision,” said Juncker.
Reporting by Madeline Chambers; Editing by Andy Bruce
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