May 9, 2012 / 12:15 PM / in 6 years

Germany's Steinbrueck: plan B needed for smaller euro zone

BRUSSELS (Reuters) - Europe should prepare a ‘plan B’ to cope with any possible departure of a country from the euro zone, Germany’s former finance minister Peer Steinbrueck said on Wednesday.

“If I had political responsibility, I would want to prepare for a plan B that would foresee that the European currency union, that the euro zone, no longer necessarily consists of 17 member states,” Steinbrueck said in an interview on German television, when asked about Greece’s future.

“And that means to make provisions so that other countries are not pulled into the maelstrom through contagion.”

Steinbrueck’s comments, coming at a time of growing uncertainty over Greece, carry weight.

He is a leading member of Germany’s centre-left Social Democrats (SPD) and is considered one of the leading candidates in the party to challenge Chancellor Angela Merkel in next year’s federal election. He served as her finance minister between 2005 and 2009.

Greece faces possible new elections after two days of failed efforts to reach an agreement among parties deeply divided over whether to stick to a EU-IMF aid program that saved Greece from bankruptcy.

Steinbrueck outlined the possible threat of any Greek exit for banks, insurers and the wider economy, advocating measures to address any capital flight.

He also suggested a recapitalization facility to assist companies hit by any such exit.

Reporting By John O'Donnell; editing by Rex Merrifield

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