Merkel's Bavarian ally says Grexit would cause 'utter chaos'

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BERLIN (Reuters) - A Greek exit from the euro zone would cause “utter chaos” but would have to be accepted if Athens was not willing to implement reforms, Chancellor Angela Merkel’s Bavarian ally Horst Seehofer told German newspaper Die Welt on Wednesday.

“No one can predict the consequences of a Grexit other than that a lot of Greece’s debts would have to be written off and at the same time monetary help would be necessary,” Seehofer, state premier of Bavaria, said to the paper.

“On top of that there would be utter chaos. If Greece were not prepared to reform, a path like that would have to be accepted but one shouldn’t strive for it oneself or organize it.”

Seehofer’s Christian Social Union (CSU) has taken a tougher stance on Greece than Merkel’s party. Some CSU members have been among the most vocal in calling for Greece to leave the euro zone, with Bavarian finance minister Markus Soeder pleading last month for an “orderly” Grexit.

Seehofer said he shared Merkel’s view that a debt haircut for Greece should not be considered but that debt relief measures were “responsible”.

Asked about Finance Minister Wolfgang Schaeuble’s proposal that Greece could take a five-year “time-out” from the euro zone, Seehofer said he did not consider this to be an option.

Earlier this month German lawmakers gave the euro zone the green light to negotiate a third bailout for Greece, but there was a sizeable conservative rebellion.

Asked if the third bailout for Greece would be the last one, Seehofer said: “If what has now been decided works and is done, we have the problems under control.”

He said Merkel would continue to have his full support as long as she continued to call for reforms in return for solidarity.

Reporting by Michelle Martin; Editing by Louise Ireland/Hugh Lawson