August 18, 2012 / 6:49 PM / 7 years ago

Grexit debate stirs in Germany ahead of Greek PM visit

BERLIN (Reuters) - Greece will not leave the euro zone unless the country “totally refuses” to fulfill any of its reform targets, the head of the Eurogroup said on Saturday, as Germany insisted the crisis-stricken country must stick to the agreed reforms.

Jean-Claude Juncker leaves a two-day European Union leaders summit in Brussels early June 29, 2012. REUTERS/Sebastien Pirlet

“It will not happen, unless Greece were to violate all requirements and not to stick to any agreement,” Eurogroup President Jean-Claude Juncker was quoted as saying in Austria’s Tiroler Tageszeitung newspaper days before meeting Greece’s prime minister.

“In case of such total refusal by Greece with regards to budget consolidation and structural reform, one would have to look into the question.”

Juncker said he expected Greece to double its efforts to fulfill its reform targets.

German Finance Minister Wolfgang Schaeuble said on Saturday there were limits to the aid that could be granted to Greece and said the crisis-stricken country should not expect to be granted another program.

With Greece in its fifth consecutive year of recession and social and political discontent rising, its Prime Minister Antonis Samaras is keen to soften the impact of budget cuts on society by extending the deadline international lenders set it.

Samaras is expected to float a proposal for a two-year extension when he meets with the leaders of France and Germany next week - he meets Chancellor Angela Merkel in Berlin on Friday - and with Juncker.

Juncker said for now such an extension was not urgently necessary and but also depended on the results of a troika mission of IMF, EU and European Central Bank representatives.

There is already a clause in Greece’s 130-billion-euro ($160.7 billion) bailout deal that says the deficit adjustment period could be extended if its recession is deeper than expected.


German Foreign Minister Guido Westerwelle said Germany would not consider easing the reforms agreed with Greece “in their substance” and called on the Greek government to “take the German government’s position very seriously”, according to an advance copy of an article due to be published in Tagesspiegel am Sonntag newspaper on Sunday.

While the German government will not agree to a third aid package for Greece, France and other southern European countries are pressing to give Greece further aid if necessary to avoid a “Grexit” or Greek exit from the euro zone, Germany’s Welt am Sonntag said in a pre-publication copy of a Sunday article.

The head of Germany’s main industry group told Germany’s Wirtschaftswoche on Saturday that if Greece did not stick to the conditions imposed upon it by the European Union and the International Monetary Fund, “there would no longer be a place for Greece in the euro zone”.

Hans-Peter Keitel, president of the BDI, which had previously insisted Greece remain in the euro zone at all costs, told the business magazine: “The country lacks substantial requisites such as a functioning administration and the express will to get itself out of the crisis.”

But European Energy Commissioner Guenther Oettinger said the euro zone should keep Greece on board if at all possible and warned against the unforeseeable consequences of a Greek exit in an advance copy of an article due to appear in Germany’s Frankfurter Allgemeine Sonntagszeitung on Sunday.

“If we can’t keep a country with 3 percent of Europe’s total debt in the euro zone, nobody will trust us to be able to solve the big problems,” he was quoted as saying.

Former German Foreign Minister Joschka Fischer also warned against a Grexit according to an advance copy of an article due to appear in Bild am Sonntag on Sunday: “If Italy and Spain were to get infected, that would be the end of the euro. Politicians would lose control because the markets would decide on that,” he was reported as saying.

Juncker, who earlier this month said a Greek exit from the euro zone would be manageable but not desirable, said:

“I did say an exit would be manageable. What I meant is that it is technically manageable but politically it is not manageable and it would be linked to unforeseeable risks.”

Asked what technically manageable meant, Juncker said: “It means that the Greeks would have to reintroduce their own currency. It would take extreme preparation. But the longer we talk about this, the more people get the hypothesis in their heads that work is being done on this. We are not working on this.”

Reporting by Annika Breidthardt and Michelle Martin

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