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EU, ECB working on Greece exit plans

May 18 2012 14:07

Brussels - The European Commission (EC) and the European Central Bank (ECB) are working on an emergency scenario in case Greece has to leave the eurozone, EU trade commissioner Karel De Gucht said in an interview published on Friday.

The comments would appear to be the first time that an EU official has confirmed the existence of contingencies being taken for a possible Greek exit from the currency bloc. Speculation has been rife about such plans, but their existence has not been confirmed.

"A year-and- a-half ago there may have been the danger of a domino effect," he said in an interview with the Belgium's Dutch-language newspaper De Standaard.

"But today there are, both within the European Central Bank and the European Commission, services that are working on emergency scenarios in case Greece doesn't make it."

He added: "A Greek exit does not mean the end of the euro, as some claim."”

The source close to De Gucht said the commissioner was explaining that EU institutions had not been sitting on their hands for the past two years, and that they were now better prepared than they had been.

Concern has grown that Greece may decide to leave or be forced out of the 17-country currency bloc after a rise in popular opposition to an EU-International Monetary Fund programme of fiscal austerity and structural reforms undermined attempts to form a government after May 6 elections.

Greeks are scheduled to go the polls again on June 17.

A victory by the far-left, anti-bailout coalition SYRIZA - which some opinion polls suggest is likely - would increase the possibility of the country leaving the euro.

However, one opinion poll on Thursday showed the pro-bailout New Democracy party in first place, several points ahead of the SYRIZA, which has pledged to tear up the bailout agreement.

The prospect of SYRIZA winning the election has sent the euro and markets across the continent tumbling this week.

Earlier this week, the country's president said Greeks had withdrawn up to €800m from banks as the political uncertainty deepened.

In a further blow, the ECB said it had halted liquidity operations with some Greek banks because their capital was too depleted.

De Gucht told De Standaard he thought Greece would stay inside the eurozone, but that the crucial question until the next election was what conditions the ECB would set for guaranteeing the liquidity of Greek banks.

"The endgame has begun, and how it will finish I do not know," he said. "The question is, can everyone maintain their sangfroid over the coming weeks."

Asked earlier this week about any contingency planning for a Greek exit, the spokesperson for the EC replied: "There are many, many questions arising and many questions open about Greece and most answers have to come from Greece and we have to respect the ongoing political process.

"Clearly, the future of Greece is in the eurozone. We are working on that."

greece  |  europe debt crisis


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