ECONOMICS > Eurozone may need to sacrifice Greece, warns British minister

LONDON- Reuters

Leaving Greece out of the eurozone may ease convincing Germany to spend more on saving the euro, Brtish finance Minister George Osborne says. The bailoust fund for Spanih banks is ‘too little, too late,’ he also says

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Students and young graduates visit a job fair at the Athens Technopolis, organized by technological firms and students organizations. Unemployment is one of the major concerns over the debt-hit Greek economy. AFP photo

Students and young graduates visit a job fair at the Athens Technopolis, organized by technological firms and students organizations. Unemployment is one of the major concerns over the debt-hit Greek economy. AFP photo

Europe may need to sacrifice Greece’s membership of its single currency bloc in order to convince Germany to put in more money to save the euro, Britain’s finance minister George Osborne suggested in remarks certain to enrage euro zone leaders.

As the EU’s biggest economy and largest contributor, Germany holds the key to how the bloc can rescue its troubled, smaller economies and whether Europe is able to agree on a banking union to end 2-1/2 years of debt turmoil.

Britain and the rest of the European Union have clashed repeatedly over how to fix the crisis, with London refusing bluntly to take any part in any euro zone banking union.

“I ultimately don’t know whether Greece needs to leave the euro in order for the euro zone to do the things necessary to make their currency survive,” Osborne said in remarks published on Wednesday in The Times newspaper.

“I just don’t know whether the German government requires a Greek exit to explain to their public why they need to do certain things like a banking union, euro bonds and things in common with that.”
Despite its tough rhetoric, Britain is in an awkward position in its dealings with the EU because it is not a member of the euro zone, yet the fate of its economy is tied closely to the future of the single currency bloc.

Ahead of elections

A day earlier, Herman Van Rompuy, chairman of the EU leaders’ meetings, said the bloc would do all it can to keep Greece in the eurozone if it respects its bailout commitments.

Osborne’s comments came just days ahead of an election in Greece seen widely as a referendum on whether it should stay in the euro zone, or leave and go back to its old drachma currency. Eurozone rescue funds are already stretched by supporting Greece, Portugal, Ireland and now also Spain, after eurozone finance ministers agreed on Jan 9 to lend it up to 100 billion euros ($125 billion) to recapitalize its banks. A potential Italy bailout is also beign discussed.

Osborne - who had earlier urged the eurozone to use its bailout fund to recapitalize Spain’s troubled banks directly - described the deal as “too little, too late”.

“If you do it via the Spanish sovereign, then you are not going to convince the market the Spanish sovereign is entirely credible...and yet they went ahead down this route,” he said.


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Notice on comments

Chris Green

6/17/2012 4:42:22 PM

Dorus Livis: You will know that you and I rarely ever agree. Today when viewing your comments, especially your reply to Dennis, I completely agree with you. Both France and Germany saw an easy way to sell their goods, particularly weaponry to southern countries and now, like the wind they are reaping the whirl wind of the wind huge debt they have manifestly helped to create. If this brings down the single currency project then so be it. Britain, meanwhile must not peer into the crater of abyss!


6/14/2012 3:02:46 PM

besides the Italians-Portuguese-Irish-Ispanians don't feel the same about Greeks...


6/14/2012 2:50:17 PM

There is no way that the economic targets can be reached by measures that struggle economy. If EU is to survive it has to let its members to survive, even Merkel has realized that austerity gets nowhere. Greece was reckless and will pay the price either way by lowering the lifestandard. But if the Eurozone's policy is to struggle to death Greece, then it will have to leave in order to survive. Andbe sure that it will be followed by the other debt-hit countries shortly...


6/14/2012 2:44:35 PM

@de Wit Hans: You know, our opinions in every subject is in a large extent formed by the trends of the media in the country where we live.The commonplace in the Netherlands is the pattern of some Greek lazy fat guy who likes to smoke and drink ouzo. I don't need to stand there because it is simplistic. The public opinion in Greece is against austerity measures not only because they are regarded as revengeful but because they are not even effective. Economy is struggled and there is no way to

de Wit Hans A.

6/14/2012 1:42:18 PM

@DORUS, its not the German state who are extremely angry, it are the Germans themselves, together with the Dutch, the Finnish, The Slovaks people etc. who have to pay directly for a country which doesn't want to pay their loans back and gamble with the future of 500 million other people. Thats the reality. I have defended Greece and the Greeks for too long, now they are on the wrong side.

kerem atan

6/14/2012 1:27:15 PM

kemal is right in a way.i also have an acquaintance with a greek person. he comes back home from work in the afternoon.all he does is eat and drink the most expensive whiskeys and ouzo.hes obese aswell. when the night comes up,he goes out to tavern or the place called bouzoukia and he doesnt mind hiring pros.i dont make a generalization about all greeks. there are hard working ppl 2. but those lazy ppl are disgrace to greece.


6/14/2012 11:38:52 AM

@dennis: Of course they knew but didn't care. The EU from the German perspective was a big market to sell its products, so they turned a blind eye hoping that no major crisis would occur. As long as the "markets" are confident no problem. Southern countries were borrowed recklessly to live better and used the money to buy German products (including expensive weapons). Germany had every reason to be happy up till now... Now they suddenly remembered how "bad" southern countries are...


6/14/2012 10:49:52 AM

@Kemal: Your views are out of reality. The cunning Greeks who need more money to spend at the tavernas... how silly

Dennis Kavaz

6/14/2012 10:27:38 AM

Please explane; Before accepting Greece, Spain, Portugal, Ireland and now S Cyprus into an exclusive and rich mans club the E U. Has the E U investigated if the new members were wealthy enough to keep up the high standards and extravagant life style of the E U club? What’s more before borrowing money from Banks were they asked for collaterals or Guarantors? Were the consequences explained before borrowing large Somme’s of cash? “These rules apply to most wealthy Golf clubs and banks”.

kemal H

6/14/2012 12:51:46 AM

The Greeks I have spoken to in London who have relatives in Greece laugh out loud, when you talk about the dire economic plight of the Greeks. They all insist the Greeks are playing the EU, and drawing even more money to spend in Greece's taverna's. When paying back the loan is mentioned, the laugh is even louder. The crafty Greeks have no intention of paying back a penny even if they could. The Greeks are on a spend now, think later mindset and are enjoying the free credit supplied by the EU.
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