Merkel: Eurozone must avoid Greek exit

 

German Chancellor Angela Merkel told Newsnight's Gavin Esler that the Eurozone must hold together

German Chancellor Angela Merkel has told the BBC it would be a huge political mistake if debt-stricken Greece was allowed to leave the euro.

In an exclusive Newsnight interview, she said Germany would do everything it could to keep the eurozone together.

She also calmed fears of further bailouts for eurozone countries, saying important lessons had been learned.

And she applauded the UK government's austerity programme, saying "no country can live beyond its means".

Greece recently won approval for a second bailout of 130bn euros ($173bn; £110bn) intended to help keep it afloat until 2014.

Germany is having to pay more than any other country for the package - angering many German citizens and politicians.

Despite the measures, some analysts fear Greece might need even more help.

Political unity

Asked how she saw the future for Greece, Mrs Merkel told the BBC's Newsnight programme that Athens had repeatedly said it wanted to remain within the eurozone.

"It has major weaknesses but it is trying to overcome them, be they in the administration or the competitiveness of their business community. It is going to be a long and arduous road," she said.

"We have taken the decision to be in a currency union. This is not only a monetary decision, it is a political one. It would be catastrophic if we were to say to one of those who have decided to be with us: 'We no longer want you'."

Protest in Athens. 29 Feb 2012 Severe cutbacks across Greece have triggered widespread protests

She said the eurozone would be "incredibly weakened" by a Greek exit.

"People all over the world would ask: 'Who will be next?'"

She added: "It would be a huge political mistake to allow Greece to leave. That is why we will be clear with Greece, we will say: 'If you want to be part of a common currency you have to do your homework but at the same time we will always support you.'"

Mrs Merkel said democracies had grown used to spending more than they earned, and had to be more careful to live within their means.

Asked to respond to those in Europe who feared further bailouts she said: "That is not how it is going to happen because there has been a rethink going on in Europe for some time.

"Some countries accepted the rescue package but they don't particularly relish it. They must follow conditions set out by the IMF, the ECB and the European Commission. What democratic government wants to be in that situation for the duration?

"Over the past two years in Europe, particularly in the eurozone, we have learnt a lot. We must reflect time and again, why are we together in Europe? Why are we a community that displays solidarity and bears responsibility for the others?"

Angela Merkel told Newsnight's Gavin Esler that Britain must decide how much it wants be part of Europe

Mrs Merkel said Europe - and particularly the eurozone area - had "slithered into crisis" as a consequence of a global financial downturn.

"It is a very tense situation right now," she said.

She said she believed that UK Prime Minister David Cameron "was right" to have embarked on an austerity drive.

"It is something that each country in Europe can do because we will all learn that no country can live beyond its means," she said.

"All European countries have understood this lesson. But we in the eurozone are convinced that together, we are so much stronger."

'Common ground'

Asked if she could envisage the UK playing a bigger role in Europe than it does now, she said: "Britain plays a very important role in Europe.

"Britain has a lot of common ground with Germany on how we see the future of free global trade, we all benefit from it.

"At the end of the day the British have to decide for themselves to what extent they wish to be part of Europe.

"It is a discussion that we have seen unfortunately taking a painful turn on the [recently agreed] fiscal compact but Britain needs to know that we in Germany want a strong Britain in the EU, we always have and we always will."

She added: "In Germany we will try to see that there is less red tape, more political decisions and more transparency. I think that we are at one on this with Britain."

Watch the full interview with Angela Merkel on Newsnight on Monday 26 March 2012 at 10.30pm on BBC Two, then afterwards on the BBC iPlayer and Newsnight website.

 

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  • rate this
    +3

    Comment number 51.

    Just think what €3bn extra would mean to our economy. The UK is in a real mess, yet to hit rock bottom. Yet, we are still being hit with even higher taxes with no end in sight. The real answer is to opt out of the Eurozone but of course, we are no longer a proper democracy with no opportunity to vote out so this won't happen! What a shambles!! The GREAT has now gone from Britain.

  • rate this
    +4

    Comment number 50.

    She's bound to oppose the collapse of the EU.

    She is one of the idiot architects of the whole shambles.

  • rate this
    +6

    Comment number 49.

    Germany is owed a fortune by Greece! It had huge investments in that country, even before the bail outs. Greek withdrawal would leave Germany with a serious financial headache and an internal battle between state & people! Secondly, a collapsed EZ would see the DM return and investors queuing to buy into it. Wages and prices would soar and its competitive edge would be destroyed.
    EZ unity, no way!

  • rate this
    -1

    Comment number 48.

    43. austriacus
    3 MINUTES AGO
    @29
    "How many votes were cast for Lucas Papademos?"
    at least he won a vote of confidence in the Greek parliament
    http://www.youtube.com/watch?v=D9RlaTwgJI0
    --
    47 sums it up.

  • rate this
    +13

    Comment number 47.

    @Wendy Politicians never do what's in the best interest of the 'people' because Democracy is a sham. The 'people' of Greece never choose a former Goldman Sachs employee as their PM. And when the Greek people were about to vote for a referendum on austerity cuts that dangling carrot was soon removed because it wasn't acceptable to their pay masters. I hope Greece leaves and takes their country back

  • rate this
    -7

    Comment number 46.

    17.
    swingsandroundabouts

    No - it just shows that UKIP have got their trollers activated!

  • rate this
    +3

    Comment number 45.

    The break-up of the Euro would be a massive political and economic disaster, so it makes sense that politicians want to avoid that. However, at some point the people will have their say and declare it a disaster.

    Everyone in The City knew in the 90's that it would never work, but they went ahead anyway, knowing that it would fail. Politics is never about implementation, only fancy ideas.

  • rate this
    +4

    Comment number 44.

    Merkl: "People all over the world would ask: 'Who will be next?'"

    If Merkl thinks pulling out all the stops to keep Greece in the euro will stop that question being asked, she is very much mistaken. It's most likely people will instead ask 'When Greece exits, how quickly will the rest of the PIIGS exit?'

  • rate this
    +1

    Comment number 43.

    @29
    "How many votes were cast for Lucas Papademos?"
    at least he won a vote of confidence in the Greek parliament
    http://www.youtube.com/watch?v=D9RlaTwgJI0

  • rate this
    +4

    Comment number 42.

    We all know by now that what the EU say and what they do (or don't do, in fact) are two different things.

    The Euro crisis is not over as events later on this year will prove.

    Will it be Portugal, Spain, Italy, Ireland or Greece that kicks it all off again?

  • rate this
    +5

    Comment number 41.

    A huge political mistake for whom?

    Greece? Or Germany?

  • rate this
    +1

    Comment number 40.

    "we in Germany want a strong Britain "

    Based on history I would be worried if I were French. Britain and Germany acting together have always done so with only one aim - to keep the French under control

  • rate this
    +4

    Comment number 39.

    So much anti-german sentiment, it's staggering now many comments still think they are fighting The War. Sad. Very Sad. Especially since most comments ignore the facts.

    1. Germany doesn't want a weak Euro. It refuses to let ECB print bail out money.

    2. Greece lied to enter the Euro. Their mess is their own fault. Greece is irrelevant to Germany. Germany makes it's fortune in BRIC countries now.

  • rate this
    +2

    Comment number 38.

    Is Mr Merkel any relation to the captain of the Titanic he could not see the inevitable.

  • rate this
    +4

    Comment number 37.

    Its not up to Merkel or any other of Europe's political elite, its the markets that will decide Greece's fate as a country. Besides Greece is a sovereign state and should be allowed to decide its own future, they were let in due to a bad credit cheque and some dodgy book keeping so its a shared problem between Europe's pro federalists.

  • rate this
    +5

    Comment number 36.

    The EU was a nice idea, but as with all ideals, when faced with reality, they tend to fail miserably should there be no flexibility. Greece won't pay it's debts in our lifetime, and I doubt for some generations to come. How long do you think their austerity plan can last before the people overrun government?

  • rate this
    +1

    Comment number 35.

    17. "Proves that most comments here really come from people truly living on an ISLAND !"

    British "Isles"?

  • rate this
    +4

    Comment number 34.

    I am bored with the anti German rhetoric coming from the UK. Germany has a healthy economy because they work hard, invest for the long term, invest in education and save money. They are also great engineers that make things that other countries want to buy. I wish Merkel would head to the UK next and take over from the vile George Osbourne!

  • rate this
    +28

    Comment number 33.

    The fundamental problem is that one size (one currency) cannot fit for all the 27 conflicting ideologies of the member states, Britain and others realised this and refused to join. It was an experiment that failed. Our politicians should now get us out of Europe forthwith so that it does not drag us down with it. It will save us billions - and while we're at it stop foreign aid dead in its tracks.

  • rate this
    +4

    Comment number 32.

    If Ms Merkel wants the greeks to stay within the EU, then she should use HER countries funds to pay off their debts!

    Greece can NEVER recover under the restrictions currently imposed on them - no country could!

    Eventually they WILL default. Bailing out Greece is just throwing good money after bad.

    She is delusional if she thinks Greece will survive within the euro

 

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