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
    +42

    Comment number 71.

    Germany has a near-unique advantage. Their hyper inflation of the 20s means they are culturally averse to inflation and will endure pain to maintain that. Plus they tend to live within their means and did not borrow massively in the 2008 crisis. I can't help noticing they are in quite a strong position now...unlike some others where spending money and high inflation is deemed acceptable.

  • rate this
    +3

    Comment number 70.

    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."

    -----
    "More transparency". Germany may well be at one with the British people on this. But today of all days, not at one with our secretive Prime Minister.

  • rate this
    +4

    Comment number 69.

    Sometimes when you love someone you have to let them go.

  • rate this
    +1

    Comment number 68.

    "65. truthhurtspainfully
    basically if you think Britain should be in the EU you are either thick or on the EU payroll one way or another"

    I agree with 63. billyhano!

  • rate this
    +4

    Comment number 67.

    Please ignore me if I am being a little dumb, but what is this "allowed" crap? Surely if Greece or any country wanted to leave the "eurozone" they can. Global finances are not my thing, and I don't understand a lot of the babble that is spouted by these people, but it comes across as some sort of control thing. This country is still in recession, is anyone giving us handouts?

  • rate this
    +10

    Comment number 66.

    Merkel would rather save her own political neck than an entire country.

    So now we know how the EU works - the needs of one person are more important than the needs of millions

  • rate this
    -7

    Comment number 65.

    basically if you think Britain should be in the EU you are either thick or on the EU payroll one way or another

  • rate this
    +5

    Comment number 64.

    Mrs Merkel is acutely aware of imminent elections in Germany & is electioneering: she will do her best to prevent Greece using any get out of jail free card they may want to use. Why Greece is in the EZ astounds me, France did insist on inclusion based upon the dubious sentimental illogic of Greece being the home of Socrates, Plato & democracy. So much for democracy & the people in Greece today.

  • rate this
    +42

    Comment number 63.

    52.
    truthhurtspainfully

    "It's pointless for the do-gooders here who say it's ridiculous to compare today's Germany with the Nazi's, but the difference is?"

    ----
    Our education system is even worse than I imagined.

  • rate this
    +3

    Comment number 62.

    53. "We as Britons to spend money in supporting Greece even more than some other Euro-zone countries,"

    But much less than we would have contributed as members of the Eurozone. And we don't have to commit ourselves to the fiscal compact 3% deficit limit that would wreck the UK economy. And we're not pegged to interest rates that would have sent us the same way as Ireland.

  • rate this
    +5

    Comment number 61.

    Merkel says "It would be a huge political mistake to allow Greece to leave."
    Therein lies the problem.The Euro is a political experiment that, which ever way you look at it,has failed.Countries in the Euro can't set their own monetary policy to suit there type of economy and the result is even bigger debt.The one cap to fit all just doesn't work as is clear with Greece and others.

  • rate this
    +5

    Comment number 60.

    "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."

    At the moment with elections just around the corner for France and Germany Merkosy does not want to upset the relative calm at present.
    No doubt once the elections are over it will be back to normal which means more money magically made out of thin air.

  • rate this
    +3

    Comment number 59.

    Well, she would appose it, given that Germany's rapidly growing economy is founded on exports. Exports made competitive by Greece continuing to depreciate the euro.

    Greece should ignore everyone else and do what's best for them.

  • rate this
    +4

    Comment number 58.

    51. jeff davies

    1) we did opt out of the Eurozone. We are not and have never been a member.

    2) With a public deficit of £126B then €3bn would mean very little to our economy. It's less than about 0.15% of GDP.

  • rate this
    0

    Comment number 57.

    Andromeda's sacrifice
    Greece was used as a cercuit breaker to save the Euro,,, they let it fry so other economies in europe can adjust themselves.

  • rate this
    +4

    Comment number 56.

    to 17. Swingsandroundabouts...

    So what you are saying is that whatever Germany does we should just lie down and accept it like good little Europeans? I will refrain from making a historical remark here but you can see where this is going!
    What is wrong with not wanting to make Germany's life easier to our own detriment. Germany doesn't do a whole lot for the UK except allow us to buy it's cars

  • rate this
    +2

    Comment number 55.

    Greece caused its own problems with tax evasion, corruption etc very much like over here it seems. All the time they get bailed out they will carry on doing the same thing over again. They should not be bailed out again. In fact there are just too many countries in the EU, no more should be allowed in fact we should come out then we would be able to get rid of these human right nonsense

  • rate this
    +4

    Comment number 54.

    Of course she wants Greece to stay in the Euro,it would cost Germany a huge amount if it left.
    As for a strong Britain,she wants us simply because we are the only mugs who follow crazy EU legislation to the letter making it easy for Germany and France to control us and our weak politicians can't see the woods for the trees.So let the Euro fall,it will in the end anyway..

  • rate this
    -16

    Comment number 53.

    I know I am going against the tide here, but after the Euro-zone crisis I believe even more that not joining the Euro has been a mistake.
    We as Britons to spend money in supporting Greece even more than some other Euro-zone countries, and all that without having a say on how the Euro is run.
    Like it or not our economic well being is tied to the Euro-zone economy, and we can't afford it to fail.

  • rate this
    -14

    Comment number 52.

    Germany could underwrite the Euro with quantitative easing but they won't do it. Yes, Germany does pay the most for the Euro but they're the only country to benefit.If the Euro fails the rise of extreme left and right wingers will make WW2 look like a tea party.
    It's pointless for the do-gooders here who say it's ridiculous to compare today's Germany with the Nazi's, but the difference is?

 

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