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
    +2

    Comment number 191.

    Ahhh EU, EU, EU... Not just Economic Uncertainty, but Extremely Utopian for the politicians, and Excruciating Upheaval for the people.

  • rate this
    +1

    Comment number 190.

    STOP DIGGING Ms Merkel ! The hole is deep enough. I've penciled in 2014 for a disorderly exit by Greece. I'm not looking forward to the after shock either.

  • rate this
    +4

    Comment number 189.

    One currency, one treasury, one chancellor. For the euro to survive, Europe has to be 'one country' like the USA. Greece's problems are excessive borrowing which was financed eagerly by the banks. And now the poorest are having to pay for the politician's greed and stupidity. Absolutely shameful. These economic theories are clearly nonsense - the 'dismal science' is absolute garbage. Start again!

  • rate this
    +2

    Comment number 188.

    The EU isn't over until the fat lady sings, and she's not even started her warming up exercises yet. I know there are some that want to see the EU fail, but that's very shortsighted.

  • rate this
    -1

    Comment number 187.

    @180
    SSR means Socialist Soviet Republics.
    The Conservatives have a big majority within the organs of the EU.
    Not to speak about the fact that many countries are ( constitutional ) monarchies.

  • rate this
    +1

    Comment number 186.

    @160

    You do not have to be an economist to know that europe for the weaker countries was a bad idea. It is just simple common sense.

    Macedonia, the likes of yourself has danced to the tune and preached for too long what the benefits of being in the EU will be. Tell that to the PIGS now. The project has simply failed.

    Its time to change your tune.

  • rate this
    +1

    Comment number 185.

    181. "Devaluation and changing interest rates would not help - as Harold Wilson proved in 1967."

    Most people view devaluing the pound in 1993 the turning point in the early 90s recession.

    "The root cause was deregulated lending,"

    Surely some of the responsibility is shared by the countries who borrowed from this system (and the EU for turning a blind eye to flouting the deficit rules)?

  • rate this
    +3

    Comment number 184.

    Perhaps something radical should happen - such as asking the Greek people what they want!!

  • rate this
    -2

    Comment number 183.

    It should be decided by all countries of EaroZone and not only by Germany and U.K.People of Greece are most important.In this case big donors are worried more.that is natural, as they are bigger loosers..

  • rate this
    +3

    Comment number 182.

    There is a lot of Euro-skeptic piety on this comment board, however a strong Europe is much more important for the British interest than we want to accept. Germany provides a bold, strong and balanced leadership through Mrs Merkel, who in a slightly matriarchal way administers tough medicine to Greece while massaging fiscal balm into the irritated and inflamed skin of the global economic order.

  • rate this
    +2

    Comment number 181.

    172 Chris Neville Smith

    Devaluation and changing interest rates would not help - as Harold Wilson proved in 1967. You can change your pricing structure within a single currency, as America does, state to state. The root cause was deregulated lending, without proper due diligence, as happened in the property market in America, then using the 'loans' as securities for further lending! Suicide!

  • rate this
    +1

    Comment number 180.

    Greece should not have joined the Euro because it did not meet the criteria this applies to several other countries. But the position was fudged because of the relentless drive to create the EUSSR. Greece should be assisted to enable it to bow out gracefully as should at least 4 other countries.

  • rate this
    +9

    Comment number 179.

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

    A sentence we have never heard spoken by a British PM for 35 years. I doubt we will hearing it anytime soon either.

  • rate this
    0

    Comment number 178.

    If there are democratic elections in Greece in April/May and a majority vote for parties advocating a Euro exit, I doubt there will be much resistance within the eurozone to this decision.
    While still supporting Greece financially, the eurozone has silently prepared itself for an exit of Greece.
    And the permanent quarrel with NATO ally Turkey is an additional argument for the exit.

  • rate this
    +4

    Comment number 177.

    Also as for club med if ur value was built on luring tourist the Euro was a suicide pack deal your devalued currencies made you more attractive In a global industry like tourism the new club med is still the non Euro med

    As for Scotland we are Part of a Successful attempt at what the Euro was an attempt at Nation Extending stop the SNP winge and start promoting our uniqueness in Our United Nation

  • rate this
    +1

    Comment number 176.

    If the Greeks need any more confirmation why they need to get out of Europe, Ms. Merkel has just provided it. If Greek leaders have any dignity left, they will leave the Euro and return to the Drakma. Atleast, they will be in control of their destiny and have the support of the country to see them through these tough times.

  • rate this
    -1

    Comment number 175.

    Never mind Greece, get the UK away from Europe. We don't need all the bureaucracy, all the political posturing, the fiscal manipulation. We need more time and motion, less procrastination.

  • rate this
    -3

    Comment number 174.

    They signed up to the Euro, nobody forced them.

    No get out mechanism exists..... Greece made their bed and now they must lie in it.

    Enjoy your years of compulsory austerity.

  • rate this
    +7

    Comment number 173.

    As much as Germany may disapprove of the weakness of the Euro because of the economic crisis caused by the debt crisis in Europe, it is Germany that is reaping the benefits in that it's exports are cheaper.
    If Germany doesn't support the weaker countries, and if the Euro revalues because Greece leaves, the relative price of German exports will rise, cutting into their Exports.

  • rate this
    +4

    Comment number 172.

    162. "The current crisis was not caused by the existance of a single currency"

    ... but the existence of the single currency turned a moderate crisis into a catastrophic crisis, by losing the options of devaluing and changing interest rates.

    The difference is that whilst plenty of EU cheerleaders blame the banks or the Greeks, very few are prepared to accept even some responsibility lies the EU.

 

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