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
    +4

    Comment number 331.

    From what I am reading in various reports Greece, Portugal, Spain and Italy are being fiscally choked and their economies are going down hill rapidly. How does that bode for the future of the Euro? Seems to me that, if anything, MORE bailouts will be needed if the zone is kept in tact. I think Merkel is whistling past the graveyard and somehow hoping this will all work itself out. Good luck.

  • rate this
    +1

    Comment number 330.

    @327 true but the usa has also had a cople hundred years to sort all that out. the eu has had less than 60.

  • rate this
    +2

    Comment number 329.

    @320
    The Westminster system of democracy also has its means of slowing down decisions.
    Wikipedia:
    "While the House of Lords is unable unilaterally to prevent bills passing into law (except in certain limited circumstances), its members can severely delay bills that they believe to be misguided and thereby force the government, the Commons and the general public to reconsider their decisions."

  • rate this
    +2

    Comment number 328.

    "It would be a huge political mistake to allow Greece to leave."
    No, Ms. Merkel. No outside body can "allow" or "not allow" Greece to leave the Eurozone. Greece is a sovereign nation and can do whatever it likes.

  • rate this
    +3

    Comment number 327.

    #244 USA is not an ideal single currency area but it enjoys two massive advantages over the EU as single currency area - real large scale movement of labour and a common, consistent legal system.

    US laws all based on common law and English language therefore applied braodly consistently across US, EU is a hoge podge.

    US movement of labour 10x EU

  • rate this
    -1

    Comment number 326.

    If the Germans had not been so keen to rule Europe (they tried twice by force of arms, and failed) aided by the French cowards by agreeing to allow financially weak economies "join their club" by adjusting their GDP/Debt figures none of this would have happened. Having a "United States of Europe" Won`t Work. 27 countries one State, is not the same as 51 States ONE COUNTRY,as in the USA.

  • rate this
    -1

    Comment number 325.

    299.Chris Neville-Smith - Norway doesn't tell EU how to run things and if they want to trade with EU they have to comply with EU laws. How is that remotely similar? If we want to be outside the EU then we will have to accept that we will have to pay duty on exports to EU, we will have no voice and the non-EU companies will relocate to somewhere else where they don't have to pay duty

  • rate this
    +1

    Comment number 324.

    "People all over the world would ask: 'Who will be next?'". That may be true but why should Greece bear the burden of saving the euro, as right now people all over the world are asking: 'When will Greece leave the euro'. The certainty that it will eventually happen is killing Greece so let's get it over with and let the rest of Europe sort out its own problems.

  • rate this
    +1

    Comment number 323.

    If the Greeks leave the euro they can go back to having the Drachma at beneficial exchange rates with the Euro and £, lots of holiday makers will go there and spend money in their fragile economy, problem solved, next question?

  • rate this
    +2

    Comment number 322.

    @310
    It is not the EU which prevents referenda from taking place, it is the governments/heads of state of the countries.

    I think somebody promised a referendum to the British people:

    http://www.telegraph.co.uk/comment/letters/8842085/The-three-main-parties-have-reneged-on-promises-of-an-EU-referendum.html

  • rate this
    0

    Comment number 321.

    Very mature comments by Chancellor Merkel. Rather than castigating other European nations for not living within their means, she wisely encourages them to learn from their mistakes and place corrective fiscal measures in place.She refrains from criticizing the United Kingdom knowing that doing so would cause an Anglo-German furore. Germany is taking the lead in practically every important field

  • rate this
    +1

    Comment number 320.

    Absolutely austriacus, the problem is of course the more countries you introduce the more time consuming and watered down any decision becomes.

    When we have problems we can respond almost immediately. When the Eurozone has problems it has an argument for 9 months then responds with half measures that please no one and address a situation that has already escalated.

  • rate this
    +3

    Comment number 319.

    310.Jackeen
    My main problem with the EU is that there's only one vision. More integration. That's why they don't like referendums. There's only one option so what's the point in a vote? A healthy EU should have multiple visions for the future and the people of the EU should get regular votes to decide which one they prefer.



    Outrages! Give common folks, not EU Commi-ssars an actual say?

  • rate this
    0

    Comment number 318.

    The debt was created by politically forcing a People to borrow their money supply at interest as opposed to creating it for themselves interest free for the goods and services they need.
    How do you think the private banks get the "money" they lend?"
    They get to create it out of nothing and charge interest.
    It is as simple as that.
    http://www.positivemoney.org.uk/

    & we are in the same position.

  • rate this
    +1

    Comment number 317.

    @303 Agreed.
    @307 Do you really think that Germany can't do without Greece?? The total value of German-Greek trade is about 6 billion euros per annum- that's nothing, it's a mere fraction of total Geman trade volume.
    Greece disappearing as a customer might temporarily hurt a few German companies, but nothing more than that. Greece is just a very small trading partner for Germany.

  • rate this
    +4

    Comment number 316.

    Merkel is pi$$ing in the wind. The Euro is a poisened chalice. The sooner Greece and everyone else gets out of it and back to their original currencies the sooner things will pick up.

  • rate this
    +4

    Comment number 315.

    If the EZ does collapse, Merkel, Sarkozy Von Rompoy, Barosso et al should be indited for their crimes against the common of Europe. Putting political beliefs before the well being of the people is totally shameful.

  • rate this
    +2

    Comment number 314.

    I see Berhanke has just down played the US recovery - stand by for more QE.
    This will accelerate the failure of the PIIGS as the markets get a new round of jitters.
    A vicious cycle is about to erupt which the Euro group is not prepared for and the ECB will not be able to replicate its rescue act.
    Banks have not increased their capital and the BRIICS will to one degree or another fail.

  • rate this
    +2

    Comment number 313.

    @309
    "Europe squabbling over conflicting national and party interests"
    I think this is what politics is about and why countries have parliaments.
    Watch a House of Commons debate about the Scottish referendum and You will experience exactly the same.

  • rate this
    +4

    Comment number 312.

    The Euro was doomed from the start. The posturing we see week, week out is just words which are meaningless. Greece will leave the Euro, as will several others, the only question is when?

 

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