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Rediff.com  » Business » Germany rules out possibility of Greece's EU exit

Germany rules out possibility of Greece's EU exit

October 15, 2012 12:34 IST

GreeceGerman Finance Minister Wolfgang Schaeuble has for the first time ruled out the possibility of debt-stricken Greece sliding into bankruptcy or leaving the euro zone.

"I think there will be no state bankruptcy in Greece," he told a meeting of the Singapore-German Chamber of Commerce and Industry in Singapore on Sunday.

Schaeuble also holds the view that Greece, which has been surviving on two financial bailouts by the European Union and the International Monetary Fund since the sovereign debt crisis erupted in May 2010, will not exit from the single currency and called for an end to speculating on such a possibility.

Continued speculations about Greece leaving the 17-nation group will be extremely damaging for that nation, for the euro and for the world economy, the minister said, according to media reports.

Schaeuble's comments are the strongest indications so far that the euro zone leaders are keen to keep Greece within the euro group and 'Grexit' is no longer an option, in spite of continuing uncertainty over whether the country had fulfilled the structural reforms and austerity measures promised to its international creditors.

German Chancellor Angela Merkel had assured the Greek leaders her continued support for the country to remain in the euro zone when she last Wednesday made her first visit to Athens in nearly three years.

Greece's economic situation will be high on the agenda of a European summit on October 18.

Referring to further assistance to prop up the Greek economy, Schaueble reaffirmed Germany's position that this will be decided only after the 'troika' experts of the EU, the IMF and the European Central Bank presente their long-awaited report on Greece's compliance with the conditions it had agreed to when it was offered a second bailout of 130 billion euros (168 billion dollars) earlier this year.

The troika report will be the basis for a final decision on whether to release the next tranche of 31.5 billion euro ($41 billion) from the bailout fund.

Without the assistance, Greece faces the risk of running out of money by the end of next month.

Greece has been negotiating with the troika for the last three months on the details of a new austerity package worth 13.5 billion euros ($17.5 billion) for the next two years, which is a condition to release the urgently needed assistance.

Image: The island of Ios is seen from the Blue Star Paros vessel as it departs from the island during a nine-hour trip to the Greek islands of Paros, Naxos, Ios and Santorini, in the Aegean Sea.

Photograph: Yannis Behrakis/Reuters

K Mammen Mathew in Berlin
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