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Sunday, 4 January 2015

Germany: Greek euro exit is now possible, report says

 Germany is prepared to accept a Greek exit from the euro, the magazine Der Spiegel reported on Saturday.

"The German government considers a Eurozone exit by Greece to be almost inevitable if opposition leader Alexis Tsipras leads the government after the election and abandons budgetary discipline and does not repay the country's debts," Der Spiegel reported on its website, citing unnamed government sources.


Tspiras’ radical left coalition SYRIZA is the most likely winner of the upcoming elections on Jan. 25, according to the polls. SYRIZA has strongly criticized the unpopular austerity measures imposed by the terms of the bailouts that the Greek government accepted in 2010 and 2012.

The German government had considered a Greek exit from the euro in 2012, but ultimately rejected the idea out of concerns for the threat it would pose to the entire European Monetary System. There was a danger that "contagion," or credit risk, would spread to other EU nations, like Spain and Ireland and Portugal, which were also struggling with financial crisis at that time.

According to the report, the German government believes that reformed financial regulations in the EU will ring-fence Greece, and control contagion risk.

The German government has neither confirmed nor denied Der Spiegel’s story on Sunday.

" Greece has fulfilled its obligations in the past. The federal government assumes that Greece will continue to meet its obligations,” government spokesman Georg Streiter said in a brief statement to German media.

The years of austerity imposed by the bailout programs have soured sentiment against the coalition government of the New Democracy and Panhellenic Socialist Movement political parties. The coalition has cut wages and social services, increased taxes and laid off public sector workers.

Germany’s opposition Left Party has blamed Chancellor Merkel’s coalition government for deliberately triggering crisis and instability in Greece ahead of elections on Jan 25.

The Left Party’s co-chairman Bernd Riexinger described the move as “lighting a bomb.”

“Greece would be destabilized ahead of the elections with such open blackmail in public,” Riexinger said. He warned that following speculation in the press, Greek citizens might rush to the banks.
www.aa.com.tr/en

4/1/15
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