Plans for euro exit under review, says EU commissioner

 

CONTINGENCY:GREEK EU commissioner Maria Damanaki has said contingency plans for her country to leave the euro if it defaults are under examination.

Ms Damanaki, who holds the fisheries portfolio, told the Greek newspaper To Vima tis Kyriakis that such options are being “openly studied” but did not say where.

Last year she became the first senior European official to publicly raise the prospect of Greece being forced out of the single currency if it did not quickly assert control over its finances.

In an interview published on Sunday, she said a return to the drachma would result in an “absolute downgrade” of living conditions for the Greek people.

Any collapse of talks on a second EU-IMF bailout and a big contribution to it from private creditors would result in a disorderly default, she warned.

“Now they’re not simply scenarios. They are alternative plans that are being openly studied. They are not preferable at the moment.

“What is promoted is Greece’s internal devaluation within the eurozone,” she said.

“But there is preparation for other solutions, if Greece doesn’t make it despite its efforts, to continue on the euro zone path.”

Asked about such remarks, spokesman for EU economics commissioner Olli Rehn said the commission was not working on such scenarios.

“But it is not a secret . . . that some private actors have among all their contingency plans the one that you are referring to,” he said.

“I don’t know what Mrs Damanaki had in mind but . . . we work very hard in order to reach another outcome.”

When Mrs Damanaki first raised the possibility of Greece leaving the euro the Commission dismissed her remarks as a “figure of speech.”

Months later, however, the Dutch government said a revamp of the euro system should include provisions for the expulsion of countries which persistently break the currency’s fiscal rules.

This was followed by an ultimatum to Athens from German chancellor Angela Merkel and French president Nicolas Sarkozy when then prime minister George Papandreou proposed a referendum on the bailout. The German and French leaders demanded that the referendum be framed as a choice between Greece remaining in the euro zone or not.

The vote never went ahead.