As the Greek crisis comes to a head, German Finance Minister Wolfgang Schäuble has admitted for the first time that Greece may leave the euro “temporarily”.
Speaking to Bild, the German minister said: “Greece is a member of the eurozone. There’s no doubt about that. Whether with the euro or temporarily without it: only the Greeks can answer this question. And it is clear that we will not leave the people in the lurch.”
He also played down the risk of contagion if Greek banks collapse:
“Even if it came to a collapse of some individual banks, the risk of contagion is relatively small. The markets have reacted with restraint in the last few days. That shows that the problem is manageable.”
Schäuble’s comments are significant because they are the first time a senior European leader has admitted that Greece could have to drop the euro currency, although his tone implies that even if it does the EU will try to get it back into the currency union as soon as possible.
In February, former French President Valery Giscard d’Estang, one of the original architects of the currency, called for Greece to quit.
He told magazine Les Echos that if the country were to adopt its own currency it could quickly devalue to pay off its debts. “The fundamental question is whether or not the Greek economy can recover and prosper with a currency as strong as the euro,” he said. “The answer is clearly negative.”
“Greece needs to be able to devalue its currency,” he added.
He also said that Greece should never have joined the euro in the first place. “I was against it at the time. The Germans too. They only accepted it because others, France in particular, insisted on it.”
Greece is due to go the polls tomorrow in a referendum on whether to accept the bailout terms offered by the IMF, European Union and European Central Bank. If it votes ‘no’, as Prime Minister Alexis Tsipras has urged, it may end up being forced to leave the currency union.