Specter Rises of Greece Being Kicked Out of Euro
The prospect of throwing Greece out of the Eurozone moved cener-stage Thursday, after the Dutch called for the "ultimate sanction" and Germany warned a second bailout deal may need re-negotiation.
Under a proposed new regime that would place economies in deep trouble under the wardenship of Eurozone partners, Netherlands finance minister Jan Kees de Jager threatened expulsion as an "ultimate sanction".
"If a country doesn't want to fulfill its obligations, well, there's no other option than that it leaves (the Eurozone," de Jager told a press conference in The Hague, stressing that this would only be "the last resort".
German finance minister Wolfgang Schaeuble meanwhile also pushed for a tougher approach, telling his parliament he will fight for "the necessary treaty changes so that we can act sooner and more effectively when things go wrong."
And ratcheting up the pressure on Athens, Schaeuble said it was "very premature" to talk about a second bailout package for Greece before it had implemented the reforms required to receive its first full disbursement.
"At the end of the day, it is up to Greece itself to decide whether it is ready to take the necessary measures to reduce its deficit and its too-high debt," added Schaeuble.
The Greek government is currently scrambling to come up with new financial planning to prevent a debt burden of more than 350 billion Euros spinning "out of control," as a national body recently admitted.
On Thursday Greece announced that its economy shrank 7.3 percent in the second quarter on a 12-month comparison, a greater fall than expected.
The Greek government warned the economy could shrink by about 5.0 percent this year instead of the previously estimated 3.5 percent, underlining the problems for the economy.
International auditors from the European Union and the International Monetary Fund cut short an inspection visit to Athens last week, aimed at establishing if conditions had been met that would allow the release of the next eight-billion-euro tranche of loans under last year's initial bailout.
They are due back there next week.
In July, Eurozone leaders agreed to construct a second bailout as a brutal recession exacerbated "slippage" in Greek budgetary targets.
However, the agreement is mired in rows over a Finnish demand for Athens to lodge a cash collateral bond before getting Helsinki's part, and Slovakia threatening to delay its vote until the end of the year.
The Dutch want to see a new position created for a Eurozone budgetary tsar, and a "loss in voting rights" for non-compliant countries.
These ideas have been welcomed by both German and Finnish counterparts, whom he met in Berlin on Tuesday, De Jager stressed.
But the European Commission, a key part of the "troika" also gathering the IMF and the European Central Bank in the Greek audit, insisted in Brussels that Greece cannot be forced out of the eurozone.
"Neither exit nor expulsion from the euro area is possible, according to the Lisbon treaty under which participation in the euro area is irrevocable," said Amadeu Altafaj, spokesman for EU economic affairs commissioner Olli Rehn.
Altafaj said there is "no discussion whatsoever on such an eventuality," despite the contribution from Rutte.
He called on Eurozone actors to "stay focused on the implementation of the July 21 agreements to ensure financial stability in the euro area, and to adopt a so-called 'six-pack' of legislation to enforce tighter economic governance as soon as possible."
He said the "normal consequence of a deviation is a sanction, and that's covered by the six-pack" -- draft laws covering states' budgetary engagements vis-a-vis euro partners which he said were close to being agreed with the European Parliament.
The draft legislation has been stuck in many months of tough negotiations.
The EU and IMF bailed out debt-wracked Greece in May 2010 with a package worth 110 billion Euros (155 billion dollars).
Athens was due to get its next payout from the fund later this month but must first demonstrate it has achieved the fiscal targets laid down by its international partners.
Source: Agence France Presse
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