VIENNA - Greece will not leave the eurozone, Eurogroup chief Jean-Claude Juncker was quoted as saying Saturday ahead of his talks in Athens, which reportedly may seek more time to implement austerity cuts.
“No, I don’t think it will happen,” Juncker, who is also Luxembourg’s prime minister, told the Tiroler Tageszeitung Austrian daily when asked whether Greece might leave the troubled currency bloc.
“It won’t happen. ... If Greece refused budget consolidation and structural reforms outright then we would have to consider this question (of a Greek exit).
“But because I believe that Greece will try to redouble its efforts to meet its targets there is no reason to expect this exit scenario will become relevant,” he told the local paper in an interview. Juncker is due to meet Greek Prime Minister Antonis Samaras in the Greek capital on Wednesday amid reports that Athens will seek more time to implement the austerity cuts promised in return for two huge bailouts.
Samaras is then due to hold talks with German Chancellor Angela Merkel on Friday in Berlin before he travels to Paris to meet French President Francois Hollande the following day. Merkel and Hollande will meet in Berlin on Thursday.
Greece, having already implemented deep and unpopular spending cuts, needs to find another 11.5 billion euros ($14 billion) in savings over 2013-14 as a prerequisite to receiving the next tranche of outside funding needed to keep the economy functioning.
Greek daily Ta Nea on Thursday quoted government sources as saying that Samaras intends to discuss spreading out the cuts but would not make an official request. The Financial Times said he wanted the cuts spread out over four years.
Merkel’s spokesman Steffen Seibert said in Berlin on Wednesday that for the German government “the agreed memorandum of understanding which states what the Greek obligations are remains the basis of all aid decisions.”
“A Greek eurozone exit is not part of my working hypothesis,” Juncker said. “I have said that an exit would be manageable, by which I meant that it would be technically manageable but that it would be politically impracticable.” “The risks are incalculable. It makes no sense to fantasise in public about exit scenarios,” he said, dismissing as “unnecessary” any contingency planning for Greece becoming the first state to leave the 17-nation eurozone.
A much bigger worry for the eurozone however is whether painfully high current borrowing rates on financial markets for Italy and Spain, the bloc’s third- and fourth-biggest economies, will force Rome and Madrid also to seek bailouts.
“There is no reason to doubt the readiness of Italy and also of Spain to make savings. Both countries have embarked on major cuts, but they are being treated by financial markets as if they were doing nothing,” Juncker said.
“Bond yields of more than seven per cent are totally off the mark. They do not do justice to the actual situation.”