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'Stupid idea'

May 7, 2011

Senior eurozone officials at a private meeting in Luxembourg have dismissed reports that Athens is seeking an exit from the European currency area as Greece continues to struggle with a harsh austerity plan.

A Greek one-euro coin
Will the Greek euro be in use for much longer?Image: dapd

Top finance officials of the eurozone's biggest economies met into the early hours of Saturday, May 7, to discuss debt-plagued Greece.

Jean-Claude Juncker, head of the group of eurozone finance ministers, said the meeting in Luxembourg was attended by ministers from Germany, France, Italy and Spain.

Luxembourg's Prime Minister and President of the Eurogroup Jean Claude Juncker
Juncker called the notion of a Greek exit 'stupid'Image: AP

Juncker denied a report published on Germany's Spiegel Online news website that the talks were held to discuss the possibility, raised by Athens, of Greece withdrawing from the 17-member eurozone, as well as the idea of restructuring Greece's 327-billion-euro ($470-billion) sovereign debt.

"We have not been discussing the exit of Greece from the euro area," he told reporters. "This is a stupid idea. It is an avenue we would never take."

Greek Finance Minister George Papaconstantinou attended the Luxembourg talks, his finance ministry said in a statement, adding that Greece remained committed to repairing its finances and returning to economic growth.

"The minister was invited to exchange views on issues including economic developments in Greece," the ministry said. "It is clear that during this meeting it was never discussed or posed as an issue whether Greece would remain in the eurozone."

Juncker said that a meeting of all eurozone finance ministers on May 16 would discuss whether Greece needed a further economic plan, beyond the 110-billion-euro bailout Athens was granted by the EU and IMF in May last year.

'Difficult path ahead'

Sunset over the Portuguese capital, Lisbon
Lisbon received its bailout from the EU last weekImage: picture-alliance/dpa

An EU source said ministers from the big four continental European states warned during the meeting of a "difficult" path ahead as Greece battles a deeper-than-expected national recession following drastic public budget cuts.

The source also said that German Finance Minister Wolfgang Schäuble's office had conducted an internal study of the consequences of a Greek withdrawal. It concluded that Greece's new currency would likely depreciate by 50 percent compared to the euro, making a debt restructuring inevitable and provoking capital flight.

Barely one year after the EU agreed to the Greece bailout, nervous financial markets have already forced similar emergency rescues for Ireland and Portugal, whose own 78-billion-euro deal was only announced in Lisbon on Thursday.

Spain, as well, has long been thought by experts to face an outside risk of financial meltdown, given its burst real-estate bubble, high exposure to losses among its banks and an unemployment rate running at over 20 percent of the working-age population.

Author: Gabriel Borrud (AFP, Reuters)
Editor: Toma Tasovac