World Economy

Greece Euro Exit manageable

Greece Euro Exit manageableGreece Euro Exit manageable

The German government sees a potential Greek exit from the euro area as manageable, Der Spiegel cited unidentified government sources in Berlin.

Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the euro zone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit manageable, Reuters reported.

“The danger of contagion is limited because Portugal and Ireland are considered rehabilitated,” the report said.

Greece will hold early elections on January 25 after Prime Minister Antonis Samaras, whose New Democracy party has led a government since mid-2012, failed to draw parliamentary backing for a new head of state. Polls show New Democracy and Pasok, Greece’s two main parties over the past four decades, trailing Tsipras’s anti-austerity Syriza alliance.

Syriza has pledged to renegotiate payment terms on bailout loans to Greece and seek a writedown on its national debt.

It is still unclear how a eurozone member country could leave the euro and still remain in the European Union, but Der Spiegel quoted a “high-ranking currency expert” as saying that “resourceful lawyers” would be able to clarify.

  Unavoidable Exit

The German government considers a Greece exit almost unavoidable if the leftwing Syriza opposition party led by Alexis Tsipras wins an election set for Jan. 25, according to the Der Spiegel report,

The Greek election was called after lawmakers failed to elect a president last month. It pits Prime Minister Antonis Samaras’ conservative New Democracy party, which imposed unpopular budget cuts under Greece’s bailout deal, against Tsipras’ Syriza, who want to cancel austerity measures and a chunk of Greek debt.

Opinion polls show Syriza is holding a lead over New Democracy, although its margin has narrowed to about three percentage points in the run-up to the vote.

German Finance Minister Schaeuble has already warned Greece against straying from a path of economic reform, saying any new government would be held to the pledges made by the current Samaras government.