European governments cannot force Greece to stay in the euro if Greek citizens decide to leave, German Finance Minister Wolfgang Schaeuble said.
“They will decide whether to stay in the euro zone or not,” Schaeuble said at a conference sponsored by German broadcaster WDR in Brussels today. “If Greece decides not to stay in the euro zone, we cannot force Greece.”
Comments by European Central Bank Executive Board member Joerg Asmussen in a Handelsblatt interview today were “not new,” Schaeuble added. Asmussen was cited as saying that Greece had “no alternative” than to stick to the terms of its bailout program “if it wants to remain a member of the euro zone.”
Greek political chiefs are struggling to forge a coalition after May 6 elections called into question the country’s ability to impose the steps agreed on with international creditors in return for aid. The risk of Greece leaving the euro by the end of 2013 has risen to as high as 75 percent, Citigroup Inc. said May 7.
Germany will continue to “show solidarity” with Greece as long as it sticks to its commitments to revamp the economy, said Michael Meister, the deputy leader in parliament of Chancellor Angela Merkel’s Christian Democratic Union.
“We assume that Greece, as a precondition for more solidarity, will continue to work on improving fiscal policy, competitiveness and growth,” Meister told reporters in Berlin. “We assume that those carrying responsibility in Athens will live up to their responsibilities.”
Meister said “we are of the opinion that nobody in the club of euro countries should be shown the door.”
Abide by Rules
Merkel took up the theme without naming Greece, telling reporters that euro countries “have to abide by the agreed programs and the agreed rules so the euro area can work.”
The election of Greek political parties that want to renegotiate bailout terms and the victory of Socialist Francois Hollande as French president are the latest challenges to confront Merkel 2 1/2 years after the debt crisis first emerged.
Schaeuble, speaking to reporters after the WDR forum, said that the agreements with Greece were decided by the so-called troika of the ECB, the European Commission and the International Monetary Fund. “Any doubt cast on them would immediately trigger catastrophic uncertainty in the financial market,” he said.
“There is no lack of solidarity,” Schaeuble said. “But Greece can’t be spared this consolidation. That is clear and that’s why the vast majority of Greeks want to stay in the euro zone, because the Greeks know that the alternatives for Greece wouldn’t be pleasant.”
Impact on Investment
German investment in Greece may suffer as a result of the instability, Hans-Peter Keitel, president of the BDI Federation of German Industries, told a separate briefing in Berlin. The BDI, which represents companies including Daimler AG and Siemens AG, said in July that German investment in Greece had a potential value of 50 billion euros ($65 billion).
“We can’t tell any German entrepreneur what kind of medium-term investment conditions he can expect there,” Keitel said. “As long as there are no stable political conditions in Greece and no commitment to Europe that’s unequivocal and clear, the question of investments in Greece of course is incredibly difficult.”