German Finance Minister Wolfgang Schaeuble urged Greece to make the “right decision” over its future in the euro to avert the “terrible” poverty that would follow re-adoption of its own currency.
Germany respects Greece’s democratic right to decide its own course of action yet exiting the euro would cause the devaluation of a new Greek currency and “a huge amount of turbulence for the rest of us,” Schaeuble told a group of school students today in Berlin.
“We can only hope that the Greeks make the right decision,” Schaeuble said. “If they make another decision, we’ll have to react in such a way as to ensure that the consequences are as constrained as possible.”
Stocks and European government bonds fell today ahead of a meeting of single-currency area finance ministers in Brussels and the euro weakened to a three-month low on concern that Greece will exit the 17-nation currency union following its inconclusive May 6 elections.
Schaeuble said staying in the euro would mean “advantages for the Greeks are greater, but it will be strenuous.”
“We have a very nervous situation in the euro zone,” Schaeuble said. “We have to get Greece back on its feet.”
Chancellor Angela Merkel will host French President-elect Francois Hollande in Berlin tomorrow. Hollande, who defeated the incumbent, Nicolas Sarkozy, with a platform of shifting away from the Merkel’s focus on austerity, also wants to reopen the European Union’s budget treaty to include measures to spur economic growth.
“I think Hollande knows that the fiscal pact can’t be renegotiated,” Schaeuble said.
Even so, Schaeuble said that he was confident Franco-German relations will continue on a good course and that any difficulties will be overcome.
Schaeuble also signaled that he’s ready to head the group of euro-area finance ministers. He said the so-called euro group must be led by a finance minister from one of the euro nations after Luxembourg’s Jean-Claude Juncker steps down, and that he has to go to meetings anyway.