Euro Ministers Alarmed as Bloc Shuts Down Greece Plan B

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Greece’s Plan B Needs Politics Over Theory: Otto Fricke

Europe’s refusal to draw up contingency plans to prepare for the failure of negotiations with Greece is alarming some euro-area finance ministers.

Slovenian finance chief Dusan Mramor led the calls at a meeting of the bloc’s 19 finance chiefs on Friday to consider a “plan B” to mitigate the fallout if negotiations with Greece fail. Several others raised similar concerns during official talks and in private conversations at a meeting in Riga, Latvia, on Friday, two people with knowledge of the discussions said.

“What my discussion was about was what we will do if no new program will be achieved in time for Greece to be able to refinance itself or improve liquidity,” Mramor told reporters on Saturday. “A plan B can be anything.”

As Greece struggles to pay pensions and salaries, its government has failed to present a plan to revamp its economy that passes muster with euro-area officials who are withholding further aid.

In February, finance ministers gave the Greek government until the end of June to complete the deal and said they expected a list of reforms by the end of April. Friday’s meeting, which European Union officials had for weeks identified as the moment when the list would be considered, instead descended into attacks on Greek Finance Minister Yanis Varoufakis for his failure to deliver.

“Some countries have said, because of their concern on the lack of progress and the attitude on the Greek side, ‘if it continues like this, we will really get into trouble,’” Dutch Finance Minister Jeroen Dijsselbloem, who led Friday’s meeting, told reporters on Saturday. “In that context plan B has been mentioned.”

Still, ministers were left frustrated that European Economic Commissioner Pierre Moscovici clamped down on discussions of a backup plan. They went on to air their concerns without him, one of the people said.

Finance chiefs aren’t saying in public that they’re contemplating alternative outcomes because that would send the message to markets that it’s game over, the person said.

“The central scenario is that in the Greece case we’re going to reach an agreement,” Spanish Economy Minister Luis de Guindos told reporters on Saturday. “That’s the only one that we’re considering.”

Anti-European

Varoufakis, who was attacked by his colleagues during Friday’s meeting for his handling of the negotiations, joined Moscovici’s effort to prevent others in the group taking precautions in case the talks fail.

“Any mention of a plan B is profoundly anti-European,” Varoufakis told Euronews on Friday. “My immediate response was to say there is no such plan B, there cannot be such plan B.”

While finance ministers’ immediate concern is how to keep Greece in the euro area, if talks over refinancing break down, failure to prepare for a Greek default also risks reawakening the contagion threat that shook the bloc during the darkest days of the debt crisis.

Technical inspectors assessing the needs of Greece’s economy on behalf of the EU and International Monetary Fund told Friday’s meeting that they need to have better access to officials with political responsibility in Athens in order to speed up the process, according to de Guindos.

The dilemma for finance ministers is that just raising the prospect of a plan B risks making it a self-fulfilling prophecy. As a result, they try to avoid talking about the issue in public, German Finance Minister Wolfgang Schaeuble told reporters

“Questions about whether there are alternatives if the world ends or everything turns out differently than one wants, despite best efforts, shouldn’t really be put to politicians in positions of responsibility,” Schaeuble said.