European officials are working on contingency plans in case Greece bombs out of the eurozone, the EU’s trade commissioner said on Friday, as European share prices tumbled and Germany warned of continuing financial turmoil.
German Finance Minister Wolfgang Schaeuble, one of Greece’s harsher critics, said market unrest fueled by the eurozone debt crisis could last another year or two.
“Regarding the crisis of confidence in the euro ... in 12 to 24 months we will see a calming of the financial markets,” he said.
Germany seemed to be increasing pressure on Athens when Greece’s government spokesman said that German Chancellor Angela Merkel raised the idea of Greece holding a referendum on its eurozone membership — something Berlin promptly denied.
Policymakers say they want Greece to remain in the eurozone, but European Commissioner for Trade Karel De Gucht said the European Commission and the European Central Bank were working on scenarios in case it has to leave.
“A year-and-a-half ago, there maybe was a risk of a domino effect,” De Gucht told Belgium’s Dutch-language newspaper De Standaard. “But today there are in the European Central Bank, as well as in the Commission, services working on emergency scenarios if Greece shouldn’t make it. A Greek exit does not mean the end of the euro, as some claim.”
Speculation about such planning has been rife, but De Gucht’s comments, which were confirmed by a person close to him, appeared to be the first time an EU official has acknowledged the existence of contingencies being drawn up.
A German finance ministry spokeswoman, asked about plans for a possible Greek exit, said without elaborating: “The German government naturally has the responsibility to its citizens to be prepared for any eventuality.”
However, the European Commission’s top economics official, European Commissioner for Economic and Financial Affairs Olli Rehn, later dismissed De Gucht’s comments.
“Karl De Gucht is responsible for trade. I am responsible for financial and economic affairs and relations with the European Central Bank.” Rehn said. “We are not working on the scenario of a Greek exit. We are working on the basis of a scenario of Greece staying in.”
A spokesman for the Commission, the EU’s executive, also wrote on Twitter there was no active planning.
“[The] European Commission denies firmly [that it] is working on an exit scenario for Greece,” Oliver Bailly wrote. “[The] Commission wants Greece to remain in the euro area.”
Confusion increased when Greek government spokesman Dimitris Tsiodras said that Merkel raised with the Greek president the idea of Greece holding a referendum on its eurozone membership next month, together with national elections.
Tsiodras’s statements evoked memories of a bitter row between Athens and the EU last year, when then-Greek prime minister George Papandreou proposed a referendum on the country’s bailout deal — an idea the EU vehemently rejected.
Greek political leaders on Friday angrily rejected a referendum and a German government spokesman denied that Merkel ever proposed it.
“This is false and we completely dismiss this,” the spokesman said.