Those in the EU who want Greece to leave the eurozone are playing with fire, country’s Finance Minister said, claiming that no “fence” could possibly exist that would protect the union from a domino effect should Greece or any other member leave.
“Anyone who toys
with the idea of cutting off bits of the eurozone, hoping the
rest will survive is playing with fire,” Yanis Varoufakis
told La Sexta, a Spanish TV channel. In an interview, recorded 10
days ago but broadcast on Sunday, Varoufakis warned that those in
the EU who think they have been “ring-fenced” from the
Greek struggle are mistaken.
“Some claim that the rest of Europe has been ring-fenced from
Greece and that the ECB has tools at its disposal to amputate
Greece, if need be, cauterize the wound and allow the rest of
eurozone to carry on,” Varoufakis said. “I very much
doubt that that is the case. Not just because of Greece but for
any part of the union.”
The fear factor in terms of a potential domino effect throughout
Europe will be impossible to ignore if Athens is pushed to a
point where it will have to consider exiting the eurozone. A
default in Greece would have a ripple effect on the European
economy, as Greece’s debt is tied to the European Central Bank,
and shares a currency with 18 other eurozone members.
“Once the idea enters peoples’ minds that monetary union is
not forever, speculation begins … who’s next? That question is
the solvent of any monetary union. Sooner or later it’s going to
start raising interest rates, political tensions, capital
flight,” Varoufakis warned.
French Finance Minister Michel Sapin claimed last week that the
union can survive without Greece.
“If something damaging
happens, it will be for Greece that it will be serious, for the
Greek people, not for the other countries of the eurozone. We’re
not at all in the same situation that we were in four or five
years ago,” Sapin
told reporters Saturday.
Over the years, Sapin said, EU economies grew to protect their
banking system, to “build walls,” and to offer
protection to those in the union if Greek exit ever happens. The
French FM also called on Athens to abide by treaties and
In February, Greece’s creditors agreed to temporarily extend the
bailout program until June while Athens is preparing an economic
reform plan that the new government hope would finally set the
country on a course of economic growth. A framework deal between
Greece and its EU creditors is due on April 24.
Despite expressing clear intentions of averting default and
remaining in the eurozone, Greece is struggling to keep its head
above water and borrow money for regular repayments to its
creditors. EU creditors want more reforms from Greece to get more
funding. Greeks, instead of austerity policies, want to focus on
stimulus schemes needed to recover economic growth.
“The Greek government has presented a realistic reform plan
that doesn’t contain recessionary measures or burden the weaker
layers of society, yet gives the economy breathing space,”
Syriza party spokeswoman Rania Svigou said Sunday, Bloomberg
reports. “The government will exhaust all possibilities for a
solution that respects the mandate of the Greek people.”