Although a Wednesday European Union summit meeting ended with Greece being urged by leaders to remain in the joint currency bloc, Germany did not back down on its stance that Athens must adhere to austerity measures already agreed to. Countries had already been directed to work on contingency plans should Greece leave the group, and emergency borrowing at the European Central Bank (ECB) rose in the wake of a funding cutoff to four of Greece’s banks.
Reuters reported that although President Francois Hollande of France pushed for joint euro bonds, highlighting the change in regime in the wake of former President Nicolas Sarkozy’s departure, Chancellor Angela Merkel of Germany wasn’t having any of it. Nor was she inclined to cut Greece any slack.
The main topic of the informal get-together was a discussion of how to stimulate economic growth, but the Greek situation loomed large and the meeting dragged on into the night. Merkel voiced her opposition to euro bonds and to allowing Greece to back off on its austerity promises.
Regarding the former, she said that a much closer fiscal union among the nations in the euro zone must be achieved before such bonds can be discussed. “There were differences in the exchange about euro bonds,” she was quoted saying after the meeting ended. Merkel has been opposed to such joint bonds from the beginning and has not softened her stance.
On Greece’s efforts to change the terms of its bailout, she was equally firm, saying, “We want Greece to stay in the euro, but we insist that Greece sticks to commitments that it has agreed to.”
Three officials were cited as the source of news that countries in the group were told via a Monday teleconference to prepare for a possible Greek exit from the euro zone. The teleconference was among members of the Eurogroup Working Group (EWG), which is made up of experts who work for euro zone finance ministers.
Greece’s finance ministry denied that any such agreement was reached, but Finance Minister Steven Vanackere of Belgium was quoted saying, “All the contingency plans [for Greece] come back to the same thing: to be responsible as a government is to foresee even what you hope to avoid.” His account was confirmed by two other senior E.U. officials.
In addition, a document was cited saying such an exit could potentially cost the E.U. and the International Monetary Fund (IMF) 50 billion euros ($62.82 billion) to ease the transition and ensure an “amiable divorce.”