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Europe Thinks the Unthinkable on Greece

19 May 2012

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Newly appointed lawmakers raise their arms during a swearing in ceremony in Athens

European officials are working on contingency plans in case Greece bombs out of the euro zone, the EU's trade commissioner said on Friday, while Berlin said it was prepared for all eventualities, reports Reuters.

German Finance Minister Wolfgang Schaeuble, one of Greece's harsher critics, said market turmoil fuelled by the euro zone 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.

European shares hit their lowest level since December, depressed by the prospect of a Greek euro exit spreading a wave of contagion in the currency bloc which could engulf much larger economies such as Spain's.

Policymakers insist they want Greece to remain in the euro zone but European Union trade commissioner 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."

But the European Commission's top economics official, Olli Rehn, later dismissed De Gucht's comments.

In a statement released by the European Commission's press officer in Berlin, Rehn said: "Karl De Gucht is responsible for trade. I am responsible for financial and economic affairs and relations with the European Central Bank. We are not working on the scenario of a Greek exit. We are working on the basis of a scenario of Greece staying in. We do not comment on speculative issues."

A spokesman for the Commission, the EU's executive, also wrote on Twitter there was no active planning.

Tags: Business, World, Europe, UNTHINKABLE, GREECE

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