EU vows to keep Greece in the fold but plans for exit

European Union leaders pledged support for Greece on Thursday, vowing to keep the debt-wracked country in the eurozone as officials prepared behind the scenes for a possible doomsday scenario of exit.

After a growth-oriented EU summit dominated by fears of a "Grexit" that went into the early hours of the morning, EU president Herman Van Rompuy told journalists: "We want Greece to remain in the euro area while respecting its commitments."

The EU chief hailed the "significant efforts already made by the Greek citizens" but appealed to Athens to continue to implement reforms that he said were the "best guarantee for a more prosperous future in the euro area".

European Commission President Jose Manuel Barroso summed up the leaders' view by saying: "The message that we send today is clear: we will stand by Greece while Greece stands by its commitments."

Nevertheless, diplomats said on the sidelines of the summit that officials had been tasked to make contingency plans in the case of Greece exiting the eurozone, sending European stocks and the euro sharply down on the markets.

A diplomat told AFP that officials from the other 16 eurozone member states were instructed this week to "reflect" on what an exit would mean for their economies.

This was not a political message to Greece, insisted the diplomat, but was a "normal" thing to do.

"It does not mean that we think the situation will get that far," he said, adding that "you would have said we were dreaming" otherwise.

"Treasury officials were already scratching their heads a year ago looking at different scenarios that could unfold," said another diplomat.

"Frankly, it would be dereliction of duty if they hadn't done this," he said.

In Athens, a government statement said the finance ministry "categorically denies" such plans.

And Greece's caretaker leader Panayotis Pikrammenos said that German Chancellor Angela Merkel was "surprised and upset" about the issue of Greece's exit from the eurozone being raised.

For his part, French President Francois Hollande said: "I can't say that there has not been work done" on simulating a Greek exit.

"But if I started to talk publicly about the hypothesis of Greece leaving, that would mean sending a signal to Greece and to the markets.

"I prefer to address the Greeks and say: France and Europe want you to stay in the eurozone," the president said.

Greece's election in June is shaping up to be effectively a referendum on whether the country stays in the euro, as parties opposed to austerity measures needed for future bailouts gain significantly in the polls.

The radical leftist Syriza party, which wants to tear up Greece's unpopular rescue deal with the European Union and the IMF, came second on May 6 and is expected to emerge in a strong position in the next ballot.

European leaders have warned that if the next government reneges on promised reforms Greece cannot hope to continue drawing international loans, which would likely lead to its exiting the eurozone.

"There is a democratic process taking place in Greece. Of course, we respect the democratic process. Let's wait for the people of Greece to have their say on June 17," said Barroso.

Van Rompuy said that after the elections, EU leaders expected the new Greek government to choose the path of reform and staying in the euro.

Merkel, who as leader of Europe's top economy holds the purse strings for any future bailouts, said the EU was sending a "positive message" to Greece but also warned that reform promises must be kept.

Earlier Wednesday, former Greek prime minister Lucas Papademos had sent markets tumbling after warning of the "catastrophic" economic consequences of a Greek exit, that some analysts have put at half a trillion euros.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • US renews travel warning to Mindanao
    US renews travel warning to Mindanao

    The US State Department renewed its warning about the risks of travel to the Philippines, in particular to the Sulu archipelago, certain regions and cities of Mindanao and the southern Sulu Sea area. In an update on Wednesday of a travel warning it issued Nov. 20, 2014, the State Department said US citizens should continue to defer non-essential travel to the Sulu archipelago due to the high threat of kidnapping of international travelers and violence linked to insurgency and terrorism there. …

  • Phl gains support for APEC Action Agenda
    Phl gains support for APEC Action Agenda

    The Philippine initiative to put the interests of micro, small and medium enterprises (MSMEs) front and center in global and regional trade has made significant progress following the conclusion on Thursday of the 2nd APEC Senior Officials’ Meeting (SOM2) and Related Meetings in Boracay, Aklan. Called “The Boracay Action Agenda to Globalize MSMEs,” the Philippine proposal calls for a host of specific, concrete and practical interventions that APEC economies can implement to provide MSMEs wider …

  • Phl to join Bangkok meet on Rohingya crisis next week
    Phl to join Bangkok meet on Rohingya crisis next week

    The Philippines will join a 15-nation meeting in Bangkok, Thailand next week to address the migration crisis involving thousands of Rohingyas who escaped persecution in Myanmar and Bangladesh. Justice Secretary Leila de Lima bared this yesterday after meeting with United Nations High Commission for Refugees (UNHCR) representative to the Philippines Bernard Kerblat. In an interview, De Lima said the Philippine government has been invited to the meeting. …

  • Magnitude 4.2 quake jolts Sorsogon
    Magnitude 4.2 quake jolts Sorsogon

    LEGAZPI CITY—A magnitude 4.2 earthquake hit Prieto Diaz town in Sorsogon before dawn yesterday, the Philippine Institute of Volcanology and Seismology (Phivolcs) said. …

  • Drought-resistant rice breeds bared
    Drought-resistant rice breeds bared

    SCIENCE CITY OF MUÑOZ, Nueva Ecija – Amid the searing heat, the Philippine Rice Research Institute central experiment station here has identified nine rice breeds which have been proven to be drought-resistant and produce high yields in temperatures as high as 38°C based on a recent study. Thelma Padolina, lead researcher of the study titled “Screening of rice-induced mutants for heat and drought tolerance,” identified the breeding lines as the Ballatinaw lines, PSB Rc72H and Azucena lines. …

  • Phl, US assert rights, ignore China warning
    Phl, US assert rights, ignore China warning

    The United States military will continue air and sea patrols in international waters even after the Chinese navy repeatedly warned a US surveillance plane to leave the airspace over artificial islands China is creating in the disputed South China Sea. The Philippine government also declared it would continue activities in the region, calling on China to respect freedom of navigation and aviation. “Our position on the importance of letting freedom of navigation, freedom of aviation and …

  • MM shutdown eyed for quake drill; 6 schools warned
    MM shutdown eyed for quake drill; 6 schools warned

    Electricity and mobile phone services would be cut throughout Metro Manila, and all private and government offices and businesses, including shopping malls, would be closed. That would be the situation on July 16 between 3 and 8 p.m. to simulate the scenario of a 7.2 magnitude earthquake. The Philippine Institute of Volcanology and Seismology (Phivolcs) has warned that an earthquake of that magnitude could occur and kill at least 33,500 people and injure at least 113,600 others following a …

  • Subaru XV now priced among sedans
    Subaru XV now priced among sedans

    Motor Image Philipinas (MIP), the authorized distributor of Subaru in the country, has positioned its brand new crossover SUV, the Subaru XV, well within the sedan segment’s price range. This move, according to MIP, was made to give the public an opportunity to experience the brand’s unique automotive technologies by lowering its price. Buyers of […] The post Subaru XV now priced among sedans appeared first on Carmudi Philippines. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options