BRUSSELS — Turmoil in Greece is forcing other eurozone countries to consider the prospect that it might soon leave the single-currency club.
Luxembourg Prime Minister Jean-Claude Juncker, president of the finance-ministers group of the 17 euro countries, told reporters today at the end of the European leaders’ summit that the eurozone must “consider all kinds of events,” but he insisted that “the working assumption” was that Greece would keep the euro.
Juncker’s statement was a frank admission that Greece could wind up abandoning the euro, which many analysts fear could cause investors to doubt the financial viability of other weak eurozone members.
But Juncker insisted he had not asked the euro nations to prepare national contingency plans for a possible chaotic departure of Greece from the currency.
Steven Vanackere, the Belgian finance minister, added, “To say that we do not prepare eventualities would not be a responsible attitude.
“I believe many countries have contingency plans when it comes to things they want to avoid at all cost, like a terror attack. And to say that we have no contingency plans would be irresponsible.”
At the end of a summit dinner of the 27 European Union nations, EU President Herman Van Rompuy said that all EU leaders want Greece to remain in the eurozone while respecting its commitments to pay back its debt. Van Rompuy said the EU needed to concentrate more on coordinating its policies to promote economic growth, to step up investments and credit to small and medium-sized businesses, and to focus on job creation.
French President Francois Hollande said EU funds could be disbursed quickly on projects that could help create jobs.
Expectations were low for agreement on concrete measures to boost growth and stability in the 17-nation eurozone. Europe’s main stock indexes plunged more than 2 percent Wednesday. The euro fell 0.8 percent to $1.2561, its lowest in nearly two years.
On Tuesday, the Organization for Economic Cooperation and Development became the latest body to warn that the eurozone is at risk of falling into a “severe recession” and suggested that it slow the pace of austerity, or cost-cutting measures, in some countries.
That’s exactly what is being asked for by many in Greece. The country has undertaken massive spending cuts and tax hikes to slash its deficit and rein in its debt, in exchange for the bailout loans that help keep it paying the bills.
But Greece is now in its fifth year of recession, and many argue that the country cannot hope for a recovery if it sticks to the deal.
In a recent election, neither of Greece’s two main parties, both of which support the bailout deal, fared well. Instead, minor parties that are threatening to renege on those commitments saw their popularity surge. A new round of elections is set for June 17.
