VIDEO: Europe makes moves to plan for possible Greek exit from euro zone
(Photo by Flickr user Ozchin)
Greece spent a decade working to become a full member of the European Union. Now it appears it’s doing its best to get thrown out.
At a summit meeting in Brussels Wednesday night, European leaders stepped up contingency planning for a possible Greek exit from the euro zone. Meanwhile, Europe’s leaders are struggling to overcome their differences on how to resolve the EU’s debt crisis.
Matthew Price, Brussels correspondent for the BBC, said just how far the planning goes is a closely guarded secret, because of political tensions. For some, he says, any movement to plan for Greece’s exit is actually an effort to force Greece out of the euro zone.
“That is not the case,” he said. “They actively say, and they said this again at last night’s summit, that they want Greece to stay in the euro. Point is, as you’d expect that they would, they’re putting in contingency plans in case Greece is either forced out of the euro or has to leave it through some accident.”
Part of the problem with all of this, though, is no one really knows what it would look like to try and force Greece out of the euro zone. There’s no mechanism to do that.
“There is no provision under European law for countries to leave (the euro). There’s all sorts of difficulties. It is fraught with difficulties. But the important thing to latch onto is it’s fraught with unknowns,” Price said.
And it’s those unknowns that have political leaders and economists uneasy. There are major risks in those unknowns — risks on both sides of the Atlantic.
“It’s a shock that the global economy could weather. The problem is what are the contagion effects of Greece leaving,” Price said. “It is widely assumed that if Greece leaves the single currency, that opens a whole question of could other countries leave the single currency.”
Is it viable? Is it workable? Or is it simply going to disintegrate. All of that remains unknown.
“If you lose the confidence in the viability of the single currency, that’s when Europe’s economy, already in huge difficulties and under great strain, that’s when it starts to have more problems,” Price said.