Greek exit from euro "could be temporary", says Germany

German finance minister Wolfgang Schäuble affirms hard line, says EU "protected" from contagion from collapse of Greek banks

A 'No' poster featuring the face of Wolfgang Schäuble on a lamp post 'looks on' as Evzones (presidential guards) march to their positions in Athens, Greece
A 'No' poster featuring the face of Wolfgang Schäuble on a lamp post 'looks on' as Evzones (presidential guards) march to their positions in Athens, Greece Credit: Photo: Bloomberg

Germany's finance minister Wolfgang Schäuble has suggested that Greece's looming exit from the euro could be “temporary”.

Reaffirming Germany’s hard-line stance on the Greek crisis, Mr Schäuble said that European financial institutions would be relatively protected from any possible “contagion” from a collapse of Greece’s banks, describing the problem as manageable.

"Even if it would lead to a collapse of individual banks, the 'contagion' is comparatively low," he told the German newspaper Bild.

"The markets have reacted very cautiously in previous days. This shows that the problem is under control."

Mr Schäuble said that European banking authorities were closely watching the situation, which has seen banks in Greece closed since Monday and a €60 daily cap per person at ATMs to prevent collapse in the face of the country's debt crisis.

He also mentioned the prospect of Greece only temporarily being without the euro, telling the newspaper that he is no longer ruling out a Greek withdrawal from the Eurozone.

“Greece is a part of the Eurozone. There’s no doubt about that. Whether with the euro or temporarily without, this question can only be answered by the Greeks themselves,” he said.

However, in the event of an exit from the Euro, he added: “We will not leave the people of Greece in the lurch.”

Mr Schäuble proves himself unyielding in the continuing face-off with Greece, saying: “I am certain that Europe and the EU will be better and stronger in a year's time than at the beginning of the Greek crisis. At least, if we draw the right conclusions from the crisis.”

When asked what conclusions those would be, he replied: “That is primarily an insight: a community can only function if the members abide by the rules. And self-critically we must admit: it was us Germans and the French who in 2003 first broke the stability rules of the euro.”

He continued: “The proposal, which the [Greek] government is having a vote on, no longer lies on the table. We must wait to see how the government in Athens deals with the result, what consequences that has. And then the Greeks can make a request to commence negotiations. But after the expiry of the programme it is a totally new situation and difficult economic conditions."

Regarding the prospect of a third bailout package, Mr Schäuble said: “Greece needs reforms. But I know already, that would mean difficult negotiations, because the situation in Greece has deteriorated dramatically in the last few weeks.”

A recent poll showed the overwhelming majority of Germans backed Mr Schäuble’s tough stance, with figures from broadcaster ARD giving the finance minister his highest-ever personal approval rating at 70 per cent.

This is in stark contrast to public sentiment in Greece, where posters put up by those campaigning for a “no” vote in the Greek referendum depict Mr Schäuble in a vampire-like image with the caption: “For five years now he has been sucking your blood. Now tell him no.”