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EUROPEAN UNION OFFICIALS have reportedly considered a batch of emergency ‘worst-case scenario’ measures to be rolled out if the result of Greece’s election this week means the country could leave the euro.
Although polls show a majority of Greek voters to be in favour of remaining in the euro, they also show increasing support for the radical left-wing group Syriza which proposes to reject the country’s EU-IMF bailouts.
Should Sunday’s election result in Syriza having enough support to lead a coalition government, the likely rejection of the EU-IMF deals would probably result in Greece defaulting on its debts and being forced out of the currency union.
Reuters reports that because there is no formal procedure through which member countries can leave the euro, officials in Brussels now believe there is “an increased need to have contingencies in place”.
Though it says no decisions have formally been taken, members of the Eurogroup Working Group – which purportedly features deputy finance ministers, including Ireland’s Brian Hayes – are said to have discussed various contingency measures “in some detail”.
Among the measures were the suspension of the Schengen borderless travel area, which would permit the introduction of temporary border checks so that cash could not be moved freely between borders.
There would also be capital controls – such as embargoes on foreign currency transactions or ‘minimum stay’ requirements – as well as limits on the cash that people could withdraw from ATMs.
Such controls would be considered necessary in order to safeguard the stability of both the euro and a reintroduced Greek drachma, as people would try to bring their cash to whichever side of the border was deemed financially advantageous.
In Greece’s case, this could mean a severe shortage of currency, leading to risks of rampant inflation if the Greek central bank had to produce larger-than-normal quantities of the new drachma.
On the Euro side, there would also be inflationary risks, as the volume of currency circulating in the union would be disproportionate to the number of countries remaining within the euro area.
The Reuters report also carries admissions from some officials that they were not sure whether it would be legally permissible to suspend the provisions of Schengen or to introduce temporary capital controls against a country which would still remain an EU member.
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I blame Germany for all of the Euro woes.GREED.
The only way the introduction of the Euro could have worked properly was if all countries involved were run by a central government! Therefore becoming one huge economy working as one! Ireland and Spain were forced into lowering interest rates at a time when they actually needed to higher them! I’m amazed that we got as far as we did before reality dawned!
Try blaming the German government and bankers instead, you will sound smarter. The international banking cabal are responsible for this mess, not Germany or Ireland etc etc
@ Dominic : No, it is not because of German greed. It is because of fear and cowardice of many politicians, in Germany, I’m Ireland, in all EuroCrountries. Come visit me in Germany and you will see how rich and greedy we are.
The only reason most people wanted it was to avoid the cost of currency exchange when going on holiday.
Is that worth inflation, bankruptcy and the loss of sovereignty?
Its all going t*ts up. Spain is going to need a lot more than ?100 billion for its banks and its own fiscal needs a bit down the road. The markets are already going after Italy, its bond yield is over 6%. Goodbye euro, t’was nice knowing you.
Possibly a bit of scare mongering in the hopes of swaying the Greek voters?
Scaremongering with a strong element of truth.
Greece needs to go but we also need to kick out Germany.
Top and tail the whole thing.
“EU preparing ‘worst case scenario’ measures if Greece quits euro”
For EU….Read Germany…..For “Worst Case Scenario”……Read German Tanks at the border !!!!
They way the headline was phrased, I read it as above…..Wouldn’t surprise me though….A lot of German money will have gone down the sinkhole…..German Fiscal Terrorism knows no bounds….!!!!
We should do the same…..Dump this German Led EU/Euro….Burn the Bondhilders…..Go back to the Punt…..Get our Sovereignty back and be proud to be Irish……Not some Quasi German EU citizen…..!!!!
P.S……Edna Give himself an Expense Pay Rise…..!!!
http://www.thejournal.ie/taoiseach-makes-switch-to-vouched-expenses-costing-us-e8k-extra-a-year-475011-Jun2012/
Is the German government thinking only of saving itself? Yes? Does the German government speak for the mass of German people? No.
But please. To say there will be German tanks on the borders of countries is not true. German Fiscal Terrorism is not true. These are the words of someone who sees politics as a season of Big Brother and wants more to see things get worse as an entertainment rather than helping to make things better.
What do you really know of the wishes and intentions of normal German people?
Interesting points Klaus. In fact I kind of feel sorry for the average German citizen who really has nothing to do with this but are taking some of the flak due to bad sentiment against the German establishment.
In many ways, however, what is occurring in Europe at the moment could be labelled anything from Financial Terrorism, Monetary Blitzkrieg (which I just coined now for illustrative purposes) or any other extreme analogous statements. The reason you don’t see this is because you are not living it.
You are entirely correct in saying that we know nothing of the wishes or intentions of the German people. I recently asked a couple of German guys, in a foreign country, what was their view on the crisis and how they felt about the so called PIIGS. They had very little knowledge of Ireland (generally) and nor, it seemed to me, did they care. The problem is down to us becoming incredibly introspective due to our own media constantly reporting on these matters.
In the end this isn’t the doing of the German people but I am sure you can understand our sentiments towards the German establishment in relation to handling affairs which are affecting day to day lives.
I would really like to see more comments from Germans here so we could at least get a different view point.
Actually, another point which I forgot to mention was that ultimately ordinary Germans are going to end up paying dearly for these so called bailouts and where will all this money go? Well it doesn’t just disappear into thin air – it has to go somewhere and it certainly isn’t into your average Irish or German pockets.
Hi Klaus
Of course it does not suit our government or the German government to advertise the fact that the people of their respective country are not happy with the austerity measures put in place, Look at the following link ! The German people , ordinary decent hard working are as badly hit as we are… http://www.guardian.co.uk/world/feedarticle/10249907
@ Michael : thank you for your comment. You are correct in saying that many Germans know very little about the current way in Ireland. Ireland is not the focus of the German media. In European terms, Ireland is not the priority. It is the high priority for people in Ireland. The focus on this forum is not a neutral representation of the crisis, which is not wrong.
I think that it is not well-known here that Germany has had ten years of austerity, and it will get worse. Do not think I and my neighbours are wealthy and secure. A more than in Ireland, yes, but life has been and will be hard. We are aware that there is will be no winners in this disaster five years from now. We’re not stupid. All the mentions of empire and war is absurd. The austerity here was caused partly through re-unification with the old East. A bigger Germany is not needed and not wanted. It is big enough.
“People Have Lost Faith In the 20th Century Religion Of Government Backed Fiat Money”
Matthew Bishop, the US Editor of The Economist magazine.
“The five years since our 1993 currency devaluation have been the only period in the history of the Irish State in which it has followed an independent exchange rate policy, permitting the punt to float rather than tying it to sterling or the Deutsche Mark. The resultant highly competitive exchange rate is the most important single reason for the ‘Celtic Tiger’ economic boom, which coincides exactly with that period. Yet having proved how successful can be an independent currency and exchange rate, our leaders are now abandoning control of them to others, in principle for all future time.
The manifest unsuitability of a one-interest-rate-fits-all economic policy inside the eurozone is shown by our recent interest rate reductions to get in line for EMU. These further boost soaring house and asset prices here. They are precisely the opposite of what the Irish public welfare needs, although low interest rates suit recession-locked Germany and France. Yet in two or three years time inside the eurozone, unlike now, the Irish economy may really need the stimulus of lower interest rates, just at the time when the European Central Bank decides that higher interest rates are needed to cap a German-French economic revival. And that could happen just when the euro gives us an uncompetitive exchange rate vis-a-vis the bulk of our trading partners outside the eurozone. What happens to the Celtic Tiger then?”
Prof. Anthony Coughlan, 1998
It was no big deal takin out some local currency in comparison to the mess we re in now. the setting of interest rates centrally with the single currency allowed no manoeuvre for weak countries to curb inflation and speculation. German banks mainly fuelled the boom, their economy benefited hugely from the euro as it kept them competitive. Germany are now trying to force a united states of Europe thru against the wishes of the citizens of Europe. The markets or the puppets of the 1% need to be put in their place. Sadly people are too busy watching Desperate Housewives to see the truth.
So lets see, we received a gold star for leading the economic recovery with reason, Portugal got one for unity and pragmatism and Spain a pat on the head for much the same and the lollipop of preferential rates. But all of us PIGS have one thing in common: austerity, austerity and more austerity that is only getting worse and worse and is leading us all into recession, recession and more recession. There’s only so much room on the bailout raft but the good Frau Merkel seems not to realise that all of this just serves to reduce revenue, increase austerity & unemployment and builds to a looming social upheaval. Think it’s time to stock up on some essentials…like my passport!
Announcing a bailout for Spain, with no austerity conditions, just before the Greek election will have helped Syrzia and other anti-austerity parties in Greece, making a new Euro crisis more likely.
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