Merkel Says Greece Must Not Leave the Eurozone

Renewing fears that even a second bailout might not keep Greece’s economy from failing, German Chancellor Angela Merkel said she nonetheless wants the country to stay in the Eurozone of the 17 members using the euro as a currency, adding that it would be a mistake to leave and could signal worries that others might follow. In an interview with the BBC, Merkel – whose country is footing much of the bill of bailouts from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) – a first for $152 billion and a second of $172 billion – she said her counry would do all it could to keep Greece in the Eurozone, although most Germans oppose the rescue packages for Greece, complaining the country is beyond help.
While part of the deal for the second bailout let Greece write off $134 billion in debt by imposing losses of 74 percent over 30 years on investors, even that relief might not be enough, Peter Bofinger, an economic advisor to the German government, said earlier this month. He said Greece’s debt, still at about $460 billion, would remain at “very high levels” and that European officials may have to consider more aid within six months, including debt write offs for official bondholders, such as the ECB. “What will have to be achieved is real debt relief for Greece — and it will have to come in the next 12 months,” Bofinger said in an interview with Bloomberg Television.
Asked how she saw the future for Greece, Merkel told the BBC that Athens had repeatedly said it wanted to remain within the Eurozone. “It has major weaknesses but it is trying to overcome them, be they in the administration or the competitiveness of their business community. It is going to be a long and arduous road,” she said. “We have taken the decision to be in a currency union. This is not only a monetary decision, it is a political one. It would be catastrophic if we were to say to one of those who have decided to be with us: ‘We no longer want you.’” She said the Eurozone would be “incredibly weakened” by a Greek exit. “People all over the world would ask: ‘Who will be next?’” She added: “It would be a huge political mistake to allow Greece to leave. That is why we will be clear with Greece, we will say: ‘If you want to be part of a common currency you have to do your homework but at the same time we will always support you.’”
The bailouts came with austerity measures that have set off two years of protests, strikes and riots; fears of more of the same led Greece to ban its citizens from being near reviewing stands for the March 25 Independence Day celebrating freedom, wary that politicians would be heckled or pelted with fruit and yogurt by Greeks furious over repeated pay cuts, tax hikes, slashed pensions, the coming firing of 150,000 workers, a 22-32 percent cut in the minimum wage and the phased-out end of collective bargaining rights for workers.