ATHENS – Finance Minister Yanis Varoufakis said if Greece is forced out of the Eurozone because of failed reform talks with international lenders then the whole bloc could be in jeopardy.
He told the Spanish TV station La Sexta that, “Anyone who toys with the idea of cutting off bits of the euro zone hoping the rest will survive is playing with fire.”
“Some claim that the rest of Europe has been ring-fenced from Greece and that the ECB has tools at its disposal to amputate Greece, if need be, cauterize the wound and allow the rest of euro zone to carry on.”
“I very much doubt that that is the case. Not just because of Greece but for any part of the union,” he said, speaking in English.
The ECB is the European Central Bank, one of the country’s troika of lenders along with the European Union and International Monetary Fund which have put up 240 billion euros ($260 billion) in two bailouts since 2010 but demanded harsh austerity in return.
With Greece locked in stalled talks with the lenders, fears are growing of a so-called Grexit in which it could be pushed out of the Eurozone.
“Once the idea enters peoples’ minds that monetary union is not forever, speculation begins … who’s next? That question is the solvent of any monetary union. Sooner or later it’s going to start raising interest rates, political tensions, capital flight,” he said.
Sparking that fear has been a key element in his strategy to get the troika to back down and give Greece money before meeting conditions and to let the government go ahead with anti-austeritiy plans but it hasn’t worked yet.
His comments were recorded before those of ECB President Mario Draghi, who said the Eurozone has more safety mechanisms in place now to deal with a default, dousing Varoufakis’ stance.