De Gucht on Greece: "The endgame has begun”

The European Trade Commissioner, the Fleming Karel De Gucht, has said in a newspaper interview that the European Commission and the European Central Bank are working on an emergency scenario in case Greece has to leave the Euro zone. This is the first time an EU official has confirmed the existence of contingency plans.

Speculation about such planning has been rife, but the comments in an interview with the daily ‘De Standaard’ appear to be the first time that an EU official has acknowledged the existence of contingency plans being drawn up in case Greece has to drop out of the currency bloc.

"A year and a half ago there maybe was a risk of a domino effect, but today there are in the European Central Bank, as well as in the Commission, services working on emergency scenarios if Greece shouldn't make it."

Mr De Gucht added that "A Greek exit does not mean the end of the Euro, as some claim."
A source close to Mr De Gucht told the press agency Reuters that the Commissioner was explaining that EU institutions had not been sitting on their hands for the past two years, and that they were now better prepared than they had been.

Concern has grown that Greece may decide to leave or be forced out of the 17-country currency bloc after a rise in popular opposition to an EU-IMF programme of fiscal austerity and structural reforms undermined attempts to form a government after May 6 elections.

Greeks are scheduled to go the polls again on 17 June. A victory by the far-left, anti-bailout coalition SYRIZA, which some opinion polls suggest is likely, would increase the possibility of the country leaving the euro.

However, one opinion poll on Thursday showed the pro-bailout New Democracy party in first place, several points ahead of the SYRIZA, which has pledged to tear up the bailout agreement.

The prospect of SYRIZA winning the election has sent the Euro and markets across the continent tumbling this week.

De Gucht told De Standaard he thought Greece would stay inside the Euro zone, but that the crucial question until the next election was what conditions the ECB would set for guaranteeing the liquidity of Greek banks.

"The endgame has begun, and how it will finish I do not know," he said. "The question is can everyone maintain their sangfroid over the coming weeks."