Euro leaders plan for Greece to ‘divorce’ the euro
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David Brancaccio: It was an informal summit, European Union leaders met and everyone’s agreed: they very much want Greece to stay with the single currency: the euro. But it’s clear there is some contingency planning going on in case there is a parting of ways.
The BBC’s Andrew Walker joins us from London. Good morning, Andrew.
Andrew Walker: Good morning, David.
Brancaccio: Greece leaving the euro is being likened to a divorce. How much would a divorce cost Europe?
Walker: That’s enormously difficult to estimate in terms of the wider economic cost because you are dealing with an unpredictable financial market investors and even more unpredictable — how would bank depositors in those countries respond. That enormous range of views is such that I think it’s really difficult to put any kind of authoritative number on what the cost would be. There is no doubt that it would be, at least the short term, very high. And there certainly are suggestions that the European Union and the International Monetary Fund would come up with some sort of transitional help — figures have been suggested, such as 50 billion euro as a kind of divorce settlement — the phrase sometimes used, although rather unusually for a divorce settlement, this is probably money that would have to be repaid.
Brancaccio: On some level we are getting ahead of ourselves because there is still a Greek general election that has to happen.
Walker: Yes indeed, and I think an awful a lot of this talk is intended to put the pressure on Greek voters. We know that the overwhelming majority of the Greek population wants to stay in the euro, but they don’t want the difficult austerity and economic reforms that are being demanded of them. The hope, at least in Europe, is that will encourage them to vote for parties in Greece that will go ahead with those reforms that have already been agreed by the previous government.
Brancaccio: The BBC’s Andrew Walker in London, thank you very much.
Walker: It’s my pleasure.
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