ECONOMY

Eurozone working on plan B for Athens

The eurozone is considering alternatives to save Greece from bankruptcy should the country?s parliament reject the midterm fiscal plan required by its creditors, a European Union official told AFP on Monday.

?Be sure, we?re working on it, we?re not only thinking about it,? the official said on condition of anonymity. ?The next step is not a default of Greece,? the official said, refusing to provide details on the plan.

This constitutes a departure from the rigid position that only planned for Parliament to vote for the new austerity program in order for the government to receive the fifth tranche of its international bailout, amounting to 12 billion euros.

The possibility of a ?no? vote to the plan is already making Europeans contemplate other solutions, with Germany?s Deputy Finance Minister Joerg Asmussen telling a conference in Berlin yesterday that ?(a rejection) isn?t Plan A, or the most likely outcome, but the eurozone and its financial sectors need to make preparations.? Societe Generale estimated that there is a 30 percent chance of the midterm plan getting rejected.

In another sign that Europe is warming to the possibility of a ?no? vote to the plan, a Financial Times commentary raised eyebrows in the Greek government as it suggested for the first time that the plan may not constitute a solution after all. The commentary, titled ?Maybe Greek MPs would be right to say No,? argues that ?the government may yet prevail. If it does, this will be because of arm-twisting more than to the strength of the argument, which is no longer clear-cut.?

Of course the warnings about a Greek default continued unabated and will increase up to the time Parliament casts its vote.

Contagion of Greece?s debt problems to the rest of Europe could be worse than the collapse of investment bank Lehman Brothers in 2008, Deutsche Bank Chief Executive Josef Ackermann said on Monday.

?If it is Greece alone, that?s already big. But if other countries are drawn in through contagion, it could be bigger than Lehman,? he said at a Reuters banking conference.