Greece will have to exit the euro area as it struggles under a mountain of debt, unable to regain its competitiveness without having its own currency to devalue, a senior lawmaker in Chancellor Angela Merkel?s party said.
The comments by Michael Fuchs, the deputy floor leader for Merkel?s Christian Democratic Union, contradict the chancellor?s stance in a sign of the domestic headwinds she faces in leading Europe?s efforts to keep the 17-member euro area intact. With the debt crisis into its third year, Merkel is due to join CDU lawmakers at a two-day policy meeting beginning Friday in the northern German city of Kiel.
For Greece, ?the problem is not whether they are capable of paying their loans — they will not, not at all, never,? Fuchs said Wednesday by phone from his Berlin office. Greece is still a ?special case? and the other 16 euro members will resolve their debt problems and retain the currency, he said.
Merkel?s Bavarian sister party, the Christian Social Union, last week reinforced its position that member states unwilling or unable to commit to necessary reforms should be given the chance to exit the euro area.
Merkel said at a joint press conference Jan. 9 with French President Nicolas Sarkozy that they would ensure no country leaves the euro, while urging Greece to finish negotiations for a debt writedown with creditors as soon as possible to win its next tranche of aid.
Fuchs dismissed the prospect that letting Greece go would trigger speculative attacks against indebted countries such as Spain or Italy. Italy is a ?rich? country and banks would be able to withstand any contagion effect, said Fuchs, who also coordinates economic policy for the CDU caucus in the lower house of parliament, or Bundestag.
Fuchs also contradicted Merkel?s support for a financial- transaction tax among euro-area members. The Bundestag would probably veto any such levy that doesn?t include the U.K., the lawmaker said.
Asked about the chancellor?s position on Greece, Fuchs said his prediction of a Greek exit from the single currency is a matter of arithmetic.
Merkel ?is also capable of calculation,? he said. ?She studied physics. And to study physics you need mathematics as well.? [Bloomberg]