Page last updated at 22:00 GMT, Wednesday, 17 March 2010

Merkel supports eurozone 'red card'

Germany's Chancellor Angela Merkel in Bundestag, 17 Mar 10
Mrs Merkel insists Greece must first put its own finances in order

German Chancellor Angela Merkel has said she wants the eurozone to be able to exclude one of its members in future if it is necessary to avert a crisis.

Mrs Merkel told the German Bundestag (parliament) that existing EU rules were not strong enough to deal with the current crisis triggered by Greece.

Exclusion from the 16-nation eurozone would be a "last resort", she added.

Greece's prime minister said later that there was "zero possibility" of his country leaving the eurozone.

Germany, seen as the driving force of the euro system, is reluctant to bail out Greece's debt-laden economy.

But Mrs Merkel said no eurozone country would be left on its own to deal with the current crisis. Greece's budget deficit - four times higher than EU rules allow - has raised fears of possible contagion in the eurozone.

'Zero possibility'

Greek Prime Minister George Papandreou rejected the idea that his country would be forced out of the single currency.

Deficit: 12.7% of output, four times higher than EU limit
Debt: 300bn euros (£275bn; $410bn)
Unemployment: 10%
Inflation: 2.8%

"Certainly there is zero possibility of [Greece] leaving the eurozone," he said after talks with the president of the European Commission, Jose Manuel Barroso.

He added that he expected European finance ministers to approve an aid programme for Greece at discussions planned for next week.

But Mr Papandreou said other options, including taking money from the IMF, would remain open.

German Finance Minister Wolfgang Schaeuble has raised the possibility of creating a European Monetary Fund, modelled on the International Monetary Fund, to enable the EU to tackle similar crises in future.

Mrs Merkel said that "in the future we need an entry in the [EU] treaty that would make it possible, as a last resort, to exclude a country from the eurozone if the conditions are not fulfilled again and again over the long term".

She said measures were needed to ensure the eurozone's long-term stability.

"The euro is facing the strongest challenge it has ever had to cope with... A quick act of solidarity is definitely not the right answer."

The BBC's European affairs correspondent, Oana Lungescu, says Germany is prepared to think the unthinkable to safeguard Europe's single currency.

After talks in Brussels on Tuesday the EU finance ministers agreed how to help Greece in its battle to control its finances.

They revealed few details, but ruled out any loan guarantees.

Their leader, Luxembourg Prime Minister Jean-Claude Juncker, said the plan was to plug gaps that might emerge in Greece's austerity drive.

European debt and deficit figures

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