Considering the magnitude of the current fiscal crisis in Greece, Europe needs [RTE]: “a treaty framework in which it would even be possible as a last resort to exclude a country from the euro if it again and again breaks the conditions over the long-term. Otherwise cooperation is impossible,” she told Germany’s lower house of parliament Wednesday.
Although Merkel did not explicitly name Greece, her insinuation to the members of the parliament was clear. “We did not think that we could come to a situation in the euro area in which a country was threatened by bankruptcy,” she added.
Ms. Merkel’s remarks, whose country has the most fiscal flexibility among European Union members in terms of helping Greece, were a clear reinforcement of German reluctance to come up with a rescue package for Athens.
Meanwhile, growing fears that Greece’s money-raising efforts might fail have increased concerns about financial stability and political divisions in other weak euro-zone members, while putting more pressure on the euro.