ANN CAHILL: Greece takes centre stage in Brussels

Eurozone finance officials have been told to study what a possible Greek exit from the eurozone would mean for their economies, according to diplomats.

EU leaders meeting in Brussels last night discussed the growing crisis in Greece as the country waited for its second general election in weeks and the euro fell to a 22-month low.

Taoiseach Enda Kenny, on his way to the meeting, said of Greece: “Quite clearly this is a matter of quite considerable concern in the EU and the eurozone.”

They were due to issue a short statement after the meeting saying that Greece had the full support of the eurozone and it was up to the Greek people to decide at the ballot box.

The Greek finance ministry issued a statement denying that eurozone officials had agreed that each country should prepare contingency plans in case Greece left the euro. However, several officials said they had agreed to “reflect” on what an exit would mean as a precaution.

The meeting was to concentrate on a growth and jobs pact to go with the stability treaty. French president François Hollande brought the battle to Germany’s chancellor, Angela Merkel, insisting that eurobonds must be considered. Ms Merkel has made it clear she will not consider this system for sharing debt, which would see German borrowing costs rise and those of other countries fall.

They barely acknowledged one another as the leaders mingled and discussed issues of common interest before sitting down.

Mr Hollande, who is a member of the Socialists, set the scene by meeting his Spanish counterpart, Mariano Rajoy, in Paris beforehand and supporting him in pushing for funds to be made available to bail out the crisis-hit Spanish banks — something Germany and the Netherlands are steadfastly against.

Negotiations are under way behind the scenes about setting up a banking union with a single bank resolution fund and a single banking regulator for all eurozone banks. Germany is in favour of such an idea which would mean EU funds would no longer have to be lent to the Government, adding to their debt. However, it could be some time before this is in place.

The Taoiseach said Ireland “would be exceptionally interested in” using the ESM bailout funds to capitalise banks directly, which would mean changing ESM rules.

He was due to speak to the meeting about growth and employment and lay the foundation for getting their political support at the June summit for a whole raft of Irish plans to leverage money and invest it in job creation projects.


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