Finland signals euro walkout as Austria asks for exit mechanism

LONDON - Agence France-Presse

A man cleans up a a Drachme Euro sign on a shop window in Athens. ‘We have to face openly the possibility of a euro-break up,’ Finish Foreign Minister Erkki Tuomioja and member of Finland’s coalition government says He also adds that it was up to the Greeks whether or not they want to remain in the euro, still warning that the contagion might be difficulty to contain should the Greeks decide to exit the currency. REUTERS photo

Eurozone member Finland is preparing for a potential break-up of the single currency block, the country’s foreign minister said in an interview with a British newspaper published on Aug. 17. This came one day after Austria’s call for a eurozone exit mechanism.

“We have to face openly the possibility of a euro-break up,” the country’s Foreign Minister Erkki Tuomioja and member of Finland’s coalition government told The Daily Telegraph.

“It is not something that anybody - even the True Finns (euroskeptic party) - are advocating in Finland,
let alone the government. But we have to be prepared,” the Social Democratic Party member said. “Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality.”

‘Bluntest warning to date’

The Daily Telegraph described Tuomioja’s comments as “the bluntest warning to date by a senior eurozone minister.”

The minister said there was “a consensus that a eurozone break-up would cost more in the short-run or medium-run than managing the crisis. “But let me add that the break-up of the euro does not mean the end of the European Union. It could make the EU function better,” Tuomioja added. Finland is the only eurozone country to hold the top triple-A credit rating with a stable outlook at all three major international credit rating agencies.

It has taken a tough line on eurozone bailouts, seeking collateral from Greece and Spain in exchange for its participation.

“It is up to Greeks whether they want to stay in the euro,” Tuomioja said. “We cannot force Greece out. We can cut off lending and that would lead to a default. Then we could speculate whether that would entail getting out of the euro. Nobody knows if it could be contained,” he warned.

Meanwhile, Austria’s foreign minister called on Aug. 17 for the eurozone to create a legal mechanism to facilitate member states that don’t live up to their promises being kicked out of the currency union.
“We need to create ways to be able to eject someone from the eurozone,” Michael Spindelegger, who is also deputy chancellor, told the Kurier daily in an interview due to be published on Friday but already available online.

This mechanism, which he said would need to be created by changing European Union treaties -- a process that he says could easily take five years -- would be for countries “that don’t meet their commitments.” “If we already had this ... then we would already have drawn the consequences,” he said in what the newspaper said was a clear reference to Greece, which has already secured two bailout packages and could need more.

 The centre-right Spindelegger said that creating an exit mechanism would bolster market confidence in the euro, and that it would be supported by euro members including Germany, Luxembourg, Finland and the Netherlands.