Juncker warns euro crisis could spread to Belgium, Italy

18th June 2011, Comments 0 comments

Eurogroup head Jean-Claude Juncker warned Saturday that the euro crisis hitting Greece and others could affect Italy and Belgium, saying in an interview with a German daily, "we are playing with fire".

Luxembourg Prime Minister Juncker, who heads the group of eurozone finance ministers, said that the problems which have forced Greece, Ireland and Portugal to seek emergency bailouts from the EU and the IMF could also hit, "due to their high levels of debt, Belgium and Italy, even before Spain," which has been touted as the next in line for possible help.

In the German daily Suddeutsche Zeitung, Juncker also warned against obliging private creditors to take part in a second bailout package which is being planned for Greece, warning that ratings agencies would see such a move as a debt default.

That could have catastrophic effects for the euro, he warned; "we are playing with fire."

If Greece was deemed to be a defaulter that would have drastic consequences for the rest of the eurozone, he added.

In a separate interview in Belgian daily La Libre, Juncker said he was confident Greece could eventually turn the corner but would likely take longer to beat its problems than previously believed.

"If we could agree on a new aid programme, submitted to strict conditionality, we could develop an overall solution that would enable Greece, in a timeframe that will probably be longer than forecast, to return within the rails," he said.

Asked whether Greece could quit the eurozone, Juncker dubbed that an "absurd" idea with "unimaginable consequences".

"There would be a contagion not only across the eurozone but also in Romania, Bulgaria, Macedonia. It would cause widespread fire. Even the most outlandish don't raise this hypothesis," he said.

© 2011 AFP

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