January 9, 2012
Greece's continuing inability to bring its debt problems under control is putting the euro under severe pressure ahead of Monday's meeting between Angela Merkel and Nicolas Sarkozy, which is expected to prepare the next EU summit on Jan 30. The Czech central bank chief said Greece may have to quit the euro.
The euro crisis has returned with a vengeance after the Christmas break, with the single currency sliding to below $1.27, its weakest level since September 2010, due to fresh concern about a Greek insolvency, and Chancellor Angela Merkel and French President Nicolas Sarkozy due to meet for another summit in Berlin at midday. A joint news conference at the Chancellery is scheduled for 1:30 p.m. CET.
According to information obtained by SPIEGEL, the International Monetary Fund doesn't believe Athens will be able to go on servicing its debts under its current reform plans. According to an internal IMF document, Greece will have to either cut back its budget even more, or private creditors will have to accept a bigger haircut on their Greek bonds, or the euro member states will have to provide more funding to the struggling country.
Meanwhile, European Union partners are getting increasingly impatient with Greece. The head of the Czech central bank, Miroslav Singer, said Greece may have to leave the euro zone if its European partners don't provide it with substantial additional aid.
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