May 23, 2012
Greece's former Prime Minister Lucas Papademos on Tuesday warned that Greeks have no choice but to stick with a painful austerity program dictated by its lenders or face an exit from the euro zone that would devastate the economy, boost inflation and generate new social strains.
In his first interview since leaving office last week, Mr. Papademos told The Wall Street Journal that dropping the common currency would have "catastrophic" economic consequences for Greece and profound and far-reaching implications for the rest of the euro zone. This is why some European states and institutions are considering contingency plans for any eventuality, he said.
"Although such a scenario is unlikely to materialize and it is not desirable either for Greece or for other countries, it cannot be excluded that preparations are being made to contain the potential consequences of a Greek euro exit," Mr. Papademos said.
Mr. Papademos, who also is a former European Central Bank vice president, continues to advise the new caretaker government that has run the country since he stepped down last Wednesday following inconclusive national elections May 6 that led to a parliament fragmented by a strong antiausterity protest vote.
The new polls set for June 17, which amount to a Greek referendum on remaining in the euro zone, will be quickly followed by tight deadlines for a new government to deliver more spending cuts to keep qualifying for aid under the country's second financial bailout by international lenders.
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