Germany should consider leaving eurozone - business leader

28 May 2010 20:42  [Source: ICIS news]

TORONTO (ICIS news)--A prominent German business leader said on Friday that the country should consider leaving the eurozone after the €750bn ($926bn) bailout of financially troubled Greece and other countries.

Germany had adopted the euro on the understanding that each country was responsible for its own debts and balance of payments, said Hans-Olaf Henkel, former head of the country's top industry trade group BDI, in a webcast television interview.

“With the bailout, Germans feel that [the eurozone] has become a ‘transfer union’,” with north European countries paying for the debts of weaker southern eurozone members, he said.

Henkel said he did not believe that Germany had no alternative to the bailout package, as maintained by the country’s government.

For one, Greece could have been forced to leave the euro, he said.

Alternatively, Germany could leave the currency union, “an alternative now being discussed in close circles”, he said.

“I believe these are alternatives that need to be discussed further,” he said.

In the current situation, the euro currency was “just dead”, Henkel said.

As it stood, the eurozone was split into a “stabilised section” with Germany, the Netherlands, Denmark, Austria and others, and a southern section that did not mind inflation and a devalued currency.

Eventually, the eurozone could end up having two currencies, one for each section, he said.

However, many Germans see the euro as a big benefit for Germany and its export-reliant industries.

BASF chief executive Jurgen Hambrecht said in a recent interview that a stable euro “was hugely important” for his company and all of Germany's industry.

The currency was a “blessing” as it tied countries together and had made Europe BASF’s home market, he said.

Last week, Germany’s chemical industry trade group VCI said in an update that the situation in southern Europe would constrain chemical demand.

Greece and other south European countries were facing the prospect of state bankruptcies, the group said. It remained to be seen if the EU’s rescue package could stabilise those countries’ economies, it said.

($1 = €0.81)

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By: Stefan Baumgarten
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