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http://www.thepeninsulaqatar.com/business-news/134608-germany-could- abandon-euro-merkel.html Germany could abandon euro: Merkel Sunday, 05 December 2010 -

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ONDON: The German chancellor, Angela Merkel, has warned for the first

Ltime that her country could abandon the euro if she fails in her

, the Guardian has learned. At an EU summit in Brussels at the end o

contested campaign to establish a new regime for the single currenc
yf October that was dominated by the euro crisis and wrangling over

Greek prime minister, George Papandreou, according to participants at

whether to bail out Ireland,Merkel became embroiled in a row with the the event's Thursday dinner.

permanent system of bailout funding and investor losses could be

Merkel's central aim, which she achieved, was to win agreement on re-opening the Lisbon treaty so a
established to deal with debt crises that have laid Greece and Ireland low and are threatening Portugal and

dinner on 28 October attended by 27 EU heads of government or state, t

Spain. The Germans also called for bailed-out countries to lose voting rights in EU councils. At the Brussels
he presidents of the European commission and council, and the head of the European Central Bank, witnesses said Papandreou accused Merkel of tabling proposals that were

t was the first time in the 10 months since the euro was plunged i

'undemocratic', 'If this is the sort of club the euro is becoming, perhaps Germany should leave' Merkel replied, according to non-German government figures at the dinner.
Into a fight for its survival that Germany, the EU's economic powerhouse and the lynchpin of the euro's viability, had suggested that quitting the currency is an option, however unlikely.

o secure and defend it and the government is not at all thinking of

Merkel's spokesman Steffen Seibert would not comment on her remarks today. But the threat, he said, was 'not plausible. The chancellor sees the euro as the central European project, wants
t leaving it' he said. 'Germany is unconditionally and resolutely committed to the euro' Despite overwhelming opposition to her calls for depriving eurozone countries of their EU votes if they need to be bailed out, Merkel stuck

tes can have their voting rights suspended if deemed guilty of g

to her guns on the issue at the summit, while conceding that the proposal would not feature at another summit in Brussels in two weeks' time. She argued that under the Lisbon treaty, which came into force a year ago, EU member st
aross human rights violations. 'if this is possible for human rights infringements, the same degree of seriousness needs to be awarded to the euro' Merkel told the summit, according to the witnesses. She shelved the demand for suspension of voting, however,

s in Brussels which decided on an €85bn (£72bn) bailout for Ireland.

but won the argument on more limited change of the treaty to enable a 'permanent crisis mechanism' to be established for the currency from mid-2013. This was rechristened the European stability Mechanism at last Sunday's emergency meeting of EU finance ministe
rInsisting on the loss of votes would have outraged most other EU governments. The Lisbon treaty would have needed renegotiation, opening a pandora's box of possible referendums in Ireland, the Czech Republic, and Britain, AND PLACING IMMENSE STRAIN ON THE EU'S SURVIVAL.

' for a weekend session. But it is virtually taken for granted that

EU finance ministers are to meet again early next week ahead of the summit on December 16-17. The mood in Brussels is febrile and there have been rumours of another extraordinary summit or session of finance ministers this weekend. Officials said today there were 'no plan
s Portugal will need to be bailed out and the €750bn rescue fund agreed in May mayy need to be increased as insurance against a Spanish emergency. Two EU ambassadors told the Guardian Portugal would need to be rescued very soon, despite repeated public statements to the contrary.

e do we need?' the diplomat added. 'Portugal will need to be saved. T

The summit in two weeks' time, said a senior European diplomat, would be preoccupied with the treaty change needed for a permanent bailout mechanism to be established when the €750bnn fund expires in mid-2013. 'The real question is, is there enough in the fund? If not, how much mo
rhe big issue is Spain' said another senior diplomat. Since the euro crisis erupted this year with Greece heading for sovereign debt default until it was bailed out in May, Merkel has repeatedly insisted that the primacy of politics over the financial markets has to be restored. That has yet to happen as Europe's leaders

e system created which would entail 'haircuts' or losses for creditor

flail around in a mood of worsening 'panic and despair', according to diplomats and officials in Brussels. The current phase in the crisis started when Merkel and the French president Nicolas Sarkozy met in mid-October and delivered an ultimatum to the other 25 EU leaders: the treaty would be reopened and a permanent resc
us and investors if eurozone countries need to be bailed out. Although this is to take place only from 2013, the markets took fright at the scale of potential bond losses, pushed Ireland's borrowing costs ruinously high, and forced last week's bailout of the Irish. Diplomats, analysts, and officials generally agree that Merkel is right

to focus on 'moral hazard', insisting that the markets and not only governments and taxpayers have to share the losses if a eurozone country implodes. But her timing could not have been worse, they add.

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