Ex-foreign minister feeds German worries about euro

BERLIN: Former German foreign minister Joschka Fischer said on Sunday the euro could collapse due to the debt crisis, adding a weighty voice to growing concern in Europe's biggest economy about the future of the euro zone.

"The situation in Europe is really as serious as it has ever been. Until now, I did not think the euro would fail, but if things continue like this then it will collapse," Fischer, who commands respect among many Germans, told Bild am Sonntag.

"You have to tell Germans what political, economic and financial consequences a failure of the euro would have. You could no longer control such a process," Fischer told the paper, adding Germany had gained a great deal from the euro.

Fischer, foreign minister for the Greens in their coalition with the Social Democrats from 1998-2005, also expressed his support for common debt issuance within the euro zone, an idea Chancellor Angela Merkel has rejected.

His comments about the euro chime with public sentiment.

Germans are increasingly nervous about the debt crisis and also growing impatient with Athens. A poll this week showed 76 percent of Germans opposed granting any further aid to heavily indebted Greece.

There are even signs German officials are contemplating a possible default by Greece -- previously a taboo.

Der Spiegel reported that Germany's finance ministry was preparing for the possibility of a Greek bankruptcy and was working through scenarios including the reintroduction of the drachma.

Germany is keen to get the European Financial Stability Facility (EFSF) running soon with planned new powers, such as precautionary credit lines and help for banks hit by writedowns on Greek bond holdings in the event of a default, the magazine reported, citing no sources.

The stakes are high for Merkel who faces a battle to convince dissenters in her centre-right coalition to vote for legislation on the EFSF in the Bundestag lower house of parliament on September 29.

She will get the law through because of support from opposition parties. But if she fails to secure a majority from the ranks of her own coalition parties her authority will be seriously dented and she may even have to call elections.

Possibly in an effort to ramp up pressure on Greece, senior politicians in Merkel's coalition have raised the question of Greece leaving the euro zone.

The chancellor has ruled that out, saying it would trigger a domino effect.

Der Spiegel magazine quoted senior conservative politician Volker Bouffier as saying: "If the Greek government's efforts to make cuts and reform are not successful, we must also ask the question whether we do not need new rules which make possible the exit of a state from the currency union."

Copyright Reuters, 2011