Belfast Telegraph

Greek exit 'would not destroy eurozone'

Greece could leave the eurozone without damaging the monetary union, Dutch vice president of the European Commission Neelie Kroes has said in an interview.

She added that while she did not support Greece leaving, the area could do without Athens.

"It is absolutely not a case of man overboard if someone leaves the eurozone. It's always said: if you let one nation go, or ask one to leave, the entire structure will collapse. But that is just not true," she said in an interview with the Volkskrant newspaper.

As pressure mounts for the country to accept the tough austerity terms set out by the EU/IMF/ECB in return for €130bn (£108bn) in bailout loans, the country's leaders met last night.

All coalition leaders must agree to the terms - Greece is also under pressure because it needs to made a €14bn (£11.7bn) repayment of bonds next month.

Meanwhile, Greece's coalition government caved in to demands to cut civil service jobs, announcing 15,000 positions would go this year, amid mounting international pressure to agree on austerity measures needed to secure major new debt agreements. The announcement signals a shift in Greece's policy, as state jobs have been protected during the country's acute financial crisis, which started two years ago.

Public sector reform minister Dimitris Reppas said the job cuts would be carried out under a new law that allows such firings.

Unions held a 24-hour general strike yesterday in response to the new austerity measures, while about 4,000 protesters braved torrential rain to join protest rallies organised in central Athens by left-wing opposition parties.

Debt-ridden Greece has been kept solvent since May 2010 by payments from a €110bn (£91.7bn) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.

As well as the austerity measures, the bailout also depends on separate talks with banks and other private bondholders to write off €100bn (£83bn) in debt.

The private investors have been locked in negotiations over swapping their current debt for a cash payment and new bonds worth 50% less than the original face value, longer repayment terms and a cut in the interest rate to be paid on the bonds.

Greek government officials say they expect private investors to take an overall cut of up to 70% on the value of their bonds.

However, the EU-IMF bailout has to be secured for the deal with private investors to go ahead as about €30bn (£25bn) from the bailout will be used as the cash payment in the bond swap deal.