Published December 10, 2012
TEL AVIV – There is a one in three chance that a future Greek government might decide to exit the euro zone, Standard and Poor's EMEA ratings chief said on Monday.
However, such a move would have extremely negative consequences and would likely deter other countries from following suit, he said.
Moritz Kraemer, head of sovereign ratings at S&P for Europe, the Middle East and Africa (EMEA), said Greece would not leave the euro zone under its current government and even if it did exit at some future date the euro zone was unlikely to break up.
"While we acknowledge that there is a non-trivial possibility of a government of Greece, some future government, almost certainly not the current one ... might decide that after all those efforts, after year after year after year of recession, falling living standards and rising unemployment, you might just try to break with what you've been trying for so long," Kraemer told a business conference in Tel Aviv.
Such a move would be a decision of the elected Greek government and not of policymakers in the core of Europe, some of whom have been speculating about it and even demanding that some countries exit the euro area if they do not play by the rules, he said.
"If such a scenario would happen and we give it a probability of around one in three, we believe that the consequences for Greece on the social, on the political and the economic spheres would be sufficiently negative, it would be very negative, actually it might be bordering on a humanitarian crisis," Kraemer said.
"Clearly leaving the euro area without financing on the balance of payments would create great hardship for the population of the country and we believe that if this were to happen ... the effect would be so negative that other countries would probably think twice about following."
(Reporting by Tova Cohen and Ari Rabinovitch; Editing by Susan Fenton)