Maybe Europe should abandon euro: Flaherty

Mon May 14, 2012 6:13pm EDT
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By Randall Palmer

OTTAWA (Reuters) - If European countries are not prepared to bail out fellow euro zone members, maybe they should just abandon the whole concept of a common currency, Canadian Finance Minister Jim Flaherty said on Monday in some of his most direct remarks on the issue.

"This is a time of crisis in the euro zone. The whole future of the euro zone is up for grabs, and this is very important for many of the euro zone member countries, given the history of Europe in the last 100 years or so," Flaherty told CTV television.

"So they have to show courage. They have to do the right thing, use some of their taxpayers' money to bail out some of the weaker members of the euro zone - or start moving away from the euro zone and just say this was an experiment that has not worked."

Flaherty, who has been a harsh critic of what he calls European incrementalism, also predicted a disorderly restructuring of the euro zone if Greek voters reject their country's recent bailout.

"If the voters of Greece reject the deal that was signed that involves austerity for the Greek government, which doesn't exist right now, then they will demonstrating a choice," he said in a separate interview with CBC television.

"And that choice to me means that there would have to be some restructuring of the euro zone. We don't exactly know how that can be accomplished. It's certain to be disorderly. And that's not good for markets. It's not good for the banking system around the world."

He said it was not clear to him that the Spanish and Italian governments would "be able to manage what needs to be done given the unwillingness of many voters to go along with that kind of economic reform."

Canada's banks, budget and economy came through the 2007-09 financial crisis in better shape than those of most other major developed countries, and Flaherty has often been blunt in urging swift and comprehensive action by Europe.   Continued...

Canada's Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa May 14, 2012. REUTERS/Chris Wattie