April 25, 2015 / 12:42 PM / in 3 years

Germany hints at preparations of a Plan B on Greece

RIGA (Reuters) - German Finance Minister Wolfgang Schaeuble hinted on Saturday that Berlin was preparing for a possible Greek default, drawing a parallel with the secrecy of German reunification plans in 1989.

Minister of Finance of Germany Wolfgang Schaeuble attends Eurogroup tour-de-table during informal meeting of Ministers for Economic and Financial Affairs (ECOFIN) in Riga, Latvia, April 24, 2015. REUTERS/Ints Kalnins

At a briefing with reporters after a tense meeting of euro zone finance ministers on Greece on Friday, Schaeuble was asked if euro zone finance ministers were working on a “Plan B” in case negotiations on funding with cash-strapped Athens fail.

“You shouldn’t ask responsible politicians about alternatives,” Schaeuble answered, adding one only need to use one’s imagination to envisage what could happen.

He indicated that if he were to answer in the affirmative that ministers were working on a Plan B -- what to do when Greece runs out of money and cannot pay back its debt -- he could trigger panic.

To explain his position, he drew a parallel with the secrecy that was necessary during the initial stage of planning for German reunification in 1989.

“If back then a minister in charge -- I was one of them -- would have said beforehand, we have a plan for reunification, then the whole world probably would have said: ‘The Germans have gone completely crazy.'”

At the ministers’ meeting on Friday, Greece was sharply criticized for dragging its feet on preparation of reforms that would unlock funding from its international lenders even though Athens is quickly running out of cash and without new lending will not be able to service its debts.

The finance minister of Slovenia suggested at that meeting that because the talks, that have been going on for three months, were leading nowhere, perhaps euro zone ministers should starting discussing a Plan B -- what happens if Greece defaults.

Additional reporting by Caroline Copley, writing by Jan Strupczewski, editing by Robin Emmott

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