BERLIN – Contagion from the Greek debt crisis could spread to at least five other European countries — including Belgium or even Italy — if it is not cautiously managed, the head of the eurozone group warned today.
Jean-Claude Juncker told the German daily Sueddeutsche Zeitung that demanding that private creditors contribute to the next Greek bailout package could be considered a “default” by ratings agencies — and that would have extreme consequences for Europe as a whole.
Juncker, the prime minister of Luxembourg who also chairs the 17 eurozone finance ministers, was quoted as saying that a Greek bankruptcy “could prove contagious for Portugal and Ireland, and then also for Belgium and Italy because of their high debt burden, even before Spain.”“We are playing with the fire,” he told the paper.
His comments came a day after Moody’s warned it may reduce Italy’s Aa2 credit rating over concerns about the country’s ability to increase growth and reduce its public debt, one of the highest in Europe. The warning followed a similar move by Standard and Poor’s, which cut its ratings outlook for Italy’s debt from stable to negative.
On Friday, German Chancellor Angela Merkel softened her government’s insistence on having private creditors share part of the Greek burden following a meeting with French President Nicolas Sarkozy in Berlin, with both leaders agreeing that the participation should be “voluntary.”
