If Greece is forced out of the euro zone, other countries will inevitably follow and the currency bloc will collapse, Greek Finance Minister Yanis Varoufakis said on Sunday, in comments which drew a rebuke from Italy.
Greece's new leftist government is trying to re-negotiate its debt repayments and has begun to roll back austerity policies agreed with its international creditors.
In an interview with Italian state television network RAI, Varoufakis said Greece's debt
problems must be solved as part of a rejection of austerity policies
for the euro zone as a whole. He called for a massive "new deal"
investment programme funded by the European Investment Bank.
"The euro is fragile, it's like building a
castle of cards, if you take out the Greek card the others will
collapse." Varoufakis said according to an Italian transcript of the
interview released by RAI ahead of broadcast.
The euro zone faces a risk of fragmentation and
"de-construction" unless it faces up to the fact that Greece, and not
only Greece, is unable to pay back its debt under the current terms, Varoufakis said.
"I would warn anyone who is considering
strategically amputating Greece from Europe because this is very
dangerous," he said. "Who will be next after us? Portugal? What will
happen when Italy discovers it is impossible to remain inside the
straitjacket of austerity?"
Varoufakis and his Prime Minister Alexis Tsipras received friendly words but no support for debt
re-negotiation from their Italian counterparts when they visited Rome
last week. But Varoufakis said things were different behind the scenes.
"Italian officials, I can't tell you from which
big institution, approached me to tell me they backed us but they can't
tell the truth because Italy also risks bankruptcy and they are afraid
of the reaction from Germany," he said.
"Let's face it, Italy's debt situation is unsustainable," he added, a comment that drew a sharp response from Italian Economy Minister Pier Carlo Padoan, who said in a tweet that Italy's debt was "solid and sustainable."
Varoufakis's remarks were "out of place", Padoan
said, adding that Italy was working for a European solution to Greece's
problems, which requires "mutual trust".
Italy's public debt is the largest in the euro
zone after Greece's and Italian bond yields surged in 2011 at the height
of the euro zone crisis. They have since fallen steeply and have so far
come under little pressure from the renewed tensions in Greece.
Varoufakis said his government would propose a
"new deal" for Europe like the one enacted in the United States in the
1930s. This would involve the European Investment Bank investing ten
times as much as it has so far, Varoufakis said.
If Europe continues to pursue counterproductive
austerity policies the only people who will benefit will be "those who
hate European democracy," he said, citing the Golden Dawn party in
Greece, the National Front in France and the United Kingdom Independence
Party in Britain.
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