Germany Believes Eurozone Could Cope With Greece Exit: Report

(Reuters) -- The German government believes the eurozone would now be able to cope with a Greece exit if that proved to be necessary, the newsmagazine Der Spiegel reported Saturday, citing unidentified government sources. Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the eurozone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit manageable, the newsmagazine reported.

“The danger of contagion is limited because Portugal and Ireland are considered rehabilitated,” Der Spiegel quoted one government source as saying.

In addition, the European Stability Mechanism, or ESM, the eurozone’s bailout fund, is an “effective” rescue mechanism and is now available, another source said. Moreover, the banking union would protect major banks.

The German government in Berlin could not be reached for comment.

It is still unclear how a eurozone member country could leave the euro and remain in the European Union, but Der Spiegel quoted a “high-ranking currency expert” as saying that “resourceful lawyers” would be able to clarify.

According to the report, the German government considers a Greece exit almost unavoidable should the left-wing Syriza opposition party led by Alexis Tsipras win an election set for Jan. 25.

The Greek election was called after lawmakers failed to elect a president last month. It pits Prime Minister Antonis Samaras’ conservative New Democracy party, which imposed unpopular budget cuts under Greece’s bailout deal, against Tsipras’ Syriza, which wants to cancel austerity measures and a chunk of Greek debt.

Opinion polls show Syriza is holding a lead over New Democracy, although its margin has narrowed to about three percentage points in the run-up to the vote.

The German finance minister has already warned Greece against straying from a path of economic reform, saying any new government would be held to the pledges made by the current Samaras government.

(Reporting by Erik Kirschbaum; Editing by Raissa Kasolowsky)