Germany mulling five-year 'temporary Grexit' plan: European source

German Finance Minister Wolfgang Schaeuble confers with an unidentified official.
German Finance Minister Wolfgang Schaeuble confers with an unidentified official.AFP

BRUSSELS (AFP, REUTERS) - Germany has drawn up plans for a temporary five-year Greek exit from the euro if it fails to improve its bailout proposals, a European source told AFP on Saturday as euro zone finance ministers met in Brussels.

“It’s an internal paper, it was not distributed today (at the euro zone meeting). There were two options: an improvement of the proposals, or temporary ‘Grexit’,” said the source, who had seen the paper.

Hardline Germany is leading a chorus of scepticism as euro zone finance ministers study leftist Greek Prime Minister Alexis Tsipras’ new reform plan for a third rescue package worth more than 80 billion euros (S$120 billion).

The European source was commenting on a report in the Frankfurter Allgemeine Sonntagszeitung newspaper that said the plans appeared in a one-page German finance ministry “position paper” which was handed to other member states.

The new Greek proposals for a third bailout “lack areas of important reforms,” which is why they cannot serve as the basis for a new three-year bailout programme, the ministry reportedly said.

It urged Greece to quickly improve its reform proposals and seek parliamentary support for a fund to sell 50 billion euros in financial instruments to reduce the debt burden.

If not, the paper said, Greece should leave the 19-country euro zone for at least five years and restructure its debt while remaining a member of the 28-nation European Union and receiving humanitarian aid and other support.

Greek government officials said on Saturday that German Finance Minister Wolfgang Schaeuble had not raised the possibility of Greece exiting the euro zone at the Brussels talks.

"The issue of a Grexit has not been raised by anyone, including Schaeuble, at the Eurogroup meeting," a Greek government official told Reuters.​