LDN - Business

Split euro zone in two, says Germany's far-right leader

[January 10, 2017] By Hans-Edzard Busemann

BERLIN (Reuters) - The euro zone should be split into two with a strong cluster around Germany and a weak cluster including France, the co-leader of Germany's far-right Alternative for Germany (AfD) party Joerg Meuthen said.

"The euro is a seed of discord in Europe that has different currency cultures and different competitiveness levels," Meuthen told Reuters, eight months before the federal election.

The AfD was set up in 2013 at the height of the euro zone debt crisis on an anti-euro platform but since ousting its founders in 2015, the party has climbed to about 15 percent in opinion polls by focusing on an anti-immigrant agenda.

Meuthen, widely seen as a moderate in the AfD which represents a wide range of views, said the German economy could suffer in the wake of such a euro zone split but only for a year or two.

"The euro is too strong for southern European countries while for Germany and several others it's too weak," he said in a telephone interview.

"It's conceivable that the weaker countries leave," he said, mentioning Italy, Spain, Portugal and France. He said Greece is so weak that no country wants to share a currency with it.

Germany, Austria, the Netherlands and Finland should remain in the core euro group, he said, even though a stronger currency would hurt exports from those countries.

"That could cause an economic slump (in Germany)," he said. "It's impossible to say how deep. But in my view the economic slump would be over in about a year or two."

Meuthen said the euro exit should not be linked to a fixed exchange rate system. "The currencies need to be able to breathe," he said.

He distanced himself from a proposal by France's far-right leader Marine Le Pen who has said France should leave the euro but shift to a new national currency accompanied by a framework similar to the pre-euro era of the ECU.

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Anti-immigration party Alternative for Germany (AfD) leader Joerg Meuthen addresses a news conference at the Bundespressekonferenz in Berlin, Germany, September 19, 2016. REUTERS/Axel Schmidt

Le Pen's deputy in the National Front, Florian Philippot, said it was normal for different parties to develop their own political vision.

"Ours is not that one (the AfD’s), what we want is to regain our monetary sovereignty via a national currency adapted to our needs, and the concerted dissolution of the euro zone," Philippot told Reuters.

Anti-establishment parties in some other European countries, such as Italy's 5-Star Movement, have also indicated a desire to leave the euro.

Meuthen's comments riled some of his party colleagues. Alice Weidel, an AfD board member, said the euro had a faulty design.

"There is no benefit in dividing the euro zone into north and south because that does not solve the fundamental problem. The only solution is for Germany to leave the euro zone," she said, adding this was part of the AfD's basic programme.

Despite its popular appeal, no other German party is willing to form a coalition with the AfD.

(Additional reporting by Ingrid Melander in Paris; Writing by Erik Kirschbaum and Madeline Chambers; Editing by Janet Lawrence)

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