Germany mulling five-year 'temporary Grexit' plan

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 today as eurozone finance ministers met in Brussels. "It's an internal paper, it was not distributed today (at the eurozone 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 eurozone finance ministers study leftist Greek Prime Minister Alexis Tsipras's new reform plan for a third rescue package worth more than USD 89 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 eurozone 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.