Greece will be excluded from the Euro-zone after the French elections! This is stated by Russian Newspaper Izvestia

Breaking news! The Russian newspaper Izvestia (www.izvestia.ru) stated tonight that Greece will be expelled from the Euro-zone right after the French elections.

During the 7 years that I have been married to my wife Olga, I’ve learned to respect the journalism and scoops of the Russian newspapers. This might sound strange for Western readers, but many times news was published in Russian newspapers first that could only be read in the Western press hours or days later. Therefore I take this news message in the Izvestia very seriously and show an almost integral version of it.

The news message is translated by Google Translate and refurbished / interpreted by me. I do not take any responsibility for flawed translations / interpretations:

Decision has been made that Greece will be excluded from the Euro-zone after French elections

The European authorities have taken the final decision to expel Greece from the euro zone. This was stated to "Izvestia" by sources close to the Russian government, who participate in the international financial institutions. The matter is not discussed openly, as it remains difficult to solve several technical and legal issues. On top of that, both the sources stated to "Izvestia" that this information may influence the elections in France, one of the key EU countries.

However, the news seems credible: hints of such a radical event have been repeatedly heard from the lips of European politicians. Last week for instance, with the unequivocal statement that Europe is now much more willing to accept a Greek default than two years ago. This was stated by the German Finance Minister Wolfgang Schäuble. 

After Schäubles statement, the leader of the European conservatives in the European Parliament, Martin Callanan said that the summit of March 1-2 in Brussels will be used to discuss the plan for the withdrawal of Greece from the eurozone.

Earlier during a meeting of Finance Ministers and Ministers of Economic Affairs of the G20 member countries in Washington, Finance Minister Luc Frieden of Luxembourg made the following statement: Greece will probably be excluded from the euro zone, when it doesn’t keep its promises once more and infringes again the austerity measures that have been established by the troika of IMF, ECB and EU. And in 2010 German Chancellor Angela Merkel took an initiative that makes it legally possible, to exclude countries from the EU that are unable to cope with their obligations.

It is one thing to talk about an event like this, but it is something different to make such a decision in reality. After all, even when the European decision-makers are mentally prepared for such a radical event, they are still faced with the necessity to clean up the inevitable mountain of financial and political problems.

The legal mechanisms for the exclusion of a country from the eurozone are not really developed yet. Formally this would lead to an exit from the European Union too. This development could have unpredictable consequences in the coming years. 

A complicating factor is that there will be elections for the French presidency very soon (2012), as well as for the German chancellor (2013). In both cases it is questionable if the current rightwing leaders will win the elections. If the social-democrats would win in both countries, this does not necessarily mean that they will stick to the idea of a more unified European Union.

‘Whether Greece will leave the Euro-zone or will stay in it, does not change the challenges very much’, according to the chief-analyst of Gazprombank Anna Bogdyukevich. The Greek economy counts for less than 3% of the Euro-zone’s economy. But it could work as a precedent: if Greece would leave the Euro-zone, this could lead to increased pressure by the financial markets on other PIIGS-countries, like Spain and Portugal. This could eventually threaten the very existence of the Euro-zone.

After leaving the euro zone and subsequently the EU, Greece will face a new reality in the form of trade and currency wars. It is questionable whether it can exist as a self-sufficient state with an independent economy. Therefore, most likely, the country would have to seek a new coalition. Which coalition is of course the million dollar question under the current circumstances.

Alexander Osin, Finam’s chief-economist believes that the formation of a Mediterranean Union would be a good way out. But the region is now so weak that these countries could not give each other anything else than mutually felt problems.

And if a strong Germany decides to disassociate itself from troubled neighbors, then it is not smart to wait any longer, according to Osin. 

However, stepping out of the EU has a lot of complications for all participants. But the parties that propagate to get rid of "ballast" from the Euro-zone, believe that maintaining the current arrangement of the Euro-zone carries more risk than the separation of countries that can not and do not want to help themselves.

This is the news that I read in Izvestia today. As my regular readers know, news like this does not make me happy or relieved. I wish with all my heart that Greece and the other PIIGS countries could stay within the Euro-zone.

But unfortunately, it could very well be that once the wheels are in motion for exclusion of Greece, the process cannot be stopped anymore. And then it makes sense that neutral and distant Russian officials are the bringer of the news. And I print it for the sake of being complete and to the point.

Of course there is also a chance that Russia plays the 'divide and conquer' strategy, trying to alienate Greece from the rest of Europe. This possibility cannot be excluded totally. But why would Russia if The Netherlands and Germany do such a fine job with that already.