UPDATE 1-German FDP: Temporary Greek euro exit an option

* Official of govt partner floats possible euro exit

* Says Germany still might withhold aid to Greece

* Says payout depends on Athens meeting aid conditions

* Says euro exit plus devaluation might benefit Greece

* No EU provision for quitting single currency zone

(Adds quotes, background, details)

BERLIN, April 27 (BestGrowthStock) – Greece might have to quit the
euro zone for a time if the country failed to tighten its belt
sufficiently to qualify for emergency aid, a budget expert with
Germany’s junior coalition party said on Tuesday.

A temporary exit from the single currency might benefit
Athens if accompanied by a devaluation, the Free Democrats’
(FDP) Juergen Koppelin told Deutschlandfunk radio.

The EU treaty makes no provision for a euro zone member to
quit the single currency, and top regional policymakers
including ECB president Jean-Claude Trichet and Eurogroup
chairman Jean-Claude Juncker have dismissed the possibility of
Greece doing so.

Greece is poised to become the first euro zone country to be
bailed out because of weak finances, having asked the IMF and
European Union for up to 45 billion euros, but with Athens’
financing costs still rising, investors have begun to wonder if
that is enough to avert a default. [ID:nLDE63Q0AO]

“One may have to say no (to aid) if Greece does not meet
conditions and the country just comes along to get money under
more favourable terms from the euro zone than from banks,”
Koppelin said.

Asked whether a German “no” meant that Greece would no
longer get any money, Koppelin said: “That can’t be ruled out,
right up to the point where Greece would have to leave the euro
zone for a time.

“This is not (monetary union) breaking up. The Greek
currency could be depreciated. That could even help them with
exports.”
Koppelin gave no further details of how a Greek exit from
the euro or a devaluation might be structured.

The pro-business FDP is the junior partner in the
centre-right coalition of Chancellor Angela Merkel, who on
Monday said Greece would have to commit to further savings
measures and show it could return to a sustainable economic path
before Germany approved aid. [ID:nBEB004453]

Merkel also said Germany would be ready to take a decision
on granting aid to Greece in a matter of days, once the IMF and
European officials have completed talks with Athens.

Separately, Hermann Otto Solms, a senior FDP finance expert,
told business daily Handelsblatt on Tuesday he believed “the
government in Athens would not be able to pay off part of its
debts.”

“That will only take effect in a few years…” he added.

Polls show an overwhelming majority of Germans oppose
providing Greece aid, a view that has been reinforced by
powerful sections of the media.

Tuesday’s edition of mass-selling daily Bild ran a headline:
“Why are we paying for the Greeks’ luxury pensions?”

Regional elections that will determine whether Merkel’s
alliance retains control of the country’s upper parliamentary
house take place on May 9.

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(Writing by Dave Graham; editing by John Stonestreet)

UPDATE 1-German FDP: Temporary Greek euro exit an option