Moscow - Ria Novosti
Greece\'s departure from the European Union would help boost its competitiveness but could trigger a domino effect that would wreck the euro zone, analysts said on Wednesday. Many economists and policymakers believe a default on Greek debt is imminent. Later on Wednesday Greek Prime Minister George Papandreou will hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy to discuss Athens\' economic woes. Merkel, who leads the only economy in Europe that seems to be unmarred by economic problems, has said the EU would use all available measures to prevent a Greek default and warned that an exit from the bloc would trigger a domino effect. However, her economy minister said earlier this week there should be no taboos in stabilizing the euro, to include an orderly bankruptcy by Greece. And lawmakers from her coalition have said that Greece may have to leave the euro zone. But analysts said Greece, whose treasury bills now yield over 60 percent, would not be able to improve its competitiveness so long as it is in the euro zone. \"It\'s Greeks who need such a step, first of all. Their troubled economy needs cheap currency. The return of the drachma and devaluation would trigger a short-term shock, but would give local companies a competitive advantage,\" Kirill Tremasov, the head of Bank of Moscow\'s analytical department, told RIA Novosti. \"Calculations show that the debt, high costs and excessive employment are unlikely to allow Greece to show any economic growth,\" Troika Dialog economist Yevgeny Gavrilenkov said. Tremasov said that the EU would drag its feet on Greece\'s default as long as it is needed to make sure that losses for the rest of the countries were minimal. \"The Greek economy has collapsed, but if Italian and Spanish bonds come under threat, the consequences could be disastrous,\" Tremasov said. \"This is a catastrophic scenario and I do not think the EU leaders will allow it to happen.\" Tremasov said a Greek default and the reintroduction of the drachma would cost the EU up to $1 trillion, a price tag he said was \"digestible.\" \"The problem can be solved. Maybe the state will have to buy and maintain a stake in banks with distressed Greek securities for a while,\" Gavrilenkov said. \"UK and U.S. experience shows that this measure is relatively harmless for the market,\" he said. \" FBK analyst Igor Nikolayev said there was no way to save Greece. \"It is better not to put things off until the very last moment, but rather to launch a new wave, having decided how to minimize the consequences of the crisis.\" Gavrilenkov said the alternative to Greece\'s default could be sale of the country\'s assets to China, and Chinese Premier Wen Jiabao has said Beijing was ready to invest more in European assets. But Gavrilenkov warned that Greece would not be able to limit itself to selling its debt and would have to sell all and sundry, including beaches. \"But the Greek government is unlikely to do this,\" he said. \"Privatization and spending cuts - Greeks are meeting all this with protests and demonstrations.\"