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Gird for 'reasonably possible' Greek exit from euro zone, Flaherty tells G20

Columns of the Parthenon are seen behind an European Union flag in Athens on Nov. 4, 2011.


Finance Minister Jim Flaherty is urging his G20 colleagues to start working on Plan B: a European Union that does not include Greece.

Speaking during a morning break in meetings at the G20 in Cannes, Mr. Flaherty also hinted that non-European nations like Canada may be asked to contribute to any European rescue plan via the International Monetary Fund.

"We've talked internationally about what we could do to help. The key is what are the European countries going to put into the facility from their own resources, and then what [is]the possible role for the IMF," he told Bloomberg News, in reference to the European Financial Stability Facility, a fund set up by the European Union to combat the region's debt crisis.

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"But there's limited appetite for that because, you know, Europe is composed of relatively wealthy countries and it's expected the Europeans will step up to the plate," said Mr. Flaherty.

Prime Minister Stephen Harper later appeared to rule out the notion of any Canadian money flowing to a European fund.

"It's the government of Canada's conviction that Europe remains fully capable of dealing with its own European problems," he said during a question and answer session with reporters. "There is a lot of wealth here. There is a lot of firepower here. And the Europeans have every ability to move forward and to deal with their own problems."

The minister also indicated that he's urging his G20 colleagues to spend more time planning for the "reasonably possible" scenario that Greece leaves the eurozone.

"We've made that the point, as others have made, that there needs to be a Plan B. Everyone's been operating on Plan A – that is Greece will stay in. They've decided that maybe they will, maybe they won't. So we better have a Plan B, that is, to protect other nations in Europe. That's not on the table yet. [We're]working on it," he said.

Mr. Flaherty was asked to describe the likelihood that Greece would leave the eurozone.

"I think it's reasonably possible," he said. "They have the ultimatum now from their partners in the eurozone that either you're in or you're out, you take the plan or you don't. There's no more negotiating. So that will be a final decision of the Greek government of the day, whoever that happens to be."

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Greek Prime Minister George Papandreou – who has scrapped his surprise plan to put the EU rescue proposal to a referendum – faces a confidence vote in Parliament Friday that risks triggering a Greek election or his ouster as leader. His governing Socialist party holds 152 out of 300 seats in Parliament but several of his own MPs have been highly critical of Mr. Papandreou this week.

The vote is expected to take place around 5 p.m. ET, after financial markets in both Europe and the United States have closed.

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Parliamentary reporter

A member of the Parliamentary Press Gallery since 1999, Bill Curry worked for The Hill Times and the National Post prior to joining The Globe in Feb. 2005. Originally from North Bay, Ont., Bill reports on a wide range of topics on Parliament Hill, with a focus on finance. More

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