IT HAS emerged that German Chancellor Angela Merkel warned at a heated EU meeting five weeks ago that her country could abandon the euro if she fails in her campaign to establish a new regime for the single currency.

At an EU summit in Brussels at the end of October that was dominated by the euro crisis and wrangling over whether to bail out Ireland, Dr Merkel became embroiled in a row with Greek prime minister George Papandreou, according to participants.

Dr Merkel’s central aim, which she achieved, was to win agreement on reopening the Lisbon treaty so a permanent system of bailout funding and investor losses could be established to deal with debt crises that have laid Greece and Ireland low and are threatening Portugal and Spain. The Germans also called for bailed-out countries to lose voting rights in EU councils.

At the Brussels dinner on October 28th attended by 27 EU heads of government or state, the presidents of the European Commission and Council, and the head of the European Central Bank, witnesses said Mr Papandreou accused Dr Merkel of tabling proposals that were “undemocratic”.

“If this is the sort of club the euro is becoming, perhaps Germany should leave,” Dr Merkel replied, according to non-German government figures at the dinner. It was the first time in the 10 months since the euro was plunged into a fight for its survival that Germany, the EU’s economic powerhouse and the lynchpin of the euro’s viability, had suggested that quitting the currency was an option, however unlikely.

Dr Merkel’s spokesman Steffen Seibert would not comment on her remarks yesterday. But the threat, he said, was “not plausible. The chancellor sees the euro as the central European project, wants to secure and defend it and the government is not at all thinking of leaving it,” he said. “Germany is unconditionally and resolutely committed to the euro.”

Despite overwhelming opposition to her calls for depriving euro zone countries of their EU votes if they need to be bailed out, Dr Merkel stuck to her guns on the issue at the summit. She argued that under the Lisbon treaty, which came into force a year ago, EU states can have their voting rights suspended if deemed guilty of gross human rights violations.

"If this is possible for human rights infringements, the same degree of seriousness needs to be awarded to the euro," Dr Merkel told the summit, according to the witnesses. – ( Guardianservice)