German ZEW chief sees one in five chance of Greece leaving euro

The probability of Greece leaving the eurozone has jumped from virtually nothing to at least 20 percent since Syriza's Jan. 25 election victory, the head of the German ZEW think tank told Reuters.

In an interview for a Reuters summit on the eurozone, ZEW chief Clemens Fuest said the government of Prime Minister Alexis Tsipras risked talking Greece out of the bloc with unrealistic plans, a scenario that no one wanted.

"There is concern in northern Europe about Greece being a bottomless pit, and I think Greece has to come up with a story about why this will not end up in permanent transfers flowing to Greece," said Fuest, who is also a member of the academic advisory board of the German Finance Ministry.

On the probability before and after the election of Greece leaving the eurozone, he added: "I think it has jumped from close to zero to at least something like 20 percent."

Promising to end five years of austerity, the new government has floated plans to swap sovereign debt for bonds with interest payments linked to economic growth - an idea that Fuest said could end up with Athens paying more.

"The downturn is hopefully over, so the Greek economy is stabilizing now at a low level," he said. "What would happen now if we converted existing bonds into GDP-indexed bonds? Greece might end up paying more."

Greek Finance Minister Yanis Varoufakis meets German Finance Minister Wolfgang Schaeuble on Thursday after holding talks with European Central Bank President Mario Draghi on Wednesday.

Fuest believed Berlin could be open to some flexibility on Greece's debt once its economy was pushing ahead with reforms and growing again.

"I would say let's address the growth issue first, let's get the reforms through. They are...