It’s time for Greece to exit
It’s time for Greece to exit
Grexit has always been on the cards since the crisis began all those years ago. Many never took the possibility seriously as to do so would suggest that the Euro wasn’t going to last or it meant that monetary union was wrong. However Grexit is now looking ever more likely with the latest Greek Government proposals being dismissed by the IMF.
Many within the EU institutions, EU supporters and the public in Greece (some of them anyway) still want to stay in the Euro and carry out the ever more painful reforms being pressed on Greece. But is this the best option? For years the Greek economy has been struggling, unemployment sits at 25.6% with youth unemployment even higher at 49.8%. This is a situation that many Greeks can’t endure for much longer. Austerity and bailouts have not worked so far and nothing indicates that they are going to anytime soon. Greeks have had a choice over the years of continuing to accept the bailouts or default and be kicked out of the Euro. Now it looks like their choice is about to be made for them.
International lenders and EU Finance Ministers are hardening in their approach to Greece, they want to keep them in the Euro but it no longer seems at any cost. A deal is looking ever more unlikely as the reforms necessary are a stumbling block that no one seems able to get over. A recent meeting of Eurozone Finance Ministers ended after only an hour as there was no deal ready to discuss. Discussions are getting harder as well with both sides taking up stances that don’t engender compromise. The Greeks don’t want to pay their debts and Europe is coming to collect them. It seems impossible how a solution can be found with this as the starting position.
The Greek crisis is also a reflection and part of the greater problem being faced by the EU over the future of the single currency itself. The possibility of Greece leaving has for a long time brought into question whether the currency can continue and if it does what will that look like. Monetary union under a single currency was never designed to work as only half of the necessary framework ever existed. You can’t have monetary union without fiscal union and that is exactly the setup of the Euro. It is no wonder then that there is a crisis in the Eurozone when the currency and was fatally flawed in the beginning. Greece has not helped itself though. The country has often carried out some rather creative accounting in order to join and then stay in the Euro. There are other problems too with a massively bloated public sector, an incompetent tax regime that sees between 10-20 billion euros uncollected each year in tax. Greece can make all the cuts it likes but if it fails to tackle tax avoidance then its cuts will have been for nothing.
In the end the problems Greece faces will be resolved miles away from Athens but it is Athens where the effects will fall hardest. Grexit looks like the best option with bailouts only serving as ever more expensive sticking plasters. Grexit is a permanent solution, it will entail harsh conditions on the Greeks in the beginning but that’s no different to what they face now except for with the Grexit there is the promise of good times to come. A return to the Drachma will make Greek debt more expensive but there will be time where Euros are still accepted. A return to the Drachma will also make Greece a very cheap place for foreigners and so they should be able to get themselves back to growth through a mix of exports and increased tourism.
Will Grexit happen? The possibility is looking more likely and more appealing with the costs of continued bailouts becoming ever higher. It may entail short term pain but how is that any different to now? How this matter will be resolved is whether it is more important to save the Euro or Greece? So far it has only been about the Euro and that is unlikely to change, meaning Greeks are likely to continue to suffer for the sake of a political goal that should never have been started in the first place.
By Alex Walker