Exiting the Euro zone: The risks for both sides

Τρίτη, 28 Ιουνίου 2011 08:29
In the face of a deepening Greek financial crisis and its toxic implications for the EU and indeed for the global economy, a growing chorus of experts is openly advocating, as the lesser evil, that Greece exit the Eurozone. It is a remedy, however, that carries enormous hidden, and not only or mainly financial risks, both for Greece and for the EU.

According to this narrowly technocratic approach, a default on her debt combined with a cheap drachma would enable Greece to improve her competitiveness and, in due course, return to the capital markets; and perhaps to the Euro. But whatever its theoretical merits, this abstract scenario is belied by realities on the ground.
In the decades succeeding the 1967-74 dictatorship, membership in the European Community/Union and later in the Economic and Monetary Union represented for most Greeks, beyond its economic benefits, the fulfillment of a national aspiration. Throughout this period, the European institutions played in the Greek national psyche the role of a stabilizing ideal – underpinning, among others, the often inefficient and corrupt governance of the country; and deterring, in particular, any thought of departure from constitutional norms.
The proposed exit from the Eurozone, inevitably out-of-control and with catastrophic consequences for Greece’s presence in the EU more generally, besides entailing enormous economic pain for the average Greek, will also deprive him of a steadying ideological influence – with rather predictable effects on the political system. Rightly or wrongly vilified – in truth their collective responsibility for the present mess is undeniable – the political personnel that have in turn been running the country all these years will most probably be carried away by a popular tsunami. And, were this to happen, it would be wishful thinking to rule out the instauration, in the name of national survival and catharsis, of an authoritarian regime with an unpredictable foreign agenda.
Should the rest of Europe be worried about such a turn of events in a relatively small, “peripheral” member country? The answer is not in doubt. The Southern Balkans remain highly volatile and unpredictable; Turkey is searching its way between democratic and autocratic rule, as well as between the Western World and its Eastern adversaries; and the Greater Middle East is in a state of flux, in terms both of the political complexion of local regimes and of their international orientation. Greek developments may tilt the scales in more than one of these areas.
And then, there is the eventual direct impact on the EU itself. Given the recrudescence of local nationalisms, the future of this historic European undertaking hangs in the balance. A major perturbation such as the one contemplated here could very possibly prove fatal to its very survival as a credible force; not to speak of a possible regime contagion effect on its more vulnerable member states.
It is thus imperative that Greece resolve her financial crisis within the European-Western framework. And to this end Athens is naturally called upon to put her house in order and to shoulder her share of the burden. But her more prosperous European partners should also fully do their part; bearing in mind that at stake is much more than bank balance sheets and opinion polls.

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