Grexit Part I: Introduction Dave Granlund www.davegranlund.com
Can the EU help fix the Greek economy?

 The discontent against the austerity measures imposed during the euro crisis is still visible today, being reflected in the rise of secessionist and nationalist movements across Europe. Greece has so far seen it all. Riots, hard austerity measures and difficult negotiation meetings with the troika are just some of the events and actions that have badly shaken Greece over the last few years.

At the end of November 2014, Bloomberg View and The Huffington Post raised attention to the difficult-to-meet demands that came from the European Commission, the European Central Bank and the International Monetary Fund. They ask for further austerity measures, by reducing public spending as Greece has the highest debt burden of all the countries in the euro area. Bloomberg View’s opinion is that such actions will “split the euro area apart” and that “they need to stop insisting on the impossible”. Furthermore in an interview for Arianna Huffington, the President of the Greek Republic, Karolos Papoulias, later stated that the troika negotiates “as if they are speaking to rocks and not people”. Arianna Huffington has also outlined that it is important “to say ‘no’ to troika” when so many people are experiencing difficult financial problems.

Bloomberg has also argued that due to the austerity measures, extremist political parties, such as Syriza, are gaining popularity. Syriza’s policy has at its core the promise to ‘reverse the reforms’ imposed so far by the EU and IMF. But would such a course of action be good for Greece? The answer seems to be ‘no’ as European shares and certain Eurozone bonds have decreased in their value after the Greek parliament rejected the Prime Minister Samara's presidential candidate, according to Deutsche Welle. Syriza is experiencing a rise in polls with 30,4 % support, compared to 27,3% of Samara’s Conservative Party, New Democracy, and this is significant as elections are coming up on 25 January. 

In the eventuality of Greece exiting the Eurozone, Germany, through the voice of its Chancellor, Angela Merkel, and its finance minister, Wolfgang Schäuble, recently gave its approval for the matter as it seems to be of the opinion that the Eurozone is strong enough after crisis and can survive without Greece, calling, in the end, the situation ‘manageable’.

But the situation seems to be far from ‘manageable’ as the opinions on the situation are split. Some call it a bluff and others are of the opinion that the event should not be treated lightly

More on the subject will be treated in this three-part article. The second part will cover the subject from the European Union’s perspective and the third from Greece’s point of view.  

Sources:

Germany ‘prepared to let Greece leave Eurozone’ if voters reject austerity, Deutsche Welle 

Germany believes Eurozone can survive Greece exit, Reuters

Calling the Grexit bluff,  Marco Giuli, Social Europe

Give Greece a vhance, Bloomberg View 

Greece’s President tells Arianna: ‘Troika acts as if they’re speaking to rocks, not people’, Giannis Pitaras, the Huffington Post 

Grexit: three reasons it should not be treated lightly Nils Pratley, the Guardian