Ligia Corduneanu explores the reasons behind the downfall of the Greek economy in the third and final edition of the question of Grexit which seems to be on everyone's mind ever since the far left political party Syriza, was elected in Greece last Sunday. How will Europe react and what implications will the new power in Greece have on managing the crisis still remains to be seen.
Syriza has won the elections. Now what?
Germany called a Grexit from the Eurozone as being manageable at the beginning of January, and from an economic point of view, maybe it will be. Some reasons are given: the setting of a bail-out mechanism, the better shape of the European banks and enhanced ability of foreign investors to better distinguish among the members of the Eurozone. Furthermore, it is believed that European officials will not let their guard down as they fear that such an approach will support the rise of anti-austerity movements in other countries that have struggled during the euro crisis .However, a deal is strongly believed to be taking place.
But what if Greece will want to leave the Eurozone at some point? Mike Dolan, in an article for Reuters, has analysed the conditions in which such an exit is possible, from the treaties’ point of view. He states that ‘there is no legal provision or framework in EU treaties for a country to leave the euro’ and that an alternative route would be to leave the Union altogether. With 75% of Greeks not wanting to leave the Eurozone or the EU, it seems to not be the case of such a scenario just yet, but opinions can change.
Who is responsible for the crisis?
Joseph Stiglitz, professor at the University of Columbia, is of the opinion that ‘EU’s malaise is self-inflicted’ and that is owed ‘to an unprecedented succession of bad economic decisions, beginning with the creation of the euro’. This is an opinion that, in light of recent events, has been embraced by more and more Europeans.
Who is responsible for the management of this situation?
Taking into account the deep implications that the situation of Greece has on the European Union as a whole, I am inclined to say that the EU is the one responsible for its development. I do not think that the EU can afford to mismanage yet another (European) crisis, as it is related to a state that has been a member of the EU for more than three decades and is the bedrock of Western civilisation. The sensibility of the situation and the multiple layers on which it unwinds (political, economic, cultural, social) are signs that this will not be an easy task for the EU. Good management will have to involve communication, diplomacy and effective actions. Obstacles have already appeared as Greece has objected to the Statement of the Heads of State or Government published on the 27th of January with regard to the killings that took place in Ukraine in the city of Mariupol on the 24th of January. Greece has accused the EU of circulating the statement ‘without the proper procedures being followed in order to obtain the consent of Member States and specifically Greece’s consent’.
(1) The era of Syriza, The Economist.
(2) UK, Greek election anxiety may see Brexit feed Grexit, Mike Dolan. Reuters.
(3) The issue is not Greece: it’s Europe, Joseph Stiglitz, Social Europe.
(4) First EU-Greece clash over Ukraine, New Europe.
Edited by: Dina Rokic