Yesterday, Greece voted overwhelmingly to reject the terms put to it via the latest in a string of proposed bailout deals (it was actually more complicated than even that, but for the purposes of this article, go with it). Tsipras told the Greek public that a “No” vote would strengthen his hand in discussions with the country’s various creditors. The question now is whether he is proven right or wrong. For the future of both the Eurozone and the EU, I think Tsipras should have his bluff called.
I’m going to say something obvious here: Greece shouldn’t have joined the Euro and shouldn’t have been admitted into the single currency. Its economy wasn’t up to it, and its admission risked the entire project as has been proven many times since the 2008 crash. It was a mixture of political idealism and the economic hubris that was a hallmark of the very early 21st century that made the other Eurozone countries put to one side any thoughts of it being a potential problem.
In Britain at present, we have an unholy alliance of left and right urging Greece to leave the Euro. The left because they think some sort of socialist paradise will be able to flourish if the drachma returns and the international banking conspiracy leaves the Greeks be. The right thinks if Greece leaves the Euro, the European project will collapse. Should Greece actually leave the Euro, neither of these things will happen.
What would occur would be sad to watch, but is something that has been specifically mandated for by the Greek people when they elected Syriza, and then ratified yesterday with the No vote. Greece will spiral downwards into oblivion. An economy already saddled with no growth will get worse as a depression settles in. Tourism will be looked to as the saving grace, but will falter as the country descends into unrest as youth unemployment skyrockets and the streets of most towns become unsafe. More people staying away as a result will make the economy worse, which will mean more social unrest, which will mean less and less tourists until there is no tourism industry at all, in a terrible negative feedback loop.
However, perhaps I’m completely wrong and Greece will flourish outside of the Eurozone. But I think it’s time to find out one way or another. Our Aegean counsins have become like the alcoholic who keeps saying they’ll get straight this time, they just need a few quid to do it, before hitting the bottle again big time. At some point you just need to wash your hands of the situation and let them either destroy themselves or happen upon a moment of clarity. It’s horrible, but it’s reality. I, like all of the European institutions, want Greece to stay in the Euro and work everything out. But there’s only so many times the voters of Greece can say No before Europe has to listen. It’s actually what the left, right and centre all agree on, albeit for completely different reasons: if the Greeks don’t want to play by our rules, we shouldn’t force them to.
But I expect that Tsipras will be proven right in the end and some new deal will be discussed between Greece and the ECB. The core of the EU is too scared of what a country exiting from the Euro might mean, not just to the markets in an immediate sense but to the entire future of the European project. This is sad, because I think Grexit would actually strengthen the project in the long run. It would send a clear warning signal to anyone thinking of playing loose with the rules – want to end up like Greece? Also, Greece leaving the Euro would strengthen Cameron’s hand in negotiations (Greece leaving the single currency followed by Britain leaving the EU really would endanger the project), helping the UK stay in. Furthermore, Greece leaving the Euro and then falling to bits would act as a clear warning sign to the British public about how dangerous it is out there, by one’s lonesome.