Opinion / Op-Ed Contributors

Modern Greek theater and Europe's future

By Daniel Stelter (China Daily) Updated: 2015-01-23 08:05

Modern Greek theater and Europe's future

Greece's Prime Minister Antonis Samaras smiles during the second of three rounds of a presidential vote at the Greek parliament in Athens December 23, 2014. [Agencies]

Politicians in Berlin and Brussels are not too inclined to give in to being blackmailed by Alexis Tsipras and a potential next Greek government led by him. And for good reason.

The politicians in Berlin and Brussels point to the fact that "Grexit" (withdrawal of Greece from the eurozone) would no longer affect financial stability or the overall existence of the eurozone. This is due to the fact that most of Greece's debt today is held by governments and the European Central Bank.

It is, in fact, quite attractive for eurozone politicians to play with the idea of Grexit. If things were to turn in that direction, the resulting chaos in Greece - including bank runs, capital controls and an even deeper slump of the economy - could serve as a powerful example for other countries with similar ideas for opting out.

In particular, the electorates of Spain and Italy would see the price to be paid if they followed the political prescriptions by the likes of left-wing Spanish party Podemos and euro-skeptic Italian party Cinque Stelle.

Interestingly, on the opposite end of the political spectrum, there is similar excitement about a potential Grexit. The turbulences that would follow - if and when Tsipras-led left-wing Syriza indeed overplays its hand - would suit the needs of those who like to see more intervention by the ECB, notably via quantitative easing.

A eurozone without Greece, while more aligned on the economic strategy of austerity, would be commensurately more challenged by financial markets. It would undoubtedly need the strong support of its central bank - this time not only with words, but also with action.

Over the short and medium terms, this might well work. But a look at the fundamentals of the eurozone is sobering. Even six years after the onset of the financial and eurozone crisis, a true recovery is not in sight.

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