A Greek exit from the Eurozone might have had devastating effects for the euro and other PIIGS nations years ago, but now the opposite may be true. If Greece gets its way it could very possibly pave the way for the other financially strained countries to do the same, thus having a less dire effect on the EU and Eurozone members.
In his first appearance before his foreign counterparts, Greek Finance Minister Giannis Varoufakis initially triggered astonishment, which then gave way to mild annoyance and finally culminated in rage and indignation.
Varoufakis, a professor of economics, used his visit to the special summit of the Euro Group — which consists of euro-zone member state finance ministers — last Wednesday in Brussels to give a lecture. He spent half an hour talking about his view of the crisis and the “humanitarian catastrophe” in his country. But a concept for how he intends to tackle Greece’s gigantic debt load was not part of his presentation.
The response to his speech was unsurprising, with representatives of smaller countries, in particular, expressing their rage over the audacity of the newly elected Greek government‘s demand to renegotiate aid from its partner countries. “Your standard of living is higher than ours, and we pay for your aid,” the finance minister of one of the Baltic countries said angrily, while his counterpart from Slovenia described the event as “a total waste of time.” “I can’t take that to my parliament,” the Estonian envoy complained.
European Central Bank (ECB) President Mario Draghi was especially irate. “We can do nothing at all if you talk like that,” he said. If all you do is “constantly talk about insolvency,” he added, “even the healthy Greek banks will eventually be insolvent.”
But by the time Schäuble landed in Berlin, the compromise had already fallen apart. Greek Prime Minister Alexis Tsipras had refused to agree with the terms and had ordered his finance minister back to Athens.
With each new day of the dispute between Tsipras and his financial backers, the likelihood grows that Greece will indeed stumble its way out of the euro. Both sides have dug in their heels.
Schäuble believes that Greece’s departure from the euro zone would be manageable. Even his counterparts from France and Italy, who have often expressed their sympathy for making concessions to Greece, want to remain tough. They fear that radical parties in their own countries could feel emboldened to demand similar concessions if Europe is too accommodating to the Greeks.
The financial world also seems more serene. “Greece remaining part of the euro zone would be the best solution for the country and the monetary union — but only if the Greek government returns to a path of reason,” says David Folkerts-Landau, chief economist at Deutsche Bank.
via Game of Chicken Between Greece and EU Threatens Euro-Zone Integrity – SPIEGEL ONLINE.