Earlier in 2015, news broke that Greece could potentially be leaving the European Union, colloquially called the “Grexit,” or the Greek exit from the Eurozone. This was astonishing for many reasons: it would be the first country to leave the EU since its founding in 1993, and the announcement came soon after Greece’s economic and political collapse.
Eventually, after negotiations between the EU and Greece, announcements followed stating that an agreement had been made, and Greece would remain a part of the Eurozone. Even though the remaining nations in the EU have decided on an appropriate bailout plan of Greece’s bankrupt economy, why have they decided to convince the nation not to leave?
On the side of the ailed country, leaving the Union would mean complete holistic devastation. According to a 2011 Economist poll, Greece’s banking system would completely fail. Associated Press journalist for Business Insider, David McHugh, asserts that Greece’s own currency, the drachma, would plummet drastically, causing intense inflation especially against imported goods to Greece.
Any Greek companies who owe overseas suppliers in terms of euros would have massive bills, launching the nation into more economic chaos. Standard of living would decrease, the overall image of Greece to foreign investors worldwide would depreciate and trade would lessen.
Although Greece’s losses could be very grim, the Eurozone’s losses may be just as compelling. Greece’s departure may cause an epidemic “imitation effect.” In other words, other countries struggling economically may also decide to leave the EU, creating a quickly deteriorating central structure, and eventually rendering the regional organization obsolete. A Greek exit would most likely mean that the country would be unable to repay debts to other Eurozone members, which would spread the losses across Europe.
The struggle has been in finding compromise between Greece and the Union, McHugh reported. He stated, “Athens is sick of the budget cuts it is being asked to make in return for 240 billion euros in loans … saying [these] requirements to restrain spending are strangling the economy. The Eurozone creditor countries, however, are refusing to lend it any more money without tough conditions.”
After extensive talks between the EU and Greece, a plan was formed. Funds would be sent to help Greece restore its economy, on the condition that specific reforms were being made within the government structure. Although Greece has expressed discontent with this system, New York Times op-ed contributor James Angelos insisted that the “marriage” between the EU and Greece is not going to be broken any time soon.
Historically, he noted, Europe has had such “reverence for Ancient Greece — and their desire to see it resurrected” that they felt compelled to support the Greek Revolution, ending in 1832. Seven years later, Greek exports of currants dropped dramatically in price, and once again, Europe intervened and desired financial control of Greece. This control was realized after Europe extended a loan to Greece during its war against the Ottoman Empire, and in return, regulated Greek finances up until World War II. Today, Greeks refer to intensive “economic occupation,” which is headed up mainly by Germany. Therefore, Greece has a long history of depending on Europe while simultaneously begrudging their methods of bookkeeping and finance.
Angelos said, especially due to Greece’s current depressive economic state and the reluctant European Union that continues to ultimately concede funds to support Greece, the country will always be dependent on the Eurozone. He said for complete Greek sovereignty, the country would have to leave the EU.
However, he postulated, “Despite the hardships they have endured, Greeks maintain an almost religious faith in the common currency. Public support for keeping the euro is nearly as high in Greece as it is in Germany, polls show.” This is why the Greek prime minister announced on Tuesday that a list of reforms are being formulated and presented to Germany and the EU to keep receiving European funds.
All-in-all, Angelos reports that Greeks seem to feel a sense of gain from being involved in the Eurozone. The members of the Eurozone feel some sense of gain, or at the least security, from maintaining Greek membership in the organization. Thus, Greece will continually remain united with the European Union, despite all resentments and nationalism. Each force pushing away from the other is not strong enough to outweigh the pull of unity.