May 13, 2012
The idea of a Greek exit from the eurozone is no longer fanciful. After 70 per cent of voters in elections on May 6 supported parties that rejected the terms under which €174bn of international bailout loans were offered to Athens, many investors now see a fissure in the 17-member eurozone as increasingly likely. European governments are furiously thinking through the various scenarios, while still urging Athens to stick to its agreements on austerity and reform. If those hopes are dashed and Greece goes, what happens next?
1. Is Greece serious about quitting the eurozone?
Who knows? Opinion polls showing 80 per cent of Greeks in favour of staying in the euro combine with the election result to offer a scene of confusion.
Greece’s European partners say Athens cannot have it both ways. But the siren call from the radical left coalition Syriza, that Greece is safe in the eurozone with its creditors poised to ease the harsh bailout, is music to the ears of hard-pressed citizens.
Popular anger is running high at the prospect of three more years of austerity while Athens implements the rest of the reform programme agreed with the EU and International Monetary Fund. “We desperately need a break ... If my pension is cut again, I might as well commit suicide,” says Angelos Syrigos, 85, whose modest income has been slashed by 30 per cent in the two years since the bailout began.
Alexis Tsipras, Syriza’s charismatic 37-year-old leader, who emerged as a kingmaker following his party’s surge to second place at last Sunday’s inconclusive general election, is gaining in support. Opinion polls published at the weekend showed Syriza would win first place in a second election, with 20-25 per cent of the vote.
Mr Tsipras insists Brussels and Berlin will not force Greece out of the euro because of the contagion effect this would have on Portugal, Ireland and Spain. He has demanded a reversal of salary and pension cuts imposed by the bailout, as well as the hiring of 100,000 new public sector workers to reduce the impact of a
21 per cent unemployment rate.
Middle-aged Greeks are afraid of a eurozone exit, fearing a further collapse in property values, the crumbling of the banking system and high unemployment.
“The gravity of the situation isn’t appreciated. Some people believe Syriza will change its tune, others that the Europeans make empty threats,” says Takis Michas, a political commentator. “The only thing that will focus minds is when the money to pay pensions and salaries just doesn’t arrive.”
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