Why Greece Will Have to Exit the Eurozone


I’m no economist but I have been wondering how Syriza plans to bypass German-imposed austerity as long as it sticks with the euro. Depressed economies recover by devaluing their currency so that they can become more competitive. But Greece is currently tied to the euro, which means it cannot devalue and must continue to compete, despite its deathbed economy, against far larger and stronger economies like Germany’s.

To use a football analogy, the current scenario is as plausible as expecting Greece to score a draw against Germany in the European Cup when it is allowed to field only two players and no goalie. There is no strategy its team can adopt that will be successful: it will be heavily defeated whatever it does.

This is also the situation for other weak European economies, including those of Spain, Portugal and Ireland. They must all hunker down in endless austerity to remain in the euro. But “austerity” is really just code for a rigged currency system designed to benefit the German economy.

On this reading, Greece’s only long-term option is to exit the eurozone and bring back the drachma. That is going to be hugely traumatic for the Greeks. But the danger must be that, if they do exit, their suffering will be severely exacerbated by the actions of other European countries, especially Germany. It will want to make sure that Greece is seen to be worse off for leaving the eurozone. Why? Because if Greece shows that there is a way out of austerity, others will follow, leading to the euro’s demise.

That is coming anyway, it seems to me. It’s just a matter of how long – and how much suffering – it takes for Europeans to understand that the eurozone is finished.


Articles by: Jonathan Cook

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