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Why Greece stays in the eurozone

Stephen Beard Jan 23, 2015
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In his last speech of the Greek election campaign, Alexis Tsipras – youthful leader of the far-left Syriza party – rallied  his supporters with fiery rhetoric. “Rise up, raise your fists, end this national humiliation and stop taking orders from abroad,” roared the potential next prime minister of Greece.

His words were aimed at Greek voters as well as the country’s biggest international creditors: the European Union and the International Monetary Fund. Tsipras is promising that if he wins power in Sunday’s vote, he will end Greece’s era of austerity. He pledges to roll back some public spending cuts imposed on the country by the EU and the IMF as part of a $280 billion bailout deal and says he will try to renegotiate and soften some terms of the loan agreements. This would put him on a collision course with Europe’s most powerful economy, Germany.

Many Greeks – including those who do not support Tsipras and his Syriza party – agree that the rest of Europe should cut Greece some slack.

“Austerity measures have brought us unemployment, poverty and unbearable social stress. The suicide rate has gone up by 40 percent,” says Dr. Dimitris  Papademetriadis, a psychiatrist. “We believe the debt should be shared among our European partners. Being part of a European family means taking care of each other. That’s what family is all about.”

The trouble is that members of this  family – the eurozone – don’t speak the same language. When the Greek prime minister went to Berlin and asked for “debt relief,” German leader Angela Merkel asked for the phrase to be translated. When it was, she said: “It doesn’t sound so good in German.”

In spite of Merkel’s lack of sympathy for Greece, the Greeks still seem to love the euro.  A total of 92 percent are in favor of the eurozone, according to a recent poll. The mystery of this attachment deepens when you consider the impact of the EU/IMF austerity measures on the Greek economy. Output  has shrunk by a quarter. Unemployment has soared to 27 percent. And 10 percent of Athenians depend on charities for their food.

Many economists argue that Greece’s problems have been exacerbated by eurozone membership because the country has been unable to make itself more competitive by devaluing its own currency . 

Two powerful factors bolster Greek support for continued euro membership. First, many Greeks trust European officials and institutions more than their own politicians. And second, many fear the financial turmoil that crashing out of the single currency would entail. Former government minister Adonis Georgiadis says that exiting the eurozone would  be like trying to change airlines midflight.

“You enter the plane and the plane is in the air, you cannot change your mind.  If you open the door and say: I want to go to the other airline you will be destroyed. This is the euro. We entered. We stay,” he says.

If Syriza gets its hands on the controls in Sunday’s election, it could be one bumpy ride.

 

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