Day: June 30, 2015

Grexit is no exit

Here is Greek Prime Minister Tsipras announcing Sunday his intention to default on the country’s International Monetary Fund obligations:

What? You didn’t hear the announcement? Welcome to the Greek hall of mirrors, where calling a referendum triggers default but is announced to the public as a necessary exercise in democracy, unjustifiably opposed by Eurocrats.

Timing isn’t everything in international affairs, but it does count. Had Tsipras wanted to go to a referendum, he needed to call it earlier than he did and schedule it in advance of the default deadline, which is today.

He is right, however, about fear. And Greeks have a lot to be afraid of. Their banks are closed and may never reopen in a euro-denominated economy. People are withdrawing as much as they can at ATMs. A “no” vote in the referendum will end Greece’s access to euros and force it to print drachmas again, which will plummet in value and impoverish the whole country. A “yes” vote may lead to fall of the government, an interim administration, and the austerity Tsipras was trying to avoid, with serious consequences for pensions and jobs.

I suppose Russia may come to the rescue with a big loan, but that is a fate I’m not sure I would wish on my worst enemy. Putin’s money comes freighted with conditions and cronyism. It also has to be paid back.

However this plays out, Greeks don’t get a way out of the predicament into which they have driven themselves. At best it will be years before a semblance of normality returns. Ordinary people who have worked hard and saved will pay the price. The politicians who created the problem and others who then failed to solve it will try to reap support from the resentment Greeks will justifiably feel. Greece may be leaving the euro (or not), but it has no way to leave its problems behind.

Grexit is no exit.


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