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Grexit Unlikely

Yesterday’s Greece-European Commission meeting ended like all the others: in deadlock. The next round of talks is the Eurozone summit which is planned for Monday. A lot of hope is pinned on that meeting since time for solving problems has run out. The Greek Finance minister has stated that the project to solve the country’s debt problems, which if approved will put an end to the crisis in the country, is ready.

On 30th June, Greece should pay up the IMF, to which it owes 1.5 billion euros, in order to release a new tranche of loans, the next of which totals 7.2 billion euros. At the same time, the population is emptying their bank accounts in panic and holding protests.

The Grexit, however, remains unlikely. Greece leaving the euro would be a massive blow for the currency in the short term and would lead to chaos on the European financial market. It is cheaper for Europe to prop up Greece than it would be to let chaos ensue.

It’s not worth underestimating the subjective factors. For the modern euro-bureaucrat with whom the decision rests, a united Europe with a single currency is one of the most important, if not the most important achievements. Furthermore, Greece has received financial support and debt write offs of more than a third of a trillion euros in recent times. For the Europeans to let it be will be extremely difficult even if only psychologically. Thus, the sides are most likely to find some way to come to an agreement and keep Greece in the euro.

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