The possibility of a Greek exit from the eurozone has never been more likely. We shouldn’t be under any illusions – this would be a catastrophe for Greece’s eurozone creditors, the Greek state and the European Union.
Like it or not, we are all in this together. If we continue on our current trajectory, everyone stands to lose from what now resembles a reckless, self-destructive standoff. The Greek economy is on the verge of complete collapse. This would not only be devastating for the people of Greece, it will guarantee that creditors never see their money again. We must remember that Germany has lent approximately €80bn. This is an astonishing figure, close to a quarter of Greece’s budget for 2016. Yet the sad irony is, the longer the current impasse continues, the greater pressure Angela Merkel will face within her own party to reject any solution that is accepted by the Greek government.
But much more is at stake than euros. The world will consider a “Grexit” as a devastating blow for EU monetary cooperation and the European project. A destabilising Grexit will only be welcomed by the likes of China, Russia and those who are most threatened by a strong, united European Union. If Greece is to stay within the eurozone, we need to secure a massive de-escalation of the tensions, rhetoric and threats from both sides – and fast. It is time for Greece’s finance minister Yanis Varoufakis and the political leaders of the eurozone to come to their senses and bring this crisis back from the brink.
Syriza’s game is up. No one believes anything Alexis Tsipras says anymore, and this is why a yes vote on Sunday is crucial. But it’s also clear eurozone leaders have made mistakes with Greece. Their refusal to recognise this also represents a barrier to a long-term solution.
Too often, failed negotiations have focused on increasing taxes and reducing pensions – placing an intolerable burden on the Greek population – while the Greek government and its unsustainable bureaucracy gets off the hook.
To avoid catastrophe, eurozone leaders need to drastically change their strategy. Whatever the result of this referendum, a cooling-off period should be proposed, whereby Greece and its creditors agree a three-month window to develop a long-term reform programme combined with an investment package to turn Greece’s ailing economy around.
We cannot continue to lurch from crisis to crisis, bailout to bailout. Greece’s people must be at the centre of such a settlement. They did not cause this crisis and remain the victims of successive Greek governments, who have protected vested interests and the Greek clientelist system at their expense.
Economic growth can only return to Greece if the Greek political and economic culture undergoes radical, far-reaching reform. Let us use this crisis to deliver real, sustainable change by drawing up a settlement in the next three months in which the Greek state, its government and its administration are paying back the debts, instead of forcing hard-working citizens to pay the bill.
A reform programme must of course go hand in hand with a sustainable solution, to what are unsustainable debts. The EU has solved bigger problems than the crisis in Greece. From the burning embers of two world wars, we have created a single market with free movement of people, goods, services and capital. We have preserved peace within the union for over 50 years. Let us now ask all parties in this crisis to take a step back, swallow their pride and use a cooling off period to bring us back from the brink.