Grexit poses journey into unknown for Europe
By Claire Rosemberg ,AFPBRUSSELS -- As investors and European leaders big and small calculate the potential cost of Greece departing the euro, the European Union too stands perilously close to meltdown after six decades in the making.
May 21, 2012, 12:06 am TWN
Weeks ago still an elephant in the room, Athens' looming exit from the club of 17 nations sharing the single currency has become the hottest topic in town since Greece's inconclusive elections this month.
Markets put the collateral damage of “Grexit” — Greek Exit — at between 150 to 500 billion euros, while political analysts see the bloc at worst tumbling like a house of cards, at best pulling together to pluck a new future from the ruins.
“It is a very, very risky game, a very unpredictable situation,” Jan Techau, director of the Carnegie Europe think tank, told AFP. “Once you pull the plug no one knows what will happen, which is why everyone's trying so hard to avoid this.”
Credited with underpinning European peace and democracy for more than half a century, the EU has seen rough-and-tumble times, but the sovereign debt crisis has spawned its worst nightmare — prospects of a failed Greek state on its periphery and a domino-effect shrinkage of the bloc.
Analysts paint a bleak picture of events in Greece should it quit the euro, with banks collapsing, the currency nose-diving, unemployment ballooning and riots in the streets.
“The greater political symbolism would be hugely damaging for European integration,” added Techau. “It would undermine the idea of solidarity, shattering efforts to construct Europe.”
“If the glue comes undone it will hurt the entire European project.”
Worried by the prospect of anti-austerity Greeks winning a vote re-run next month and refusing to pay back hundreds of billions in loans, European leaders, including austerity hardliner German Chancellor Angela Merkel, have softened their line.
A Greek exit “will delight extremists. It's a very bleak option, which is why we're hearing all these calls to Greece not to depart,” said Jean-Dominique Giuliani, who heads the Robert Schuman foundation in Brussels.
But such talk may be too little too late.