Greece and Us

Temple of AthenaAs I write, millions of Greeks are heading to the voting booths to have their say in a crucial referendum on whether to accept the terms of an international bailout.

This is a significant vote. The government have urged a “No” vote, but there are those who say a “no” means ejection from the eurozone.

EU leaders – and eurozone ones more specifically – are backtracking on that somewhat in recent days, and say a “no” vote, while unfortunate, does not mean instant expulsion from the euro.

Sadly, the Greek government don’t strike me as being particularly competent, and the Greek people are, according to polls, very divided on what to do. A Greek colleague of mine has told me of the ugly scenes there at the moment, with friends turning on each other as credit halts and money gets harder to come by.

There’s no good options left for the Greek people now. No magic wand can be waved to fix this crisis. However, there is always a “least worse” route, and for the Greeks, I think it would be to find themselves on an “outer-tier” of the EU, and finally out of the euro altogether.

If they default, decouple, and go through the (painful) process of returning to a currency (the drachma?) that they can inflate at will, goods and services (and holidays) would be much cheaper again, and the Greeks could finally start exporting their way back to growth.

Colour me sceptical, but I think the reason why the eurozone leaders are so keen to keep Greece in the euro – even if they vote “no” today – is because they would hate to see Greece slowly recover under their own steam.

That could have a particularly strong resonance here in the UK. If we were to witness a more independent Greece get back on its feet in the months ahead after walking away from the eurozone, will it influence British people’s vote on the EU referendum?

Right now I think the popularly-held (but inaccurate) narrative that “it would be worse for Greece right now if it were not in the EU” could crumble very quickly if a “free” Greece were to get back on her feet again.

Eurozone leaders know this, which is why I think they are keen to see Greece remain with them, come what may.

It’s set to be a fascinating 30 days. I just hope either way, thinks start getting better.