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Jake’s Blog: Grexit-A Tale of Two Cities

Politics / Wed 8th Jul 2015 at 03:05pm

GrexitAthens and Berlin: A Tale of Two Cities

The prospect of Greece leaving the Euro is more tangible as ever. Greece forfeited its €1.6bn debt to the IMF (International Monetary Fund) on Tuesday, and although the skies above Athens haven’t fallen the tension has most certainly risen.

Greek default on its huge public debt of €323bn have left people queuing at cash machines. Withdrawals are capped at just €60 a day. This is a difficult situation for us to comprehend, and despite David Cameron reminding us how close we were to becoming like Greece after financial crisis, the truth lies much further away from that all too familiar Tory Soundbite.

In a country where fruit is considered a luxury and the average family will go to a restaurant less than once a month it is clear to see the impacts of austerity on a country hit hardest by the Global Financial Crisis. However, as I recall it wasn’t the men, women and children of Greece who caused a financial crisis, and as the bailiffs of the Eurozone start knocking on Greece’s door it is difficult to forget that all too poignant fact.

The ECB (European Central Bank) has refused any further assistance and this is with good reason if Berlin, the centre or the ECB extended the Greek deadline then Spain and Ireland would start dragging their heels about their repayments, in brief it would be the fall of the Euro and the end of the European Project. We’ve seen how this fear has resonated around the top table of the EU, Angela Merkel has said the ECB will offer some flexibility on the Greek paybacks but the IFM has been less permitting. Perhaps more importantly, Greece leaving the Eurozone poses very uneasy questions about security as there are fears that Greece may turn to Russia to bankroll it’s government, it is understandable that in the current political climate Greece could become the next Vietnam.

So what is the worst case scenario? Well a Grexit would be a damaging blow to the EU and more importantly it would put Cameron’s negotiations on hold as the Eurozone picks up the pieces. However, the impact on the Greek people would be horrendous with prices of day to day groceries likely to double it would take time for Greece to acclimatize to the Drachma, in short there is no right answer for Greece only a lesser of two evils.

With the latest default and tensions set to rise the question on whether Greece should leave the Euro is becoming an ever more pressing issue one that only the upcoming referendum can decide.

Authored by Jake Shepherd

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