Europe

Would Greece be better off outside the eurozone?

EU and Greek flags flutter Image copyright Getty Images

Eurozone leaders have broadly welcomed new proposals for Greek reforms amid hopes a deal can be struck within days to stop Greece defaulting on its debt.

Greece must repay a €1.6bn (£1.1bn) International Monetary Fund (IMF) loan by the end of the month. If it fails to do so, it risks crashing out of the euro and possibly the EU.

But would so-called "Grexit" actually be a disaster for Greece? Or could taking control of its own currency be the country's best way to prosperity - even if it resulted in a weakened eurozone?

Four expert witnesses spoke to the BBC World Service's Inquiry programme.


Giorgas Vichas: Something's got to give

Cardiologist Giorgas Vichas runs the Metropolitan Community Clinic, a free health clinic in Athens set up by volunteer doctors.

"In the last three years, more and more of our patients are homeless, and have nothing to eat. When I told a patient who has high blood pressure that he should limit his salt intake, he replied that he eats at the church soup kitchen, and so he has no control over that.

"And when I prescribed aspirin to another patient with the normal instruction to take it half an hour after eating, he looked at me and said he hadn't eaten in three days. What people who don't live in Greece need to understand is that these are people who until recently had a completely normal life.

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Image caption Healthcare workers hold a banner reading "Closure to IMF not hospitals" to mark a 24-hour strike

"Public hospitals in Greece have already run out of their funding for 2015 by June. Last month our social clinic gave medicines and supplies to ten public hospitals across Greece, because they couldn't buy them themselves.

"For us Greeks, that's the worst scenario, to stay in the eurozone under the current conditions, because the only things being produced by these policies are dead people, destitute people, and higher deficits."


Jens Bastian: Don't even think of leaving

Jens Bastian is an economist at the MacroPolis think tank in Greece.

"We are in uncharted territory. There is a lot of speculation going on, but we have no precedent, and we have no road map.

"Greece would have to introduce a new currency. It would immediately have to devalue vis-a-vis the euro. That would trigger inflation.

"Greece imports 48% of its food from abroad. Greece imports 80% of its energy, in particular fossil fuels. You would have pharmaceutical products that would become exorbitantly expensive, and would quickly create shortages. You would have rationing in the real economy.

"The social consequences of such a development would be major social disruption and major social inequality, which is already rising and which only would rise further and deepen the cleavages that exist in the society.

"Mitigating these effects would require financial resources. Where would Greece get that from? If you leave the eurozone, you would be a financial pariah in Europe for years to come. Greece would not be able to borrow in international capital markets.

"Grexit would not solve the underlying problems of the Greek real economy that have existed for decades, even when we had the drachma: a chronic lack of productivity, declining export capacity, and structural indebtedness.

"[Grexit] is often advocated by economists and by legal experts from outside Greece who do not have to bear the consequences of such a possible development. And my concern is for the social cohesion of this country, for the democratic glue of this society, and I do not want to face the consequences."


Frances Coppola: Take the pain

Frances Coppola is an independent economic commentator.

"In the short term after a euro exit, the Greek economy would look very bad indeed. In human terms, that does mean bankruptcies for small businesses; further cuts in wages; it could mean very high inflation.

"[But ] I think it's fair to say that Greece has not got from membership of the euro what it hoped. The principal effect of the single currency for Greece has been to make trading, oddly, more difficult.

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Image caption Greece's olive exports have been put under pressure by their German neighbours

"For example, you would think olive oil would be a principal export from Greece, but they've actually been overtaken by exports of olive oil from of all places, Germany. It imports raw olives, processes them, bottles the oil, and sells it more cheaply [than Greece can].

"One of Greece's major exports is actually petroleum products, refined oil. It's not feta cheese and olive oil at all. It has also historically been an important shipping source, both building and running shipping.

"It is an important trade hub for the region, and it could position itself as the trade hub for that 'Middle Eastern/Balkans gateway to Russia' region.

"Greece has a fragmented and disrupted political set up, some fair amount of corruption, a huge informal economy and this dominance of oligarchs in important sectors. They have to deal with all of that, and I don't see the EU helping them to make the institutional reforms and to eradicate corruption and break the oligarchic grip.

"The way the eurozone is going - with enforcing convergence through fiscal reform, and the commitment to austerity - actually makes it very hard to make reforms.

"One of the principal benefits of having their own currency for Greece would be to return control of their own affairs to them.

"When you join a single currency, when you use a currency that isn't yours, you give up control of your own economy. You adopt the policies of everybody using that currency, and in particular the policies of the strongest member, which in this case is Germany.

"When you start using somebody else's currency, in effect you've become a vassal state of that somebody else."


Dimitris Christopoulos: It's a dangerous world

Dimitris Christopoulos is associate professor of Comparative Politics at Panteion University in Athens, and vice president of the International Federation for Human Rights.

"I'm not for Europe because I like Europe's aesthetics. I'm for Europe because Europe represents a key prudent answer to a security argument.

"For the majority of Greeks, EU membership is the formal, solemn recognition of Greece belonging to Europe. Becoming a eurozone member was part of a long transition from an unstable political regime to democracy and a consolidated rule of law.

"The fact that the EU, the Central Bank and the IMF are exercising such pressure on Greece to remain on the good path, means that the country represents high political significance.

"You have Israel, you have Lebanon, you have Syria, you have Turkey, which is not in a very safe situation today. To the north you have the whole Caucasus region which is a problem, and then of course you have Ukraine.

"You have Egypt, a dictatorship supported by the westerners in order to deal with the Muslim Brotherhood. And next you have a country which is already a failed state, Libya. Inside this triangle you have Greece. Despite its problems over the last 40 years [it has] represented a point of stability.

"If we decide to push the Greek government to the extreme of leaving the eurozone, I'm not sure where Greece will be in two or three years.

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Image caption Could Grexit bolster support for the far-right Golden Dawn party?

"We have had a re-emergence of the most atrocious form of far-right political extremism, because Golden Dawn is not a populist, nationalist, extremist party, it's a Nazi party. We're talking about a political ideology which is constructed around the biological differentiation of people, of humans and sub-humans. Imagine in this mess having to also deal with that.

"Exit from the eurozone [would create] political and financial instability, and when frustration rises, people turn to the far-right.

"When I speak to colleagues from the EU and other international organisations, I want to highlight the Greek history. I want to highlight the emergence of this far-right beast who is able to destroy Europe, to destroy the idea of togetherness. This is what bothers me."

The Inquiry is broadcast on the BBC World Service on Tuesdays from 12:05 GMT/13:05 BST. Listen online or download the podcast.