Before 1 January 2017, will it be officially announced that Greece is leaving the eurozone? (update)

I’m responding here to BG1’s excellent comments on my last post on the subject. Here’s what BG1 had to say:

About the Greeks being the EU’s servant is close as best exemplified by Merkels push through hollow EU/Turkush deal. Actually, the immigration issue has de facto now become for EU countries in general a hot button point. Most countries now practice a sort of covert/hybrid upper limit policy well beyond EU mandates ( NB: E European countries, Austrians et cetera). The Danes & Swedes are feed up & the Swiss aren’t far away either.

A round about way of saying —- the v/ LAST thing Merkel & the EU need now is a Greek exit. This ( a Greek exit) when combined w/ the hot button immigration ( keep it in Greece, Turkey, anywhere else but here in EU land), issue dramatically increases the probability of an EU break apart! Brussels inows this &, will do everything it can to keep them w/in their fold.

And here’s my response: What you’ve said here really makes me rethink the likelihood that the EU will try to nudge Greece out of the fold. Since I only afforded this a 2% probability, that won’t require me to change my forecast much.

Harder to gauge is the matter of how the EU’s unwillingness to allow Greece to leave might affect Greece’s own desire to bolt. In a way, it’s pretty clear how the EU could entice Greece to stay; give the people what they want. The EU – and Germany in particular – hasn’t *quite* done that, but I think I’ve underestimated the extent to which this is starting to happen: “While previously demanding pension cuts, Germany would now be satisfied with a combination of measures that ensures the pension system’s sustainability amid a review of Greece’s progress on meeting its bailout terms, according to the person, who asked not to be identified because the talks are private”[a]. Other sources report similar softening of attitudes in and around Deutschland[b][c][d]. So my forecast for strum und drang in Greece’s future might some further rethinking need.

But it ain’t a done deal, that’s for sure: “Greece and its creditors ended the latest round of talks on Sunday without reaching an agreement on the terms attached to the country’s bailout”[e]. Moreover, the EU would likely need some help from the IMF, and it’s taking its time with a decision[f]. It will be interesting to see whether Germany will be able to talk the IMF into joining the fun[g]. Complicating matters further in the unpopularity in Germany and elsewhere in the EU of extending more aide to Greece[h]. Even if the spirit is willing, the electorate may be weak.

Anyway, I’ll have to mull this over a bit more before revising my forecast.

[a] http://www.bloomberg.com/news/articles/2016-03-01/germany-said-flexible-on-greece-s-pensions-amid-refugee-crisis

[b] http://www.wsj.com/articles/germanys-angela-merkel-becomes-unexpected-greek-ally-in-migrant-crisis-1456773578

[c] http://www.wsj.com/articles/germanys-schauble-sees-no-need-for-immediate-decision-on-greece-payments-1457438844

[d] http://www.reuters.com/article/eurozone-crisis-greece-idUSB4N13100W

[e] http://www.bloomberg.com/news/articles/2016-03-20/greek-bailout-talks-end-without-deal-as-migrant-challenges-grow

[f] http://www.reuters.com/article/us-eurozone-greece-imf-lagarde-idUSKCN0UT0N0

[g] https://global.handelsblatt.com/edition/388/ressort/politics/article/germany-squares-off-with-imf-over-greece

[h] http://www.businessspectator.com.au/news/2016/2/26/europe/migration-crisis-complicates-greek-bailout-deal

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