Germany was forced to give a fundamental go-ahead to Greece's staying in the club. Some chain reaction that could provoke an implosion of the whole eurozone is quite possible. In a certain sense, German leaders are capable enough of taking advantage of the scenario.
The financial crisis in Greece started back in 2010. Of course, it is Greece's fault that it put itself into such a macabre situation. Nonetheless, what actually happened was the following: part of Greek debts was devolved upon countries by their private European – French, German, Italian – banks. Now, member states of the eurozone need to sort the story out using two instruments at their disposal, namely: the European Financial Stability Facility and the European Stability Mechanism.
As a matter of fact, the crisis emerged because the new Greek government decided that its historical mission was to tell opponents: we need part of the debts written off, but we do not need any additional loans at all! It would be suffice if you remitted part of the debts, then we would compensate the damage we caused you!
Germany was all against it, because Greeks somehow caught Germans in a trap. Angela Merkel has encountered the following problem with her voters. She told Germans two things. First of all, she said "You will no longer pay for Greeks!" She later added: "And, of course, Greeks will repay everything in spades!" Moreover, both of her assurances proved to be false. We know very well that Greeks will never return the full debt. That is why Germany, just as France and Italy, will have to put up with a certain loss of the sums loaned to Greece. Secondly, we will have to finance Greece. That is why Germany has decided to struggle for expulsion of Greece from the eurozone! So, why is Germany pursuing such a goal? Maybe because if Greece gets ushered out of the eurozone, Germany will no longer be compelled to grant Greece money, because Greece would be cast out of the European reciprocal aid regime. On the other hand, German leaders, including the German chancellor and the finance minister of the country, are well-aware that if Greece is asked to step out, it will declare a default on debts. Therefore, Germany would lose part of the capitals invested in the country. In that case, however, Mrs. Merkel could always say: "It is not my fault! Greeks egressed on their own free will! They just declared a default and refuse to pay the debts now!" In this case, she would avoid saying: "Despite my promises, we will never see a substantial part of the funds we loaned to Greeks! It was too hasty of me."
Such are the basic reflections of top managers of the German state. Well, as for France, for instance, it has been deeply shocked by the situation. Its attitude towards the problem is more dictated by ideological reasoning! In this sense, the French are utterly confused about such notions as the eurozone, European Community and Europe itself. Yet, those are absolutely different realities.
Those are the reasons motivating France to be so die-hard in advocating Greece's stay in the ranks of euro states. It is not the only country taking such position. Italy, for example, holds to the same opinion, and somewhere in the rearguard, vicariously, we can sense Washington's position. So, Germany was forced to give a fundamental go-ahead to Greece's staying in this club. However, in retaliation, Berlin has brought forth absolutely intolerable terms. In the past days, we noted that politicians came closer to realization that the deal of July 13 cannot be fulfilled. A breach of sorts has already taken place. This, in turn, will no doubt swiftly lead to new debates on expulsion of Greece from the exalted assembly, which is what we call the Grexit.
We all realize that the true weight of Athens does not coincide with its purely economic performance. According to the latest data, Greece forms no more than 2% of the eurozone's GDP. But everyone understands that Greece's leave would immediately be followed by a question: who is next? Could it be Portugal, Spain or maybe even Italy?
Thus, occurrence of some chain reaction that could provoke an implosion of the whole eurozone is quite possible. In a certain sense, German leaders are capable enough of taking advantage of the scenario. Germany will survive by reviving the mark. German politicians see no need in saving the eurozone where Germany is constantly financing countries with bigger or smaller problems. Therefore, Germans can clay-cold state the fact: if the euro explodes, we will pull through! Yet, there is Francois Hollande in France, and he, as the successor of Jacques Delors, one of the eurozone creators, is dead set against it! Scrapping the euro can bring France and Italy considerable benefits.
Meanwhile, Greece has set to selling own islands. Although the potential benefit from such riddance of the basic funds of the country will yield a billion euro at best. Most Greek islands are deserted and lack water. It appears that the Bretton Woods Age is becoming history, and the world needs a new economic and financial model. Yevgeny Primakov may as well be the one who engineered it, insisting on multipolarity and polyphony in macroeconomics.
