Grexit — let’s stop scaring ourselves

Again this week the Europeans – and not just Europeans – played at putting the fear into themselves by evoking the hypothesis of a Grexit as increasingly likely. In the wake of analysts who have been muttering for months about how and why Greece should leave the eurozone, it is now the turn of politicians and their appointed experts to dispense forecasts, duly priced, on the inevitability of this scenario.

At the extraordinary informal summit of 23 May, EU leaders agreed that the issue is no longer taboo and that each was studying the issue for themselves. At the same time they repeated their wish that Greece should remain in the eurozone – provided, of course, that it honour the commitments to its creditors. And there lies the central rub of the question: more than it is a question of economics, the “Grexit” is pre-eminently a political issue – just as was Greece’s joining the eurozone at a time when officials in Brussels and elsewhere knew very well that, like the Italians before them, the Greeks were not ready.

It is up to Europe’s leaders to decide whether or not they are willing to assume the economic costs to their banks and their taxpayers of a Greece exit from the eurozone – and the political costs too: loss of credibility of the single currency, the breakdown of the European integration model, and the flight of the "Cradle of Democracy", to name just a few. Their Greek counterparts, on the other hand, must decide how far they are willing to respect their commitments or, if they want to go back on them, how they intend to do so.

As for their exit from the eurozone, it seems not to be an option either for them or for most of their constituents. And it is precisely because the political and economic costs of a “Grexit” would be too high for both the Greeks and their partners that it is reasonable to bet on a “softer” outcome, which ought to be emerge following the June 17 parliamentary elections in Greece and France.

Europeans will probably end up accepting a new restructuring and debt rescheduling for Greece, which will give a breather to a population tested by two years of severe austerity. Likely to be governed by an unprecedented majority and monitored closely by the EU-ECB-IMF “troika”, the Greeks will be forced to reform a state that has proved unjust and inefficient and to stop exploiting the crisis, the consequences of which are plain to all.