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Playing the Chicken Game: Greece and the Eurozone

By: Christopher Linnan

The recent election in Greece and the subsequent inability of any party to form a governing coalition are indicative of how desperate the Eurozone crisis has become.  The two traditional Greek ruling parties, the New Democracy Party (ND) and the Panhellenic Socialist Movement (PASOK) lost significant electoral support, and more radical parties on the left and the right made significant gains.  This includes the radical leftist Unitary Social Movement (SYRIZA) and the neo-Nazi Golden Dawn party, which would have entered parliament for the first time in its 30 year history. 

The vast ideological gulf between the various parties made building a coalition impossible, and has forced new elections to be scheduled for June 17.  The potential results of this election could endanger the latest Greek bailout package, which required stiff austerity measures in exchange for much-needed aid.  The ND and the PASOK helped negotiate the recent bailout for Greece, and if they are part of a ruling coalition they would presumably honor austerity commitments.  Unfortunately, most other parties are against the bailout agreement, or Greece being in the European Union at all.  The most prominent example is SYRIZA, which is led by Alexis Tsipras, and has peddled the idea that Greece can refuse to accept austerity, and remain in the Eurozone.  This illusion appeals to Greek citizens, 70% of whom want to stay in the Eurozone, yet refuse to face the reality of harsh budget cuts.[i]  The Eurozone’s response has been icy, as leaders such as Austrian finance minister Maria Fekter have declared that “if Greece does not stick to the terms of its bailout program, it will not receive further aid from the EU or the International Monetary Fund.”[ii]  Tsipras’s ominous response was that “’if the disease of austerity destroys Greece, it will spread to the rest of Europe’.”[iii]  These divergent attitudes have resulted in a stand-off, where Greece and the rest of the Eurozone are waiting for each other to blink.  The Eurozone does not want to accede to Greece’s demands for a more lenient bailout package because this would force them to renegotiate with other countries that have received bailouts such as Ireland.  This game of chicken will most likely end in disaster for Greece, and should be abandoned by Greek politicians.  While the exit of Greece from the Eurozone will undoubtedly have an adverse economic impact on the rest of Europe, and the global economy, many Europeans have become so disenchanted with financing Greek debt that they are willing to ditch Greece.

Fareed Zakaria points out “that Germany [and the rest of the Eurozone are] being asked to take its taxpayers' money--in a democracy--and use it to bail out a country like Greece, which is guilty of mismanagement, poor competitiveness and financial fraud. And it has said yes! In return for this, Germans are being called Nazis in Greek newspapers.”[iv]  We should not be so naïve to believe Germany and the rest of the Eurozone have purely altruistic motives.  If Greece leaves the Eurozone it could potentially have a catastrophic domino effect on the rest of Europe.  However, this does not justify Greece demanding to stay in the Eurozone, having other countries pay its debts, and not imposing austerity measures.  Greek voters should bear in mind that its current crisis was brought about by an oversized and incompetent government that was created by corrupt and nepotistic politicians.[v]  Transparency International estimates that the average Greek pays about $1830 in public service bribes in 2009, and $2255 in private service bribes.[vi]  The Heritage Foundation ranks Greek’s economic freedom as 118th in the world, sandwiched between Benin and Senegal.[vii]  For better perspective, the U.S. is ranked tenth, Germany is ranked twenty-sixth, and Turkey is ranked seventy-third.  The Greek people need to realize that they must make difficult choices and rational electoral decisions; otherwise they will face harsher consequences down the road.  This is a lesson that the American people, whether on the left or right, should be wise to keep in mind as we face our own deficit debacle.

Christopher Linnan is a rising senior majoring in history.  His chief interests are contemporary European and American politics.  He is currently interning with Congressman Clyburn of South Carolina in Washington D.C.


[i] Allen Mattich, “Do Greeks want to Stay in the Euro Zone?  That is the Question,” The Wall Street Journal 2 November 2 2011, http://blogs.wsj.com/source/2011/11/02/do-greeks-want-to-stay-in-the-euro-zone-that-is-the-question/, accessed 22 May 2012.

[ii] Heather Conley, “On Greek Economy, who will Blink First,” CNN Opinion 19 May 2012, http://www.cnn.com/2012/05/18/opinion/conley-greece/index.html?hpt=op_t1, accessed 22 May 2012.

[iii]Ibid.

[iv] Fareed Zakaria, “Time to Say Danke,” Time Magazine World 21 May 2012, http://www.time.com/time/magazine/article/0,9171,2115038,00.html, accessed 22 May 2012.

[v] “Greek Voters Need to Look Beyond Syriza’s Dangerous Lies,” Bloomberg News 21 May 2012, http://www.bloomberg.com/news/2012-05-21/greek-voters-need-to-look-beyond-syriza-s-dangerous-lies.html, accessed 22 May 2012.

[vi] “Greek Corruption Booming, Says Transparency International,” Spiegel Online International 2 March 2010, http://www.spiegel.de/international/europe/0,1518,681184,00.html, accessed 22 May 2012.

[vii] “Country Rankings: World and Global Economy Rankings on Economic Freedom,” The Heritage Foundation 2012, http://www.heritage.org/index/ranking, accessed 22 May 2012.

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