Greece and the euro

Osmi Anannya

Image © Yiannis Baboulias

Greece has been entangled with large-scale debt, for many months now. Off late, prominent voices in the European Union have stated that it’s looking increasingly likely that Greece will leave the Euro zone. Some have added that it’s probably in the best interest of the country to in fact do so. This is because all those in favour of the exit believe there is a possibility Greece could reach a time when long-term of interdependency on foreign nations and banks is widely active; significant shares of the nation’s finances and economy are already under the reign of the International Monetary Fund (IMF), European Commission, and the European Central Bank [3].

If Greece does choose to exit the Euro zone, it could then start the journey of recovery by having its own currency, the drachma, once more. The currency could then be devalued to make way for cheap exports and high rates favouring imports [1]. It is quite difficult to grasp, however, how expensive imports are going to be beneficial for the country, because an increase in the rate of import stands to most likely increase the prices of goods, merchandise or commodities available in the country.

In an economic crisis it would be an unwelcome request to ask people in Greece to spend more on their daily purchases. Widespread problems in the Greek political system have already left the nation’s people frustrated about daily life, about the lack of jobs available tailored to their skills, about the inefficiency of many public services, for months on end now. This has given rise to a growing lack of faith in the government, cumulating to the recent riots and revolts and protests in Greece, one after another in a locomotive fashion.

Greece, as was recently established by the IMF, has a small industrial base, and by stark contrast, a highly influential public sector, not in the least because of the number of workers employed there.[1] It simply does not have a globally competitive industry as of yet to be able to provide a wide range of home-grown products at a low price in markets. The Greek public could therefore be facing a scenario where there are expensive imported products and a substantially limited low-price range of local products available for purchase. Also, owing to the factor that the industry in the country is still relatively small in comparison to those of many countries in the world, it is also increasingly likely that it won’t be able to place many different kinds of local produce up for sale to foreign nations, and generate large shares of income.

Greece should definitely be a strong and independent country, as reviving the drachma is claimed to contribute to. The situation here, however, really does not exactly point to that being the case if it eventually chooses to exit the Euro zone. When it comes to the question of Greece leaving the Euro zone, you are still left wondering if the political scenario in Greece will be better from the decision. The economy of Greece is dependent on the political situation in the country. Politicians devise and pass legislations on economic practice and the present crisis is attributed partly to unrestricted government spending. Politicians, therefore, need to understand the dire necessity to establish a government that can ensure the people in Greece trust them with their country’s economy, their ability to find work at home, and not feel helpless to bring about any positive change they would like to see.

The new Greek government should aim to formulate policies and harness a strong enough economy, unlike much of their predecessors, to ensure the nation stays financially and politically independent of its European partners for years to come, whilst keeping the Euro as a currency, because an exit would be a terrible loss for the economy of the country.

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[1] http://www.spiegel.de/international/europe/why-greece-needs-to-leave-the-euro-zone-a-832968.html

[2] http://www.rte.ie/news/2012/0524/en-summit.html

[3] http://www.reuters.com/article/2012/05/24/italy-euro-greece-idUSL5E8GOHZK20120524

[4]http://www.google.com/hostednews/ukpress/article/ALeqM5hs9_uOXs9ozCnjO5Lcarjm0awPpQ?docId=N0317201337898366962A

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