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United Daily News: Greek farce -- domino or popcorn?

United Daily News: Greek farce -- domino or popcorn?

The Greeks' own response to their national debt crisis has prompted European leaders to think that it's a bucket of popcorn that will sooner or later pop and so it's time to prepare for the likelihood of Greece's eventual withdrawal from the European Union. From the beginning, European leaders, with Germany and France at the center, had not put Greece, whose GDP accounted less than 3 percent of the EU economy, on their priority list. Instead they were focused on maintaining the integrity and stability of the union, as well as on stopping Italy, the union's third largest economy, from falling into a default crisis too. In spite of the EU's efforts to help Greece tide over its financial crisis, the Greek people could not swallow what they saw as the EU's "bitter medicine." The rescue package came with a string of austerity programs that would lower living standards in Greece. Prime Minister George Papandreou was forced to back off from his proposal to hold a referendum on EU's bail-out plan - a proposal that stood for only three days. Then he survived a vote of confidence that would have cost him his prime minister's job. So now everything seems to have returned to act one in the Greek debt crisis. Yet, some things have changed during the process. For example, the EU Solidarity Fund (EUSF) was forced to delay the issue of bonds to ease Ireland's financial difficulties. The European Central Bank (ECB) has also intervened in Italy's government bond market. Of course, the Greek referendum farce also upset European leaders, who now realize that a well thought out agreement with Greece could end up on the junk heap and that placing the eurozone's stability on Greece is naive and dangerous. The leaders of Germany and France have told their Greek counterpart that a referendum on EU's bail-out plan would be seen as a decision on whether Greece would stay in the eurozone. If a member leaves the currency union, then it must also leave the EU. The EU's tough position on Greece is an indication that it is no longer willing to be held hostage. The EU leaders have gone from being worried about a member quitting the union to proposing expulsion of a possibly defaulting member. The international financial market will be paying close attention to how this change of attitude will affect Europe's future. If other European countries start talking openly about the possibility of a member leaving the eurozone, it means this is a growing possibility. If Greece indeed left the EU, the possibility of its 570 billion euro debt would create an earthquake in European, American and other banks that are owed money by Greece -- a quake that will likely change the very nature of the eurozone. For now, the market may be taking European leaders' threat to kick Greece out of the union as a merely words rather than a prelude to action. The European debt crisis is far from over. All parties concerned should be advised to be cautious in word and deed. (Editorial abstract--Nov. 6, 2011) (By S.C. Chang)


Updated : 2021-04-19 02:18 GMT+08:00