Greece. Euro. Crisis. The words are now almost interchangeable as negotiations to keep Greece in the single currency creep from one missed deadline to another.
Illogical as it may seem, I expect that some kind of deal will be agreed between Greek politicians and the so-called Troika – the European Commission, the European Central Bank and the International Monetary Fund. While it will be hailed as a solution (to what?), it will almost certainly fail to meet Greece’s most pressing need – economic growth.
The Greek economy has not grown in the past five years. In fact it has shrunk. And the only realistic chance of achieving any growth is – as I have argued all along – for the country to exit the euro. devalue and become competitive once more.
Obviously this will be a messy process, not least because there is no procedure in place for an orderly exit. But I doubt very much whether it will be as difficult as the “experts” claim. Alarmist scenarios – which depict currency flights and a domino effect on other states such as Portugal and Spain – are being generated by those who want to preserve the euro for political reasons.
Remember, the euro was created as a political – not economic – project, to serve as a stepping stone towards political union. That is why so much treasure and political effort is being squandered on keeping the eurozone together.
So, a deal in the next few days remains the most likely outcome. But we should pity the poor citizens of Greece who are going to pay for it.