Time to Admit Defeat Greece
Can No Longer Delay Euro Zone Exit
There are many things Alexis Tsipras likes about Germany. The leader of
Greece's Coalition of the Radical Left (Syriza) party drives his BMW
motorcycle to work at the Greek parliament in the morning, Germany's
über-leftist Oskar Lafontaine is one of his political allies, and when
it comes to his daily work, his colleagues have noticed a certain
tendency toward Prussian-style perfection.
Tsipras could easily count as a friend of the Germans, if it weren't for
the German chancellor. Greek magazines have frequently caricatured Angela
Merkel dressed in a Nazi uniform, because she imposes her fondness for
balanced budgets and austerity on the rest of Europe. The Greeks, says
Tsipras, want to "put an end" to the Germans' requirements and
their "brutal austerity policy."
Tsipras is the new political star in Athens. While the country's
washed-up mainstream parties struggled for days to
form a new government, the clever young politician has been dominating the
headlines with his coalition movement of Trotskyites, anarchists and
In the recent elections, Tsipras'
Syriza party advanced to become the second-largest political force in the
country, and Tsipras is making sure his gray-faced opponents from the
Greek political establishment know it. Surrounded by cameras and
microphones, he stood in the Athens government district last Tuesday, put
on his winner's smile and called upon the two traditional parties, the
center-left Socialists (PASOK) and the conservative New Democracy, to send
a letter "to the EU leadership" and cancel the bailout deal that
Athens made with the EU and the International Monetary Fund (IMF).
Tsipras knows what many Greeks are thinking. At the end of last week, his
poll numbers rose to a new record level of almost 28 percent.
Two years after the government in Athens requested the first emergency
loans in Brussels, the European debt crisis is reaching a turning point.
Europe and the international community pumped about €240 billion
($312 billion) into the Balkan nation, government employees were let go,
pensions were slashed and a series of restructuring programs were
But even though the country is virtually being governed by the European
Commission and the IMF, Greece's debts are higher than ever and the
recession is worsening. As the political situation becomes increasingly
chaotic, new elections seem all the more likely.
At the Chancellery in Berlin, the television images from Athens now
remind Merkel's advisers of conditions in the ill-fated Weimar Republic of
1919-1933. Back then, the Germans perceived the Treaty of Versailles as a
supposed "disgrace." Now, the Greeks feel the same way about the
austerity measures imposed by Brussels. And, as in the 1920s in Germany,
the situation in Greece today benefits fringe parties on both the left and
the right. The country's political system is unraveling, and some advisers
even fear that the tense situation could lead to a military coup.
Greece has been in intensive care for years, but the patient, instead
of recovering, is just getting sicker and sicker. In a confidential
report, which SPIEGEL has seen, experts from the IMF arrive at a
devastating verdict. The country, they write, has only "a small
industrial base" and is characterized by "structural
incrustations" and an "excessively large role of the public
In Greece's Best Interest
It's time to rethink the treatment. The Greeks were never ready for the
monetary union, and they still aren't ready today. The attempt to
retroactively bring the country up to speed through reforms has failed.
No one can force the Greeks to give up the euro. And yet it is now
clear that withdrawal would also be in the country's best interest.
It isn't a matter of abandoning the Greeks. Greece is and remains an
important part of Europe. A Greek withdrawal from the euro will have
serious social, political and economic consequences -- mostly for the
Greeks, but also for the rest of Europe. The continent's solidarity is not
tied to the euro, which is why other European countries will still have to
support Greece with massive amounts of money.
But only a Greek withdrawal from the euro zone will give the country a
chance to get back on its feet in the long term. The Greeks would have
their own currency once again, which they could then devalue, making
imports more expensive and exports cheaper. As a result, say American
economist Kenneth Rogoff and others, the Greek economy could become
At the same time, a Greek exit from the euro would send a strong
message to other financially ailing countries, namely that Europe cannot
be blackmailed. Populist politician Tsipras is merely expressing views
that are already widespread within large segments of the Athens
establishment, namely that the Europeans will ultimately give in and pay
up, because they fear a Greek bankruptcy as much as people in the Middle
Ages feared the Black Death.
If the euro-zone countries do give in, the pressure for reform will also
decline in the other crisis-ridden countries. If that happens, their debts
will continue to rise, investors will flee from the euro and the entire
currency union could break apart.
There are no provisions in the regulations of the monetary union for
the withdrawal of a member state, and the euro partners cannot force a
member to withdraw. But what else can the Greeks do if the Europeans
remain truly adamant and insist that Greece satisfy all conditions
attached to further aid?
In the end, a Greek withdrawal could only be the result of
negotiations, prompted by the realization that it would enable the country
to regain its national dignity. If Athens clung to the euro at all costs,
it would remain dependent on the international community for decades to
come. In contrast, regaining its own currency would enable the country to
decide on its own fate.
Part 2: Reforms Have Ground to a Halt
An exit from the euro zone would be the prerequisite for the political
new beginning that the country's reformers believe is inevitable. One of
those reformers is Gikas Hardouvelis, 56, the chief adviser to
transitional Prime Minister Lucas Papademos.
His job description was easy to write but difficult to fulfill: He was
supposed to ensure that Greece remains in the euro zone. Since the end of
November, Hardouvelis has had possibly the most beautiful office in the
country. The Maximos Mansion, next to the National Garden in downtown
Athens, is the prime minister's grand official seat.
But since taking office, the economist has also had a mission which
could well be described as impossible: to revamp a country that has been
Until last summer, the total number of government employees wasn't even
known, nor was the number of government agencies, which were often
established for the sole purpose of concealing the enormous expenditures
of certain ministries.
When Hardouvelis began working as chief adviser to the prime minister,
the reform process was supposed to be in full swing already. His first
step was to count the laws that had not only been passed but had actually
been put into effect. "It was a very small number," Hardouvelis
After two years, Hardouvelis came to a devastating conclusion about
Greece's economic, political and social situation: Almost none of the
government's reform efforts have been a success.
The privatization of state-owned companies, which was intended to help
fill up empty government coffers, has hardly even begun. Of the €50
billion in anticipated revenues by 2015, the program has only generated
€1.6 billion to date.
The sale of real estate holdings, in particular, is more difficult than
expected. Until recently, the Greeks were almost wholly unfamiliar with
the concept of the land registry. After over 10 years of efforts to
develop such a registry, only 6 percent of all real estate has been
entered into the system.
The liberalization of restricted sectors of the economy has also ground
to a halt. Symptomatic of this failure is the plan to open up the services
of architects, lawyers and shipping agents to competition. There are
roughly 140 so-called closed professions; no one knows the exact number.
The members of these professions received the licenses for their
profitable activities under the former military junta, and they are passed
on from generation to generation or sold for a lot of money. Sums of
€100,000 to €150,000 are not uncommon for the purchase of a taxi
license in Athens.
The system seemed to have come to an end in the early summer of 2010.
After only a few months in office, the Socialist government enacted a law
to liberalize the closed professions, which were expected to become open
to competition in the free market in the future.
Professional groups like pharmacists and taxi drivers reacted furiously
by going on strike. In the early summer, freight forwarders used their
trucks to block major roads, bringing the entire country to a standstill
-- at the height of the tourist season.
The efforts to protect the vested rights of many professions were
successful, and the protesters secured transition periods, special rules
and exceptions. As a result, the professions are still virtually closed to
In addition, large parts of the government administration are still in
agony. One of the new miracle weapons that the European Commission is
keeping ready for the European economy was also supposed to be used in
Greece: so-called project bonds. They would have enabled private investors
to hedge against the risks of investing in major trans-European
But there is not a single Greek project among the construction projects
that the European Commission has proposed for the pilot phase this year
and next year. It isn't as if the officials in Brussels did not have every
intention of finding a project in Greece that could be implemented
quickly. The new stimulus program was intended to drum up €4.5
billion in investments in Europe in the short term. But the Greeks also
had to fit the requirements for the scheme. Now the subsidies will go to
the Baltic countries.
Tricking the Troika
The only progress, albeit modest, that the Greeks have to show for
themselves is in the fight against the budget deficit. To this end, the
value-added tax was raised from 19 to 23 percent, several new taxes on
luxury goods and special duties were introduced, pensions were cut by 15
percent and the salaries of government employees slashed by 30 percent or
Through these efforts, the budget deficit was reduced by an impressive
7 percentage points. A historically unparalleled debt haircut, in which 95
percent of creditors relinquished 75 percent of their claims, also brought
some relief. Nevertheless, the successes of the debt reduction effort
remained modest. Despite creditor participation, the country still suffers
from a debt burden of 160 percent of gross domestic product, which
threatens to suffocate the country in the long term.
This is aggravated by the fact that the established ruling class has no
interest in the reforms being a success. To accommodate the programs
called for by the so-called troika of the European Commission, the
European Central Bank (ECB) and the IMF, laws were established that could
not work, "because the relevant cabinet ministers didn't want them to
work," says Hardouvelis.
According to Hardouvelis, it is very clear that members of the former
administration tricked the troika, and valuable time was lost as a result.
"They thought the party would somehow go on," he says. And they
Little Interest in Reform
One of the peculiarities of the Greek state is that, although there are
32 laws on deregulation, there is in fact no deregulation in reality.
Greece routinely ranks poorly on the World Bank's Doing Business index.
Neither the troika nor the local EU Task Force for Greece, whose goal is
to actually implement reforms, have been able to change this.
Officials from the Greek Interior Ministry complain that the ministers
are usually the ones getting in the way of progress. "We have to
fight with our own bosses when it comes to administrative reform,"
they say. There is a rumor that the minister of public administration
advised the environment minister to agree to the troika's proposals, but
not to implement them.
The international envoys and the EU Task Force staff members are
familiar with many such examples, as are those ministerial officials who
truly want to change things and have given up on the old system.
Most politicians have very little interest in reform, says Hardouvelis,
whereas the general population is more willing to change. "The Greeks
want their government to work, and they want it to be more
equitable," he says. Like Italy, Greece currently has a technocrat,
Papademos, as (interim) prime minister. But unlike in Italy, the ministers
in Greece unfortunately stayed the same -- in other words, the same old
politicians are still in charge.
It's no surprise that the EU and IMF reform plans have failed so far,
given that the people who were responsible for the country's problems were
expected to solve the crisis.
It is difficult to explain to a deeply frustrated population that while
ordinary people are supposed to change, and have to pay more taxes and
receive less income, the political class continues to occupy key positions
and can keep doing as it likes.
The policy of austerity and drastic cuts has a high price. Domestic
demand plummets, the economy shrinks, new holes open up in the budget and
further cuts become necessary. The result is a downward spiral from which
the country cannot extricate itself without outside help.
Part 3: The Only Way Is Down
Greece is now in the fifth year of recession. Economic output has
shrunk by a fifth, unemployment is at almost 22 percent and youth
unemployment is at more than 53 percent. The ranks of the unemployed grew
by 95 percent between March 2008 and March 2011.
For the first time in postwar history, there are more people out of
work than employed in Greece. The minimum monthly wage was reduced to
€585, and was even brought down to €490 for younger workers. The
monthly unemployment benefit was reduced from €461 to €385, and
benefits are discontinued after a year. At the same time, more and more
new taxes are being levied. One, for example, is the charatzi, a
special tax on real estate collected through electricity bills.
All the same, according to reports by the IMF, wages in Greece are
still significantly higher than in Portugal or in neighboring Balkan
countries like Bulgaria and Romania.
A Vote Against the Political Class
There is little movement -- and when there is, it is downward. This
explains why the election success of the smaller, more radical parties is
not just a vote against the hated austerity policy and the so-called
memorandums, as the loan agreements with Greece's creditors are dubbed.
Most of all, it is a vote against the ruling class, which shamelessly took
advantage of its power for so long.
Radical parties garnered more than 42 percent of votes. This shows how
much trust the established parties have lost with the Greek public. For
years, Greeks voted for either PASOK or New Democracy, but now they no
longer believe their promises. Alexis Tsipras did particularly well in
The Greeks are fed up with their political establishment, which appears
to firmly believe that the state's raison d'être is to allow them to
line their pockets and enlarge their own sphere of influence.
The two candidates of the major parties, Conservative Antonis Samaras,
60, and Socialist Evangelos Venizelos, 55, are part of this
The two men have been professional politicians -- a term that is now
perceived as an insult in Greece -- for decades. Samaras has been a
cabinet minister three times and a member of the Greek parliament since
1977. Venizelos has held eight cabinet posts since 1990.
Samaras' campaign was a ludicrous farce, difficult to surpass in its
political miscalculation and overconfidence. In defiance of all polls, he
campaigned on the expectation that New Democracy would govern alone, and
he made election promises that could easily compete with those made by
Tsipras. "His rhetoric is straight out of a 1985 campaign
manual," the newspaper Kathimerini scoffed.
Just how cluelessly Samaras has acted in the public sphere as head of
New Democracy in the last two years is also reflected in the fact that he
was the one who pushed for the new elections that have now dealt him this
humiliating defeat -- and will likely put an early end to his political
Venizelos, on the other hand, a former finance minister and a sort of
emblem of the crisis, who was responsible for finally curbing the tax
flight of the rich and the super-rich, is also responsible for a highly
controversial law that codifies the immunity of ordinary members of
parliament. In supporting the legislation, he essentially endorsed
corruption at the highest political levels.
A Nightmare for Business
Greece is caught in a uniquely Greek vicious circle. Hardly anyone
wants to invest in a country that is not only bankrupt, but is also seen
as highly corrupt.
Aris Syngros, who has been trying to market his country for the last
year, is also aware of this problem. The gray-haired Syngros, 52, who is
wearing a gray suit with a purple pocket square with yellow polka dots,
runs an economic development agency connected to the Economy Ministry. The
agency is called "Invest in Greece," and its logo looks like a
stylized tree with a large amount of fruit.
Seen in this light, Syngros is at the forefront of the campaign to
overcome Greece's poor image as a place for investment. The country is
viewed as a nightmare for entrepreneurs, a place where it can take years
to obtain something as simple as a license.
If Syngros has his way, all of that will now change. There has even
been an expedited approval process for large projects for the last year.
Nevertheless, Greek government agencies, with their Kafkaesque structures,
sometimes even drive Syngros to desperation. It recently took two months
until all required signatures had been appended to the minutes of a
meeting of the relevant committee of ministers.
But the main problem is that investors are hard to come by. "They
shy away from the sovereign risk," says Syngros. As an example, there
has been only one taker so far for an extremely attractive loan set up for
that purpose by Germany's KfW development bank.
For Syngros, a withdrawal from the euro would be a nightmare. But
things cannot continue in the current vein. Experts are increasingly
realizing that it will be difficult to attract foreign capital to the
country under the current conditions. But an economic new beginning,
including a renaissance of the drachma, could change that.
If the currency is devalued, it will become cheaper to buy Greek
companies and operate them profitably. This could stimulate investment,
say proponents of a Greek withdrawal from the euro in Brussels and
Europe's governments have expanded their bailout funds to protect other
southern European countries like Spain, Portugal and Italy, and private
creditors have largely withdrawn from Greece. Under pressure from Berlin,
Paris and Brussels, and after months of negotiations, banks, insurance
companies and other investors waived almost 75 percent of their total
claims of €206 billion against the Greek government in early
Billions of losses in Greece have spoiled the bottom lines of many
financial companies. But because the debt haircut was so long in the
making, the banks were able to digest their bad Greek bonds in small bites
without getting into trouble themselves.
The banks complained that they were forced to agree to the supposedly
"voluntary" haircut. But if Greece now withdraws from the euro
and Athens can no longer service its debt, private-sector creditors will
benefit from the fact that they have already survived the worst.
"The direct costs of a Greek government bankruptcy are manageable
for private creditors," says Jürgen Michels, chief economist for
Europe at Citigroup. Furthermore, only a portion of the remaining debt
lies with banks and insurance companies in the euro zone, while the rest
has been taken on by speculators outside Europe. This is why a bankruptcy
would probably not severely affect the European banking system.
Part 4: Scenarios for a Greek Exit
European leaders are now convinced that a Greek withdrawal from the
monetary union would be manageable. "The risks of contagion are no
longer as great as they were a few months ago," says Luxembourg's
Finance Minister Luc Frieden.
European leaders, at any rate, are no longer willing to depend on the
foresight of Greek politicians, and so they have instructed their experts
to make preparations for the worst-case scenario. For around the last
year, a "Greece Task Force" appointed by German Finance Minister
Wolfgang Schäuble has been developing a possible exit resolution.
Isolated from the rest of the German Finance Ministry, the group is
working out models and scenarios on the potential consequences of a
withdrawal, both for the rest of the euro zone and for Greece itself.
The task force's most important conclusion is that a large share of
Greece's debt is now held by public creditors, most notably the ECB.
According to Finance Ministry officials, the Frankfurt-based monetary
watchdogs hold between €30 billion and €35 billion in Greek
These holdings become dangerous if Greece stops servicing these debts
because it is no longer receiving any money from the European bailout
funds. This is why crisis experts in Berlin have dreamed up a particularly
cunning solution for the problem. They don't want to completely cancel the
tranches from the aid packages the Greeks are scheduled to receive.
Instead, under their proposal, the country would have to do without the
portion of the aid that was meant to flow into the government coffers to
cover pensions, public sector wages and other expenses. But the billions
that are earmarked to service the bonds held by the ECB would be paid into
a special account, thereby averting problems at the central bank. In
return, the ECB has already signaled its intention to resume its program
to buy up the government bonds of other debt-ridden countries if they come
under pressure following a Greek withdrawal from the euro.
The mechanism essentially amounts to the European Financial Stability
Facility (EFSF) paying for up to €35 billion of Greece's sovereign
debt. The last bond held by the ECB matures in 2030.
Of course, the EFSF's claims against Greece will remain in place, but
the only question is whether the country will be capable of honoring its
obligations. EU experts are convinced that it will certainly not be in
that position during the initial period following the introduction of a
new currency. The country's euro-denominated debts would suddenly turn
into foreign-currency debts, and would multiply as a result.
Even if the Greeks withdraw from the monetary union and receive no
further support payments from the European bailout funds, they will not be
abandoned. If Greece remains a member of the EU, it will be entitled to
the same type of assistance other EU countries can receive when they are
in dire financial straits. Latvia, Hungary and Romania have received such
assistance in the past, for example.
This is not necessarily disadvantageous for the euro-zone members.
"Then it won't just be the member states of the euro zone paying for
Greece," says a senior German government official, who preferred not
to be named. "In fact, all 27 EU members, including Great Britain,
will have to make their contribution."
While the exit would be turbulent for the rest of the euro zone, it
would be a matter of life or death for Greece. EU diplomats in Brussels
paint a dramatic picture of the challenges the country will face if it
gives up the euro. No one wants to talk about it on the record, so as not
to further fuel speculation on the financial markets. Nevertheless, the
emergency plans have already been developed. "Of course we have
something ready," says a top official familiar with the matter.
First of all, say officials in Brussels, Greece would have to introduce
capital controls. Well-heeled Greeks are already believed to have moved
€250 billion abroad, which could hardly have been prevented in a free
internal market with a common currency. But if the drachma is to be
reintroduced, the Greek authorities will do everything possible to stop
the transfer of euros to other countries.
Police Guarding Banks
The introduction of the new, old currency will require detailed
planning and execution. Money presses will have to produce the drachma
notes. "The banks will have to close for a week until the new currency
can be distributed," predicts one of the senior EU officials, who
spent months studying how other countries reformed their currencies.
Experience has shown that, in such cases, police units are posted
behind sandbags at bank branches. During the transition period, cash
dispensers would only spit out €20 or €50 a day, so that
customers could buy the bare minimum in daily necessities.
The introduction of the new currency would begin with a sort of
mandatory exchange period, during which the Greeks' euro assets would be
exchanged into drachmas at a fixed rate. Pensions and salaries would only
be paid out in the new currency.
EU officials are preparing for the possibility that the Greeks would
then no longer be able to fulfill their obligations within the EU, at
least temporarily. For instance, the country, as a signatory to the
Schengen Agreement, monitors the external borders of the EU. If there is a
currency devaluation, customs agents will have other priorities, at least
in the short term.
It would be the first time in postwar history that a Western European
country declared bankruptcy and introduced a new currency. The
organizational challenges are considerable, but the economic consequences
would be even greater.
If the drachma returns, it will drastically lose value against the
euro, with experts expecting a devaluation of at least 50 percent.
Insiders say that a loss of up to 80 percent is even possible. Banks and
companies with foreign debts denominated in euros could no longer service
them and would have to file for bankruptcy.
As a result, Greece would plunge into an even deeper recession. The IMF
estimates a decline in economic output of more than 10 percent for the
first year following the return of the drachma. This would set the country
back by years in economic terms.
But after that, according to the IMF, the Greek economy will grow even
faster than it would without the devaluation. "The turbulence could
last one or two years," says Hans-Werner Sinn, president of the
influential Munich-based Ifo Institute for Economic Research. But after
that, he adds, things will improve again.
The professor's prognosis is based on two assumptions. First, because
imports will become more expensive, the Greeks will buy more domestic
products, eating Greek instead of Dutch tomatoes, for example. At the same
time, the country's exports will become cheaper, making it more
competitive. The result: Greek olive oil will displace Spanish oil in
Many countries have successfully exported their way out of their
plights in the past through currency devaluation: Sweden in the wake of
the banking crash in the early 1990s, South Korea following the 1997 Asian
financial crisis and Argentina after the end of the dollar regime in 2001.
In all of these countries, the economy crashed initially, only to recover
all the more vigorously in the end.
Greece can reduce its foreign trade deficit by exporting more and
importing less. In the last decade, its trade deficit was at a near-record
10 percent. Even in 2010, when the crisis hit with full force, the country
imported €32 billion more in goods than it sold abroad. As a result,
Greece, supposedly an agricultural country, is still a net importer of
Another economic sector on which many are pinning their hopes is also
likely to benefit from the return of the drachma: tourism. A vacation in
Greece has become too expensive for many foreigners. But with the new
currency, the country could compete once again with its toughest rivals,
Turkey and North Africa.
It's likely, but not guaranteed, that the economic renaissance will
succeed. Many economists fear that the unavoidable chaos of a currency
reform could overshadow its positive effects for a long time. Savers would
lose a large share of their assets, the government would face the risk of
collapse, Greeks could slide into poverty and Europeans could find
themselves with a costly, long-term problem in the southeastern corner of
It wouldn't be the only bill coming Europe's way. More and more Greek
debts have been assumed by the public sector in the last two years. In the
wake of the March debt restructuring, private creditors, such as banks,
insurance companies and hedge funds, now hold sovereign debt worth only
about €100 billion.
There are also loans in the amount of €73 billion that were
disbursed by the members of the euro zone and the IMF in the context of
the first aid package for Greece. Now Athens has also received the first
tranches from the second aid package. And then there is the roughly
€35 billion in sovereign debt held by the ECB. It is unclear what
will happen to the ECB's claims against the Greek central bank, the
so-called Target-2 balances, which recently added up to about €100
The Fitch rating agency estimates that public-sector claims against
Greece will grow to more than €300 billion this year. If the majority
of these claims became worthless, the German finance minister alone would
face a loss of tens of billions of euros.
This is a large amount, and yet most economists believe it is
manageable. It would roughly correspond to the German government's net
borrowing for this year. In other words, the economic damage of a Greek
withdrawal from the euro for Germany would remain within limits. "The
Greek economy is simply too insignificant for that," says the
Oxford-based German economist Clemens Fuest.
The conclusion is clear: The current strategy to rescue Greece has
failed, but at the same time the risks of a withdrawal are shrinking. This
makes it all the more important to take advantage of the opportunities of
a new beginning, in the interest of both Greece and the euro zone. It
would also make the euro zone more attractive to new members, such as
Poland, with its strong economy. Foreign Minister Radoslaw Sikorski has
already signaled Warsaw's desire to join the euro zone.
If Athens were to leave the euro zone, it would send a message that the
fiscal and budgetary rules in the monetary union must be more closely
adhered to in the future. It would also make it easier for the Europeans
to implement the necessary resolutions to save the euro. In many
countries, the situation in Greece only inflames the resistance to bailout
funds and aid programs.
A comeback of the drachma would change this, so that it comes as no
surprise that in Germany, in particular, many people are inclined to take
a hard line on Greece. Horst Seehofer, the head of the conservative
Christian Social Union, the Bavarian sister party to Merkel's Christian
Democratic Union (CDU), has long called for a Greek withdrawal, and he now
feels vindicated. If Athens were to reintroduce the drachma, it would be
"neither the end of the euro nor the end of the EU," he says.
"We must preserve Germany's economic strength. That's more important
that Greece remaining in the euro zone."
The two other partners in Germany's ruling coalition are also
sharpening their tone toward Athens. "Greece only has a future in the
euro zone if its debts are consistently reduced and structural reforms are
put in place," says Economics Minister Philipp Rösler, leader of
the business-friendly Free Democrats. "A softening of, or deviation
from, the established programs will not occur."
The EU's Biggest Test
Volker Bouffier, the CDU governor of the western German state of Hesse,
also argues for strictly adhering to the current austerity course.
"Greece has already received more money than was paid out under the
Marshall Plan," he says. "The Greeks must treat the measures as
an opportunity, or else they don't stand a chance."
But even with a comeback of the drachma, the Greek problem would not be
solved by a long shot. A withdrawal from the monetary union would subject
the EU to the biggest test in its history. It would have to continue
supporting the Greeks to prevent the country from descending into chaos
One thing is clear: If Greece returns to the drachma, that will be the
point when Europe's work really begins.
REPORTED BY SVEN BÖLL, MANFRED ERTEL,
MARTIN HESSE, JULIA AMALIA HEYER, CHRISTOPH PAULY, CHRISTIAN REIERMANN,
MICHAEL SAUGA, CHRISTOPH SCHULT AND ANNE SEITH
Translated from the German by Christopher Sultan