Greek Exit - Who will Win?

• 05.12.2015, 10:00
•  Europe,  World

http://www.bloomberg.com/news/articles/2015-05-10/merkel-pressed-to-give-up-on-greece-as-germans-urge-strong-euro

Christian Democratic party leaded by German Chancellor Angela Merkel started to pressure own leader to give up on Greece because of the sake of the euro. Some officials in Finance Ministry of Germany are persisting toward the conclusion that the euro currency will be better off and stronger without Greece, Bloomberg reports.

Alexander Radwan, who is a Merkel-affiliated lawmaker and the person who voted for extension of Greek bailout in February now is against of staying Greece in the Zone. According to him the euro would be stronger and the other countries of the Eurozone would move closer together and apply to more strict rules.

Merkel, however, thinks that Europe still needs to support Greece and help them to stay in the euro area because of geopolitical reasons. On the other hand some officials in the German government do not agree and they see Greece as a rule-breaker in the regions economy and it seems for them that Greek situation can be contagious for the other member countries of  Eurozone as well. Other officials in Germany consider that if Greece have its own currency it will help the country to get back on its feet sooner.

According to the German Chancellor she is trying to take into consideration everyone’s interests and try to do everything possible to keep Greece in the euro area.

Thus, in case Greece finally leaves the Zone, it is true that the euro will be stronger, but this is not what European Central Bank desires. According to the last policy steps that the Bank took in the action, it wanted to weaken euro in order to push export and boost the production. So, Greece is not the reason in this case. The other option that Greece is a rule-breaker in the Zone is not properly justified, because the country suffers under the harsh fiscal policy that is demanded by the system. So, the country has right to fight for its economic benefits. 

And finally is it a good idea for Greece to leave the Zone? Actually it needs a serous and comprehensive economic analysis to answer the question, but one thing is obvious - for Greece to come back to its previous currency  - drachma, can be beneficial for the country’s economy, as it will raise the export and will keep prices down, which will push the production. In this case, however, there is also a negatve side - the public dept in euro has to be paid in drachmas and Greece will be worst off in this case because of the exchange rate.