In 2012, the prospect of a "Grexit" – a Greek exit from the eurozone – had the entire global economy on edge.
Fast-forward two years: Greece is facing elections Jan. 25 after parliament failed to elect a new president last week. The far-left opposition Syriza is poised to take the lead – and its leader, Alexis Tsipras, says he'll change the terms of the country's bailout agreement and put an end to German-led austerity if it does. Greek Prime Minister Antonis Samaras, meanwhile, has warned that Greece's membership in the eurozone hangs in the balance.
This time, European leaders appear more blasé about an outcome they once feared. The reason: They feel the EU has undergone so much reform since 2012 that one country's exit might not cause a domino effect.
French President François Hollande said it was "up to the Greeks" to decide whether they stay in the eurozone. He went further, during an interview with France Inter radio this morning, condemning the economic prescription that has kept Greece in the eurozone until now, but at a high cost. “Europe cannot continue to be identified by austerity,” he said.
His words came after a widely noted article from Der Spiegel was published over the weekend in Germany, claiming that the German government has decided that the eurozone would survive a “Grexit.” “The danger of contagion is limited because Portugal and Ireland are considered rehabilitated,” Der Spiegel quoted an unnamed government source as saying.
German Chancellor Angela Merkel did not comment on the report, and her government has publicly said that it expects Greece to continue the terms set out by the bailouts prescribed by the EU. According to Germany’s Deutche Welle, German Economy Minister Sigmar Gabriel denied to the local media that Berlin was making any contingency plans for a “Grexit.”
“The goal of the German government, the European Union, and even the government in Athens itself is to keep Greece in the eurozone," Mr. Gabriel was quoted as saying.
But the Der Spiegel report nevertheless reflects sentiments held by observers throughout the EU: namely, that it would manage even if Greece left, largely due to reforms that have been pushed through across the eurozone, from bodies in Brussels to national governments.
Where leaders might be more concerned is in the political realm, if similar radical parties, on the right or left, use a Syriza victory to boost their own cause.
As Takis Pappas, author of the new book “Populism and Crisis Politics in Greece,” told The Christian Science Monitor last week:
“If Syriza wins in Greece, it might have a multiplying effect in a sense, from Podemos in Spain or the Five Star Movement in Italy to the National Front in France” he says. “I don’t think the threat posed by Greece is economic [today], but it is political.”