From the Comments: Greece, the Euro zone, and Russian prowess

Dr Amburgey writes:

I just returned yesterday from a week in Athens for an academic conference. There seemed to be a big socio-economic divide in voting intentions. The unemployed and menial workers were definite No votes. The Yes votes were physicians and a few academics. Personally I think they should bag the euro and go back to the drachma.

Brandon: how long do you think it will be before Putin is making deals in Athens? Might be nice to have a friend in the EU when sanctions come up again. Port privileges for the Russian navy would be very conveniently located as well.

Jacques has a good, thoughtful response (“Leaving the Euro zone does not require leaving the European Union”) that I wholeheartedly agree with (and that I’ve blogged about here and here), and it appears Dr Amburgey is in agreement with us (though does he think Greece should stay in the EU?). Contra Dr Foldvary, I do not think there is any need for Greece to leave the EU. If anything, the EU should be adding more states, though not expanding its geographic space.

Regarding Russia, I simply don’t know. Russia – along with Turkey, Iran, and China – is a society that is very hard to understand let alone predict (I would add India/Pakistan to this list, but the states of the Indian subcontinent are traditional post-colonial states and are therefore much easier to predict; the other four were never conquered or carved up by imperial cartographers). The whole Crimea debacle still has me smarting. Nevertheless I’ll add my thoughts to the conversation.

I don’t think Athens will grow closer to Moscow. There are two major reasons:

  1. Greece fears Russia, which is why Athens has remained in NATO for so long.
  2. Most Greeks – even the ‘No’ voters in this recent referendum – don’t want to leave the EU; Greeks overwhelmingly want to be a part of ‘Europe’.

There are couple of minor reasons, too, though I don’t know how minor they are. 1) Greece is not Ukraine. 2) Russia’s economy is in shambles. Greeks have a higher standard of living than do Russians.

On the flip side, the Greeks are always thinking about the Turks. If an opportunity presents itself (though I cannot think of any arising), Athens may start to edge closer to Russia (a traditional enemy of Turkey) if it thinks Ankara is getting antsy about its former province. This is pretty extreme, though. Also, Russia’s economy may be in shambles, but it seems like Moscow always has plenty of money for military expenditures, and rent stemming from a Russian port in the Mediterranean Sea might be too tasty to resist for a country saddled with so much debt.

At this point I don’t think Greece has much clout in European politics, so I don’t see Moscow viewing Athens as a reliable friend in Brussels.

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3 thoughts on “From the Comments: Greece, the Euro zone, and Russian prowess

  1. Yes, I think Greece should stay in the EU although I think they should leave the euro [although that looks like a moot point now]. I think there will be ill-will in Greece for some time and Syriza has already taken a pro Russia stance vis-à-vis sanctions.
    http://www.wsj.com/articles/eu-heads-call-for-more-russia-sanctions-1422351364
    In one sense Greece doesn’t need much influence in the EU, a veto is a veto….

    I think it’s a mistake to view the clusterfuck in Greece as an issue of economics and not political economy. Not as big a mistake as viewing it as a moral failing of Greeks as some conservatives are wont to do but still a mistake.

    • Thanks Dr A.

      Fwiw, I don’t view Greece waltzing with Russia as a bad thing. It’s just competition, and not much at that (because if push came to shove, the Greeks would side with Europe). Athens should try to squeeze as much out of Moscow as possible, with as few strings attached as possible.

      You are right, too, I think, about this being an issue of political economy. Most commentators that I have been reading on Greece – from Krugman to Cowen to Delacroix – have been framing it in such a way, for the most part. The Euro Zone would have been a whole lot better off without the damned Euro, but nobody seems to read enough NOL!

      The tricky part is going to be how to keep the EU together while discarding the Euro. My initial thoughts on this are two-fold: 1) The euro is, for all its faults, a voluntary currency. Nobody forced the Greeks or Italians to adopt it as a national currency. Following this line of logic, I don’t see why the euro – as a currency – could not simply function as one of many currencies. So, like, the euro could compete with the pound, a new deutsche mark, a new guilder, etc., but the ECB would no longer be a supranational authority.

      2) Without the political backing of Brussels, the euro would eventually fail, but its going to fail anyway so why not flush it out in an orderly fashion by introducing competition to soften the blow? Heck, if states in the EU were allowed to reintroduce a national currency into their economies, while allowing for the open flow of other currencies in the EU as well as the euro, there might not even be a blow at all. The euro itself might even survive if it had a bit of competition within the EU, especially if the more austere northern states decided to keep the euro as a currency but allowed for competition within the EU (and, hell, outside of it as well).

      I think that Europe needs to more politically knit together, but not so that a single currency could function better a la the dollar in the US (“streamlining fiscal and monetary policies”). Europe should get tighter politically so that it has the power to recognize devolutionist tendencies within the nation-states that have joined the confederation. I realize I’m starting to go off on a tangent here, but this is huge.

Please keep it civil

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