Anas Hassan: Why Greece exiting the Euro makes sense

29/06/2015
CommonWeal

Anas Hassan states that in order for Greece’s democracy to be fully revived and for its economic situation to start improving, the country needs to exit the Euro and bring back the Drachma

FOR many Greeks, daily life has recently been like encountering a journey through a never-ending depressing dungeon. The dark curse of this vicious economic tornado has ripped Greece apart and caused social chaos.

For the last few years, it has hardly stayed away from the headlines for the economic woes that it has suffered, thanks to the short sightedness of politicians over the years. But despite the country being on the brink of collapse, there is a small glimmer of hope.

When the Euro was launched nearly two decades ago, celebrations swept throughout Europe as many citizens across the continent were witnessed withdrawing their cash from bank machines in a gleeful and jubilant manner.

Could Greece’s exit from the Euro provide the antidote that it so desperately needs?

A new era dawned for many member states of the European Union (EU) as they put their own former national currencies to bed and rushed into the new millennium with a currency they could all commonly share.

And while not every member of the European Union has the Euro as its currency, today nations such as France, Germany and the Republic of Ireland use it. Why have lots of different currencies when you can bind all of the different economies across the EU with one single and commonly shared currency?

One can argue respectfully that a common currency is appropriate for an economic and political union that carries a key feature of the single market, the same single market that political leaders back in the 1970s championed the cause of when it came to campaigning for membership of what was back then the European Economic Community (EEC).

Never was it truly imagined at the time by many people that the political union of the EU would become more and more cohesive today. And political leaders such as David Cameron are keen to protect that same single market today, despite also stating his unambiguous position on never allowing the United Kingdom to join the Euro currency, but rather to retain the Pound Sterling.

Other leaders such as German Chancellor Angela Merkel have remained keen not to allow Greece to slip through the exit door from the Euro and other so called European ‘federalists’ are also keen to keep the common currency intact, despite its ongoing troubles.

Greece faces the most major set of crossroads it has ever faced in its entire history this coming week and yet neither direction will bring any immediate relief. On the contrary, pain of some kind will be inevitably encountered.

But what about the long term? Let’s split this up into two major options. Firstly, if Greece decides to undergo even more austerity than ever before then it will most probably encounter the same journey it has experienced on every other occasion when spending cuts have been implemented – the vicious, repetitive and nauseating economic merry go round will once again prove to be a foreboding experience.

Greece can do no worse than make the much needed escape from a currency that has brought nothing more than hurt, pain and tragedy for its citizens.

But because of the major change in political circumstances now, there is every chance that this rather mundane and miserable option will thankfully not be selected. Could Greece’s exit from the Euro provide the antidote that it so desperately needs?

Greece can do no worse than make the much needed escape from a currency that has brought nothing more than hurt, pain and tragedy for its citizens. Sure, the country’s exit from the Euro will cause an abundance of short term pain not just there but potentially across the continent.

But yet, a lot could be gained. Fundamentally, the country’s democratic health will almost immediately improve. The country will have regained its autonomous dignity and can go ahead and make the decisions necessary in order to inject some sort of hope for the future.

If Greece returns to the Drachma then it will never again face being punished nor lectured by unelected politicians from Brussels over economic and public spending decisions.

We only have to go back to 1992 when Black Wednesday ripped through the UK and forced the then Chancellor of the Exchequer Norman Lamont to announce the country’s exit from the then-known exchange rate mechanism in the aftermath of interest rates soaring to as high as 15 per cent.

What was learned then was that when you peg different currencies together, the potential economic consequences can be very dire when things go wrong.

Fundamentally, Greece should never have joined the Euro. The example of Greece’s suffering over the last few years shows that the Euro project that politicians obsessed over has been nothing more than a delusional shambles.

Greece’s suffering over the last few years shows that the Euro project that politicians obsessed over has been nothing more than a delusional shambles.

The Euro lacks any economic sense and it can only ever truly work when you take ever more autonomy from all of the nations that use it as its currency – a route that nobody surely wants to go down at any time. And a common currency only really works between economies where the same or similar policies are enacted.

There is nothing wrong with a European Union that brings together the common interests that members share across a range of other different areas. But with everything in life, things do have its limitations.

You could never have two different kinds of economies bound together by one currency, and the sorry state of affairs in Greece will undoubtedly be viewed as the prime example of why full economic diversity must prevail over ill thought-out political projects.

Click here to find out more about how severely Greece has been affected by the Euro crisis and austerity, or click here for a quick explainer of the situation.

Picture courtesy of (Mick Baker)rooster