Europe on journey to the unknown if Greece exits
(BRUSSELS) - As investors and European leaders big and small tot up the potential cost of Greece departing the euro, the European Union too stands perilously close to meltdown after six decades in the making.
Weeks ago still an elephant in the room, Athens' looming exit from the club of 17 nations sharing the single currency has become the hottest topic in town since Greece's inconclusive elections this month.
Markets put the collateral damage of "Grexit" -- Greek Exit -- at between 150 to 500 billion euros, while political analysts see the bloc at worst tumbling like a house of cards, at best pulling together to pluck a new future from the ruins.
"It is a very very risky game, a very unpredictable situation," Jan Techau, director of the Carnegie Europe think-tank, told AFP. "Once you pull the plug no one knows what will happen, which is why everyone's trying so hard to avoid this."
Credited with underpinning European peace and democracy for more than half a century, the EU has seen rough-and-tumble times, but the sovereign debt crisis has spawned its worst nightmare -- prospects of a failed Greek state on its periphery and a domino-effect shrinkage of the bloc.
Analysts paint a bleak picture of events in Greece should it quit the euro, with banks collapsing, the currency nose-diving, unemployment ballooning and riots in the streets.
"The greater political symbolism would be hugely damaging for European integration," added Techau. "It would undermine the idea of solidarity, shattering efforts to construct Europe."
"If the glue comes undone it will hurt the entire European project."
Worried by the prospect of anti-austerity Greeks winning a vote re-run next month and refusing to pay back hundreds of billions in loans, European leaders, including austerity hardliner German Chancellor Angela Merkel, have softened their line.
A Greek exit "will delight extremists. It's a very bleak option, which is why we're hearing all these calls to Greece not to depart," said Jean-Dominique Giuliani, who heads the Robert Schuman foundation in Brussels.
But such talk may be too little too late.
"Events in Greece show that elites are no longer in charge, things have been taken out of their hands," said Richard Whitman of London-based Chatham House think-tank.
"I think the Greek public has stopped listening to what the EU or the politicians have to say. They are just looking at their unsustainable living conditions."
Across the 27-nation bloc, the two-year crisis has toppled eight national leaders -- the latest being France's Nicolas Sarkozy -- while Greece's far-right this month joined eurosceptic populist parties on the march in nations such as Finland, France and the Netherlands.
And as the crisis threatens major economies Italy and Spain and knocks at France's door, a growing rift between the 10 non-euro and 17 euro nations -- the "ins" and "outs" -- may widen should Greece depart.
Nations already hesitant about joining the single currency might turn their backs on the project while weaker economies such as Portugal, Ireland, Italy and Spain might also depart -- or be elbowed out.
"A Greek exit would throw the whole process into reverse," Whitman said. "That has never happened before. We've never had a country that was expelled or expelled itself from the core part of the project."
The endgame could see the euro restricted to a core group of economically sound nations such as Germany, the Netherlands, Belgium, Luxembourg, Finland, Austria and France, he said.
Encouraged by Britain's example, London having opted out of the euro as well as the border-free Schengen area, other EU nations might be tempted in the future to pick and choose their favoured EU projects, rather than opt for grand union.
On the other hand, the drama unfolding in Greece might save the European dream, said Giuliani.
"Each time there's been trouble there's been progress on the path to integration," he said.
Grexit could open the way to the creation of eurobonds -- mutual loans currently opposed by Berlin -- as well as a European Treasury and a European finance ministry, Giuliani said.
"I'm not sure Greece will leave," he added. "I tend to think it will remain in the euro."
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