In late 2016, Professor Otmar Issing of the European Central Bank issued a series of prophetic statements about the current, unworkable condition of the Eurozone. According to the professor, "One day, the house of cards will collapse.” Backing up Issing's position was considerable data, collated over the past decade as the collapse of the Greek, Spanish, Portuguese and Italian economies led to a vicious circle of bailouts and lending with little to no yield, which served to sink the Union's economy further into the mire.
Slowly but surely, the facade of a booming E.U. economy supported by cheap oil and unsustainable growth in local, unregulated circles began to fall apart, revealing that every strategic decision since 2010 was made in the interest of rescuing the capital of French and German banks.
Then, in 2015, Greece's Syriza government led by Alexis Tsipras attempted an ineffectual gamble, threatening the Union with a Grexit. It was a considerable risk that ultimately succeeded in merely reinstating newer, more severe austerity measures. Now, following the recent statement by Ted Malloch, the likely U.S. ambassador to the EU, Grexit might be well on its way to becoming a reality. According to Malloch: “This time I would have to say that the odds are higher that Greece itself will break out of the euro.”
The statement was compounded by Malloch's previous prediction where he claimed that in its current state, the Euro would not survive for longer than 18 months. It's important to note that Malloch, as the chosen (though as yet unconfirmed) ambassador of Donald Trump, is likely to share the U.S. president's views, despite their faulty basis. While Malloch's opinions may not be supported by the rest of the Union (and Germany in particular), his statements coincide with recent IMF reports, which raise concerns that if negotiations with Greece's creditors aren't resolved by summer, it could lead to an accidental default and a definite exit from the Eurozone.
Such predictions might come off as little more than typical Euroskepticism. But at the same time, the U.S. has been one of the IMF's most important contributors, and should the country choose not to support Greece's upcoming bailout or negotiations, the E.U. could well be facing the possibility of widespread collapse. President Trump, of course, has made his opinions regarding a possible Grexit publicly known since 2012, when he openly supported Greece's return to the drachma.
Will Greece Succumb to Dire Predictions?
Trump's position closely aligns with Republican policy, which resisted Barack Obama's support for the IMF in its effort to rescue the failing E.U. economies. Now, after years of wailing and considerable teeth gnashing, the debacle might be finally coming to a head.
During the early days of February, Greece was in the grip of another wave of farmer strikes, which cut off traffic across the country's freeways as farmers with tractors protested the current wave of austerity measures that according to the Minister of Finance were a necessary part of the bailout negotiations. These events have served to bring the IMF's dire report more sharply into the light, after it was consistently ignored by the country's major creditors.
Greece's dire situation seemed to assume an almost comical note, however, when a separate IMF report, which made it on to Wikileaks, revealed that the IMF has long since declared Greece a lost cause. By all accounts, IMF officials speculate that the country's economy should have long since collapsed and are only attributing the sense of sustainability to a nebulous factor of "the strength of family-based support systems." Through it all, the IMF remains unwilling to assist Greece in its next bailout and is even considering possible workarounds, with the aid of the Trump administration.
As of this writing, opinions regarding any possible resolution remained unclear. According to reports issued over the weekend, negotiations toward achieving a Greek bailout are well underway, even as Greece's creditors seem unwilling to confirm this eventuality. However, should Greece be forced into a Grexit, the ensuing chaos of transition out of the euro and back to the drachma is certain to plunge the country into even more absurd cutbacks, even as Greece remains plagued by widespread poverty and massive unemployment. Should it occur, the aftermath of a Grexit might shape the continent's policies toward maintaining the Eurozone in 2017 and beyond.
It seems that the decision may finally rest on the shoulders of Trump and his cabinet, who seem to be treating the European Union as another Soviet dystopian state, which, according to recent statements, "needs a little taming."
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