The swelling protests, marathon summits and market panic can only mean one thing: the eurozone is gearing up for its third consecutive summer of slogging through its never-ending debt crisis.
After a brief respite, Greece once again finds itself on the brink of a financial collapse. Last month, Greek leaders were unable to form a coalition government after the May 6 election, which was largely seen as a rebuke of unpopular austerity measures that have ravaged Greek civil society. A repeat election has been scheduled for June 17, and it has been widely cast as a referendum on Greece’s membership in the eurozone.
European leaders have made it clear that compliance with previously negotiated austerity programs is a precondition for continued eurozone membership. However, Greek citizens have clearly signaled their growing intolerance for the successive government cuts that have taken a dramatic toll on living standards over the past two years.
This impasse has spurred some policymakers to openly acknowledge the contingency plans that are being drawn up in the event of a Greek exit – or Grexit – from the eurozone. Once seen as an improbability, Greece’s eventual departure from the currency union is now viewed as all but inevitable. While some European policymakers have recently issued statements about a “managed exit,” many believe that the absence of any legal framework governing a country’s departure from the euro would all but guarantee a chaotic chain reaction that would have global ramifications.
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