There are signs that Europe’s long simmering financial crisis may be about to boil over.
Last weekend, the parliament of Greece, which is at the center of the crisis, passed yet another round of eurozone-mandated austerity measures.
Greeks, once again, took to the streets in protest. Anna Diamantopoulou, a member of the Greek cabinet, said Greece needed to pass this latest round of austerity measures, but said she understood why Greeks are angry.
“We want to stay in the eurozone, so we did all this because we insist that Greece has to be in the eurozone. But there has to be an end,” she said. “For the people, the feeling is — enough is enough. For people, although they have done so much, they cannot see anything.”
Greeks continue to hope that Europe will see that they are taking steps — harsh steps — to mitigate the economic crisis.
But earlier this week, European finance ministers canceled a face-to-face meeting with Greek officials. They said the Greeks had not done enough to implement previous agreements, and so there was no need to talk about new ones.
“We can help, but we are not going to pour our money down a bottomless pit,” said Wolfgang Schäuble, Germany’s Finance Minister.
That kind of talk led to an angry reaction from Greek Finance Minister Evangelos Venizelos.
“There are clearly powers inside Europe that are playing with fire,” Venizelos said, “that would like to see Greece outside the eurozone.”
The idea of Greece voluntary leaving the eurozone — or getting kicked out — has been a taboo subject here in Brussels for two years now. Chalk that up to the fact that its taken an incredible amount of political capital to create and maintain the common currency.
But Greece’s dire economic situation and the thought that it could spread are exposing Europe’s fault lines.
“The general picture is one of mutual distrust,” said Gideon Rachman, chief foreign affairs commentator for the Financial Times.
He said both Greece's and Europe’s leaders are under enormous public pressure.
“We’ve seen the riots in Athens, and so the Greek government clearly knows that large parts of the Greek population seem to be at the end of their tether,” Rachman said. “Equally, though, if you’re a German politician or a politician from one of the other nations paying into the bailout fund, you know this is very unpopular at home, and so there’s a lot of skepticism in Germany and Luxembourg as to whether they will ever see this money back.”
So while no one will say so publicly, Greece’s exit from the eurozone is increasingly seen as an option.
Johan van Overtveldt, author of “The End of the Euro,” said more austerity measures won’t work in Greece, because there is, literally, nothing left to squeeze, and the bailout packages Europe has proposed simply aren’t enough to solve the problem either. He said the Greek economy needs to grow to be competitive again.
“There is one option left, and that’s for Greece to leave the eurozone, to have a new Drachma that would devalue at least 50 percent vis-à-vis the euro. That in one movement of the finger will improve dramatically the international competitiveness of the Greek economy, and give Greece some opportunity to start growing again, which is the key to all the problems Greece is facing,” van Overtveldt said.
But that’s in the long-term. In the short to medium term, he said, Greece’s situation will remain dire, whether it stays in the eurozone or ends up leaving.
European officials say they are hoping to finalize Greece’s next bailout plan on Monday.
The country faces a mid-March deadline for making payment on a $15 billion bond — or face bankruptcy.