Greece Leaving the Euro Seems Likely as Governments Create Back-Up Plans

Greece’s proposed exit from the euro zone, called Grexit, should be seen as certain given the fact that almost half of EU governments are beginning to set up contingency plans to protect themselves from its inevitability.

Fears of Grexit have reached the point that on Thursday Senior European Union officials told member states to prepare for such plans. Though they are just contingency plans, such a request and warning indicates that Grexit is more than likely.

Even though EU leaders have made it very clear that they are committed to Greece remaining in the currency union, and this may be sincere, they are also adamant about them meeting their austerity commitments. This was reconfirmed at the conference held this past week in Brussels, where EU leaders met to attempt to come to a resolution of the economic crisis.

Mr. Vittorio Grilli, Italy’s Deputy Economy Minister, stated that his country was preparing for such a possibility. The concern he had was that Greek elections on June 17 will likely usher in parties, such as the Syriza, that reject the austerity and bailout measures they previously agreed to. Though these parties have also stated they are committed to Greece reaming in the euro zone, they are also likely adamant about rejecting austerity.

The contingency plans appear to be focused on financial and currency policies, but some governments are looking at other important factors. In the UK, the Home Secretary, Ms. Theresa May, is setting arrangements to deal with what they believe will be increased immigration from Greece. Greeks would continue to have access to relaxed immigration policies within the EU, in spite of leaving the euro zone.

Though national governments are setting up emergency plans, it should be noted that there is no plan as of yet at the European, or EU level yet. This is a good indication that there is a slight chance that Grexit could be avoided.  However, since the EU is the source of the warning, this chance seems very slim, and Grexit is clearly more than likely to happen.