Never Say Never: Remember when breaking up the eurozone was unthinkable? That was then.
It didn’t take long after Greece’s economic woes surfaced in 2009 for observers to contemplate a Greek exit from the eurozone. New York Times columnist Paul Krugman predicted this very scenario in 2010, 2011, and, most recently, on Sunday, when he warned that Greece’s withdrawal from the monetary union could happen as early as June (is Krugman angling for his own version of the “Friedman unit?”).
But European finance ministers, who tend to choose their words with the utmost care, have generally washed their hands of the topic altogether — dismissing the notion as unthinkable under European treaties. When the Dutch prime minister and finance minister argued in September that countries that persistently violate eurozone budget rules should be expelled from the union, the Irish Times marveled that the two leaders had “crossed the Rubicon.”
After a meeting of eurozone finance ministers on Monday, Eurogroup chief Jean-Claude Juncker stuck with the script, declaring that “there is an unshakeable desire to keep Greece in the eurozone” and that the group hadn’t even discussed a possible Greek exit.
But not all of Europe’s financial leaders are on the same page. In fact, several European officials have crossed the Rubicon in recent days as Greece’s struggle to form a coalition government has raised the prospect of new elections, which could empower political parties that oppose the austerity measures attached to the country’s $170 billion bailout. Talk of a Greek exit is so widespread this week that news outlets are now referring to the looming “Grexit,” which has already become a popular hashtag on Twitter.
But are these officials changing their tune because Greece is now more likely to leave the euro, and they want to prepare markets for the news? Or are they doing so as another form of political pressure — a way to make it extra clear to Greek leaders that they should think twice before jeopardizing their membership in the union? The new message appears to be this: Greece, you’re the one who’ll decide your future in the eurozone. And if you renege on your bailout commitments, you’ll be the one who suffers, not us.