The Slatest

Will Greece Lead a Rush to the Exits in Europe?

Greece’s Alexis Tsipras with Spanish Podemos leader Pablo Iglesias.

Photo by DANI POZO/AFP/Getty Images

Technically, Greeks are voting this coming weekend only on whether to accept the terms of a bailout deal proposed by the country’s creditors, but other European governments, including the leaders of Germany, France, and Italy, have made clear today that they view it as an in-out referendum on whether Greece will remain within the eurozone. Prime Minister Alexis Tsipras’ Syriza party has urged voters to reject the bailout, and as there’s currently no legal mechanism for withdrawing from the monetary union other than a complete withdrawal from the EU, the prospect of a full-scale “Grexit” is looking much more likely this week.

European heads of state intend this as a threat, and a majority of Greeks do want to stay in the Eurozone, though perhaps not under what are viewed as unfairly punitive bailout terms, but some are watching events in Greece this week with excitement. If the Grexit does come to pass, the increasingly influential euroskeptic parties on both the right and left in several countries will view it as a watershed moment in the continent-wide backlash against European centralization.

Spain’s leftist, anti-austerity Podemos party, Syriza’s ideological allies, have organized a rally in Madrid to support the Greek referendum on Saturday, with demonstrators chanting “Viva Greece!” and “We are all Greeks!” and the party’s leader, Pablo Igelsias, referring to Greece’s creditors as a “mafia operation of fiscal terrorism.” Podemos made major gains in local elections in May, and polls show it running even with Spain’s mainstream parties in advance of general elections due later this year.

Gerry Adams, leader of Sinn Fein, the Irish nationalist party that has sought to reinvent itself as a leftist anti-austerity force, has praised the referendum, as has Italian comedian-turned-politician Beppe Grillo, leader of the populist, anti-EU Five Star Movement. Syriza has also earned praise from the opposite end of the political spectrum, with right-wing euroskeptic parties like France’s National Front and Britain’s UKIP praising this challenge to the authority of Brussels. Britain, which is not on the euro, is due to hold a referendum on EU membership by 2017, and polls show voters are likely to vote for an exit unless Prime Minister David Cameron succeeds in a long-shot bid to renegotiate the terms of British membership. Marine Le Pen, whose far-right anti-EU National Front came in second in local elections this year, has promised to hold a similar referendum in France if she is elected president in 2017.

Though mainstream European parties are by and large aghast at what’s happening in Greece, these parties will be excited to see a country take the plunge and accept the consequences of abandoning the European project. Eurozone membership is designed to be irreversible, and the exit of one member could erode trust in the union, leading more to follow its example.

On the other hand, Greece is hardly the ideal test case. No one really knows what happens next is Greece strikes out on its own, but even Grexit advocates, who argue Greece will benefit in the long run from the ability to print its own money and take advantage of more favorable exchange rates, concede that in the short term, massive inflation and a banking crisis are almost inevitable and the country will be treated like a pariah in global markets. Even if the worst scenarios don’t come to pass, Greece is unlikely to look like a promising model for a post-euro future for at least several years.

The Greek events are also likely being watched closely in Moscow. Tsipras’ government has pursued closer ties with Moscow as tensions with Europe have grown, and though he is not officially looking for other sources of loans, he paid a high-profile visit to an economic forum in St. Petersburg hosted by Vladimir Putin last month, giving a keynote speech at the conference. Putin has invited Greee to participate in the new BRICS Development Bank, an alternative to the U.S.-dominated IMF and World Bank organized by emerging powers. Putin, who in addition to his outreach to Greece has cultivated ties to anti-establishment parties throughout Europe, would likely welcome a new dramatic blow to the continent’s unity. 

Read more of Slate’s coverage of the Greek financial crisis.