Judy Asks: Would Grexit Be a Geopolitical Disaster?

Like the Yugoslav Wars in the 1990s and the Ukraine conflict today, the eurozone’s troubles have undermined the post–Cold War goal of a Europe whole, free, at peace, and enjoying reasonable conditions of health, education, employment, and prosperity. Grexit would make matters worse.

By demonstrating that a country can leave a monetary union intended to be permanent, Grexit would sink the notion of a Europe that is whole. Sooner or later, a Greek exit would call into question the eurozone membership of other EU countries.

Whether Grexit became a disaster would depend on the European and U.S. responses. Inadequate post-Grexit levels of assistance for Greece would offer fertile ground for the spread of economic disorder, organized crime, corruption, irregular migration, religious radicalism, and other malign phenomena that are breeding across the Balkans and Eastern Mediterranean.

If #Grexit happens, there is no serious risk Greece would tilt to #Russia, let alone to China.

 

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There is no serious risk of a Greek tilt to Russia, let alone to China. But Greece might come to resemble Kosovo or Macedonia in its disorderly politics, rotten institutions, and reliance on foreign economic help. Under what I would call a contained disaster, a long-term Western presence would prevent total state failure but would deepen native resentment of Greece’s de facto protectorate status.

A Greek departure from the eurozone would be dismal news for both Greece and its EU partners. Grexit would prove that European integration is reversible and doesn’t lead to convergence in prosperity and governance standards.

Is Europe also in for a geopolitical disaster, with stability under threat along a vast arc from the Eastern Mediterranean to the former Yugoslav republics? I doubt it. Yes, the economies of Greece’s neighbors would suffer lower exports and a decrease in remittances, and Greek-owned banks in Bulgaria, Albania, and Serbia would struggle too. However, let’s not forget that these are local entities subject to national regulations and safety nets. For all the pain, the drachma’s comeback might, in time, facilitate adjustment and reinstate Greece as a motor of regional growth.

In case of a #Grexit, Moscow is clearly not willing to bail out Greece.

 

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To be sure, the EU’s competitors would score points. Russia would poke a finger in the West’s eye; yet with a recession at home, Moscow is clearly not willing to bail out Greece. The visit by Greek Prime Minister Alexis Tsipras to Moscow on April 8 was telling. For their part, eurozone chiefs have not softened because of Athens’s flirtation with the Kremlin.

For all its failings, Greece’s Syriza-led government looks committed to good ties with Turkey—especially as a window of opportunity has opened for resolving the division of Cyprus with the April 2015 election of Mustafa Akıncı as president of Northern Cyprus. Grexit would be bad, but not a catastrophe.

Grexit would have profound (although not equally distributed) geopolitical consequences for all sides involved. Even if Greece were to leave the eurozone but remain in the EU, the country’s contribution to various common endeavors would be quite limited, at best.

First, Greece has one of the EU’s most sensitive external borders in the context of immigration. Effective border management would be beyond the capabilities of a bankrupt country.

Second, a healthy Greece, either as a party to a dispute or as a balancing actor between Albanian and Slavic populations in the Western Balkans, can play an important stabilizing role in the region.

Third, further reduction of defense expenditures and military capabilities would negatively affect Greece’s participation in NATO and EU missions.

Fourth, Greece’s privileged relationship—of varying degrees—with Israel, the Arab world, Iran, Russia, and China could allow it to play the role of an additional Western bridge in turbulent regions.

An ostracized Greece would be vulnerable to non-Western great-power penetration.

 

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And finally, an ostracized Greece would be vulnerable to non-Western great-power penetration.

So a new Greece could certainly be a valuable partner for the EU, as well as for the United States and NATO, in regions of critical importance for European and transatlantic security and interests. Greek political leaders should step up to the challenge and take advantage of the country’s opportunities.

A Greek exit from the eurozone, or even a default short of this, would pose very real geopolitical risks. Amid all the talk of moral hazard and more tangible financial stakes, the political and security dangers associated with a Greek collapse have not received sufficient attention.

A Greek exit from the eurozone, or even a default, would pose very real geopolitical risks.

 

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A recovering Greece, inside the eurozone, would be capable of playing a very positive role on an increasingly chaotic Eastern Mediterranean scene. A troubled and unstable Greece, by contrast, would be in no position to play a constructive role—whether in the Western Balkans, where much unfinished business remains, or on the range of pressing migration, terrorism, and energy issues in Greece’s neighborhood.

The EU could lose a potentially important asset in projecting European power, and NATO could lose a key partner in addressing the acute risks emanating from the Levant and the Mediterranean. Russia might well take advantage of Greek weakness to strengthen its position vis-à-vis Europe through new financial and energy deals. And Athens could be distracted at a time of real potential for a settlement of the ongoing division of Cyprus.

In short, the direct and opportunity costs for Europe and the United States could be substantial and ought to argue in favor of a financial compromise with Athens—in the geopolitical interest of the transatlantic partners.

Fears about the geopolitical ramifications of Grexit focus on the possibility that Greece might be a Russian Trojan horse. Such concerns are not conceptually wrong, but I don’t believe that the EU will face a geopolitical Waterloo.

Even if a #Grexit happens, the EU will not face a geopolitical Waterloo.

 

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One thing is for sure: even if Greece exits the eurozone, it will still be a member of the EU and of NATO. Despite populist voices within the Greek government suggesting that Athens should play the geopolitical card and seek alliances in Russia, the dogma coined by former Greek prime minister and president Konstantinos Karamanlis that “we belong to the West” will remain deep-rooted among Greek elites.

What is more, Russian President Vladimir Putin, himself a political realist, recognizes that entering the Western backyard during such critical circumstances might backfire. Besides, Greece will have little to offer as a foreign policy actor, so Russia will be prudent and won’t add fuel to a fire waiting to ignite.

Moreover, concerns that the ongoing Greek-Russian energy flirt will evolve into an energy alliance are rather far-fetched. In the event of Grexit, it is doubtful that the proposed Turkish Stream gas pipeline across the Black Sea will enter Greece, as Russia will seek more reliable partners and more sustainable transportation routes. It recently emerged that there may be a resurrection of the suspended Nabucco pipeline, which would transport Russian gas from Turkey to Central Europe, bypassing Greece. If that happens, Athens will have limited leverage against Europe, and using energy as a political tool to blackmail the West will not be an option.

Grexit would not be the thermonuclear war feared by former U.S. president Harry Truman and Soviet leader Joseph Stalin, nor would it be the fall of Byzantium. Yet the poisonous negotiations between Greece and the troika of the European Central Bank, the International Monetary Fund, and the European Commission have already destroyed a long-accepted climate in the Old Continent. The sweet utopia of progress, coexistence, welfare, and mutual solidarity in Europe taught to every generation since World War II has given way to nasty confrontations.

Greek public opinion is divided. On the one hand, there is a leftist fight against neoliberalism, a cocktail that mixes Yanis Varoufakis, Joseph Stiglitz, Thomas Piketty, and a splash of ouzo, not prepared to compromise but happy to struggle against capitalist Europe and eager to daydream in a reverie of easy pensions and short workdays. On the other, there is a much savvier crowd, aware there is no such thing as a free moussaka lunch anymore, ready to make sacrifices, yet hopeful that Europe will eventually blink and rescue the hapless Prime Minister Alexis Tsipras.

#Grexit would not be a geopolitical tragedy but rather a nasty Greek-European tragedy.

 

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If a deal is not reached in the next couple of weeks to avoid Grexit, the EU will be reduced, Greece will have to beg for credit while printing useless drachmas, and many other countries will shiver: Spain, Portugal, Italy. Tsipras will win and lose elections like the ins and outs of a Greek concertina, the streets of Athens will be crowded with proud demonstrators, and Varoufakis will write his memoirs. All the smart Greek kids will leave the country in just a few years.

So Grexit would not be a geopolitical tragedy, no, but rather a nasty Greek-European tragedy, unless a benign deus ex machina pops up soon. Mario Draghi as Athena, anyone?

The specter of Grexit signals a decline in the EU’s influence in Europe, and perhaps a concomitant increase in Russian influence. Thus, it is important to place the debate on Grexit within its broader geopolitical context. Sometimes, it feels like the discussion of Russia’s comeback focuses too much on the military balance in northeastern Europe. As critical as that might be, it is only part of the story. Overall, the EU’s standing in northeastern Europe is actually quite solid. The Baltic countries and Poland are economic success stories. They are politically stable, and the EU enjoys strong public support there—which cannot be said of Russia.

The specter of #Grexit signals a decline in the EU’s influence in Europe.

 

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In southeastern Europe, the balance is far more mixed. Many countries there have not yet joined the EU, and those that have are rather behind in terms of economic development and political stability. Moreover, southeastern Europeans are generally much more prone to Russian economic, political, and cultural influence than their northern counterparts are. The 2013 strategic partnership between Russia and Serbia bears witness to this—as does the February 2015 agreement that will allow the Russian Navy access to ports in Cyprus.

Against that backdrop, Grexit would be very symbolic. For all its problems, Greece happens to be the one southeastern European country that enjoys the highest levels of economic development and integration within the EU. Of course, Greece could exit the euro and remain within the EU, and in that sense, Grexit would not be the end of the EU’s influence in Greece. But it would certainly represent a serious blow to the EU’s position in southeastern Europe and open the door to even greater Russian influence and geopolitical contestation in that part of the continent.

The short answer is no. Greece will probably be out of the eurozone in the near future but is likely to remain in the EU, albeit as a peripheral country in the outer circle of member states.

#Grexit could in fact be the beginning of a much-needed consolidation of the EU.

 

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However, even if the momentum of a default and eurozone exit were to lead to Greece’s exit from the EU, the consequences would be manageable. This sort of Grexit could in fact be the beginning of a much-needed consolidation of the EU, which could result in a firmer core union that is more capable of rejuvenating itself. Greece could play a spoiler role given its close relationship with Russia, and an exit from NATO would be a likely consequence—but Greece is no Lehman Brothers.