A Greek exit from the eurozone would only serve to inflict more misery on its people as the country would still have to pay back its huge debts which have soared to a staggering €243 billion, according to observers.
Consequently, it is in its own interest to negotiate some sort of agreement with its creditors, to prevent them from pulling the plug on its economy.
At the same time, the lesson learnt from this crisis is that brinkmanship is no longer an effective diplomacy tool.
These were the views expressed yesterday when Times of Malta sought the opinions of former EU commissioner Tonio Borg, former Central Bank governor Francis Vassallo and international relations analyst Stephen Calleya.
On Tuesday at midnight, Greece went in arrears on a €1.5 million loan repayment to the International Monetary Fund, plunging the eurozone into further uncertainty.
The troubled EU member state became the first advanced economy to miss such a deadline and it will no longer be eligible for IMF funding until this debt is cleared.
However, a fresh offer tabled by Greece yesterday morning fuelled fresh hopes that all is not lost and that common sense would prevail.
In a letter to creditors Prime Minister Alexis Tsipras expressed his willingness to accept most conditions, which he had previously rejected before calling a referendum for next Sunday. Although no decision was taken until the time of writing, international markets reacted positively to this development.
Nevertheless, Mr Tsipras later spoke on Greek television, urging people to vote No in Sunday’s referendum and claiming this would not result in the country leaving the eurozone.
Dr Borg said: “Greece’s place is within the EU. It would be a big blow if it had to exit from the eurozone, or worse the EU. I believe that ultimately, common sense will prevail.”
The former EU commissioner, who had previously served as foreign minister when the Greek crisis erupted in 2010, said the hardline approach adopted by the left-wing Syriza government – elected on the platform of ending austerity measures and negotiating better terms with its creditors – had cost Greece dear.
“Many lost sympathy for Greece as a consequence of Mr Tsipras’s attitude,” he said.
Europe can cope without Greece, but Greece won’t survive out of Europe
Dr Borg argued it would be unfair if the EU had to give in to the demands of the present Greek government, seeing no such leniency was shown with its former leaders who faced a backlash back home for pursuing unpopular, but necessary, austerity measures.
“God forbid if the EU were to give in to somebody elected on populist pledges, such as Mr Tsipras,” he said, while expressing his support for Prime Minister Joseph Muscat who last week accused the Greek government of acting “irresponsibly”.
The former Central Bank of Malta governor did not mince his words either.
“Europe can cope without Greece, but Greece won’t survive out of Europe,” Mr Vassallo said.
“Reverting to the drachma would result in high inflation, which in turn would inflict more misery on vulnerable people like pensioners and low-income earners.”
Mr Vassallo said initial feedback from the fresh proposal tabled yesterday by Greece was positive, and could be an indication that some sort of deal would be struck before it was too late.
From a political perspective, Prof. Calleya noted that the Syriza party had remained true to its word and sought to renegotiate the tough conditions of the bailout programme. Unfortunately, its strategy of brinkmanship had not delivered the desired results.
As for Sunday’s referendum, Prof. Calleja concurred with popular views that it would boil down to whether the country would stay in the eurozone or not.
For Mr Tsipras, voting no would be a vote of confidence, as his position would become questionable if the Greeks accepted a deal he deemed to be unacceptable, Prof. Calleya said.
Nevertheless, he cautioned that reforms should, at all costs, avoid putting the lion’s share of the burden on the most vulnerable sectors of society.
“While an elected government should adopt a strategy that protects the most vulnerable in their discussions with creditors, it must also offer clear alternatives that will result in a balanced budget over a period of time.”
However, only time will tell if this fine equilibrium is reached, but with creditors breathing down its neck, the options for Greece seem to be running out fast.