Greece will never leave the euro zone and dump the single currency because the global economic ramifications of such a move would be “catastrophic,” warns economist Nouriel Roubini of New York University.
“It will not happen because the consequences would be too terrible,” he told the Financial Times’ FTfm.
The European Union is rushing emergency funds to Athens to keep Greece afloat after the country was given another chance to build a future in the euro area, Bloomberg News reported.
Greek banks are ready to open their branches across the country on Monday after a three-week shutdown, officials said, while German Chancellor Angela Merkel called for swift aid talks so Athens could also lift withdrawal limits, Reuters reported.
Roubini said the biggest danger of a Greek departure would be that Greece’s ties with Russia would grow stronger. He said this could enable Russia to regain influence in the Balkans at a time when its dealings with Ukraine is already a concern for politicians, FTfm reported.
“We could see Russian influence extending in the Balkans again.”
Roubini was confident the deal would go through and be effective.
“It includes the structural reform and investment needed to improve Greece’s growth potential,” he said.
But German finance minister Wolfgang Schäuble has admitted he believes Greece would be better outside the euro, where it could restructure its debts, the Irish Times reported.
“Many economists ... are listening to what the IMF says, which doubts that Greece’s problems can be solved without a real debt haircut,” he said. “But a real haircut is incompatible with membership in a currency union.”
Given these contradictory positions, he said a Greek exit to restructure its debts is an option that must be considered.
(Newsmax Wire Services contributed to this report).
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