Argument: Leaving the Eurozone would be detrimental for Greece in the long-run.

Even if the proposition are correct in claiming defaulting and leaving the Eurozone would stimulate growth in the Greek economy, such benefits are transitory whereas the benefits of remaining in the Eurozone are permanent. [1] Having the Euro provides stability for the Greek economy – investors know that the currency will not collapse, making their invested capital worthless. The gravity of the outcomes of a Greek default cannot be known for sure, however some economists have even suggested that hyperinflation could occur – leading to disastrous consequences for Greece. [2] Moreover, in the long term, a single currency makes investment and transactions with other Eurozone members much more efficient and profitable. This is particularly important given that the vast majority of Greek trade is carried out with other European members. In light of these benefits, a short term cost that comes with the austerity measures enforced under the status quo, would be worthwhile in the long term.

[1] Barrell, Ray: “Eurozone crisis: what if… Greece leaves the single currency”, 14 May 2012, The Guardian, http://www.guardian.co.uk/world/2012/may/14/greece-euro-single-currency-expert-view

[2] Ruparel, Raoul and Persson, Mats: “Better off Out? The short-term options for Greece inside and outside of the euro”, June 2012, Open Europe, 2012 http://www.openeurope.org.uk/Content/Documents/Pdfs/Greece_better_off_out.pdf

Candidate 1: "A Greek default would increase stability for the rest of the Eurozone

A Greek exit from the ‘Eurozone does not mean the end of the euro. It will, instead, mark a new beginning. Germany has a long and proud tradition of currency strength, but it could not cope with going back to the deutschmark because it would rocket in value and destroy the country's competitiveness. Some 97% of the Eurozone's population will continue to use the single currency and their leaders will circle the policy wagons to protect what is left.’ [`] A Greek default and departure from the Eurozone would decrease uncertainty and fear within the rest of the Eurozone. This, in turn is likely to attract higher levels of investment and transactions across Eurozone members.

[1] Parsons, Nick: “Eurozone crisis: what if… Greece leaves the single currency”, 14 May 2012, The Guardian, http://www.guardian.co.uk/world/2012/may/14/greece-euro-single-currency-expert-view"
Candidate 2: "Defaulting would be the quickest route to economic recovery

Under the status quo, the Greek economy is only headed in one direction: deeper recession. There are no signs of the situation changing any time soon. Were the Greek Government to default on its debts, after a period of recession, conditions would quickly be favourable for economic growth once more. This is what was observed when Argentina and other nations [1] recently defaulted and can be explained by many factors. Firstly, defaulting and exiting the Eurozone would allow Greece to conduct monetary policy more freely: they would be able to quickly devalue their currency in order to make Greek goods and services more competitive on the international market. This would increase exports and attract investment, as well as tourists looking for cheaper holidays – all of which would contribute towards the rebuilding of the Greek economy. [2] Moreover, were Greece to default, it would put an end to the huge degree of unpredictability and uncertainty about the Greek economy. At the moment, nobody knows if the banks are safe, if the government will default etc. The constant chopping and changing of current austerity measures such as increases in varieties of corporate tax and changes in regulations also contribute to the huge degree of uncertainty in the Greek economy. Uncertainty breeds risk and risk breeds fear: a recipe that drives away foreign investors and makes it difficult for local businesses to start up. Were Greece to default, however, such elements of uncertainty would be seriously diminished, and conditions would be ripe for investment from abroad and locally. Greek would be able to start afresh.

[1] Pettifor, Ann: “Greece: The upside of default”, 23 May 2012, BBC News, http://www.bbc.co.uk/news/business-18143078

[2] Lapavitsas, Costas: “Eurozone crisis: what if… Greece leaves the single currency”, 14 May 2012, The Guardian, http://www.guardian.co.uk/world/2012/may/14/greece-euro-single-currency-expert-view"
Candidate 3: "The situation in Ireland, Italy, Spain and Portugal is not as extreme as that faced by Greece. It is therefore highly unlikely that a Greek default would have as severe a domino effect as the opposition suggests. Greece is the main source of political and economic uncertainty in the Eurozone, and their departure would ease the situation, facilitate investors and allow for the Eurozone to rally strongly. [1]

[1] Ruparel, Raoul and Persson, Mats: “Better off Out? The short-term options for Greece inside and outside of the euro”, June 2012, Open Europe, 2012 http://www.openeurope.org.uk/Content/Documents/Pdfs/Greece_better_off_out.pdf"
Candidate 4: "The current austerity measures are not working

The Austerity measures put in place by the ECB, IMF and European Commission have led to nothing but misery for the Greek people. They have failed to cut down the total debt % GDP ratio and have also failed to increase the competitiveness of the Greek economy. This is because raising taxes and slashing the minimum wage has sent the economy deeper and deeper into recession. Unemployment is at a record high of 21% and there is a severe shortage of credit leading to severe difficulties in companies financing their day to day projects. What’s more, the country itself is plunged into depression. Escalated (inevitably) by the local and international media, the climate is one of despair and investment is at the bottom of anyone’s priorities. This further perpetuates the cycles of recession and prevents any of the austerity measures having their desired effect. Additionally, the drastic fall in GDP every quarter means that cuts in government spending are also not having their desired effect on reducing the budget deficit % GDP ratio. Worst of all, the economic hardships have drawn many people to despair and the suicide rates in Greece have dramatically risen over the last year and access to healthcare has drastically declined. [1] In this manner, the government is failing in fulfilling its most basic duties of safeguarding the lives and wellbeing of its citizens. If the current measures are not working then a new approach is needed. A default would alleviate much of the suffering caused by austerity.

[1] Armitsead, Louise: “Why Greece should default and exit the euro” 23 February 2012, The Telegraph, http://www.telegraph.co.uk/finance/financialcrisis/9101397/Why-Greece-should-default-and-exit-the-euro.html"
Candidate 5: "It is not necessarily true that the whole banking sector in Greece would collapse. Given that the default would be orderly and take place within the context of the European Union, the ECB and European Commission would still provide substantial liquidity aid for Greek banks. Moreover it is not true that a devaluation of domestic currency necessarily leads to high inflation – this was not the case, for example, when Britain exited the European Exchange-rate Mechanism in 1992 and pursued a devaluation policy of the British Pound. [1] Lastly, evidence of recent governments that have defaulted suggests that even though some of the harms the opposition refer to may actualise, recovery generally follows fairly quickly, as was the case with Argentina, South Korea and Indonesia. [2]

[1] Ruparel, Raoul and Persson, Mats: “Better off Out? The short-term options for Greece inside and outside of the euro”, June 2012, Open Europe, 2012 http://www.openeurope.org.uk/Content/Documents/Pdfs/Greece_better_off_out.pdf

[2] Becker, Garry: “Should Greece Exit the Euro Zone?”, The Becker-Posner Blog, 20.5.2012, http://www.becker-posner-blog.com/2012/05/should-greece-exit-the-euro-zone-becker.html"
Candidate 6: "Even in the long-term, continued Eurozone membership for Greece is not sustainable. The size of their total debt % GDP ratio is such that even if Greece were to recover (eventually) with the current austerity measures, Greece would always be susceptible to yet another debt crisis in the event of a future global or European recession. Eurozone membership denies Greece fiscal and monetary policy freedom required to face economic shocks to prevent this from happening. We thus see that in the long-term growth is more sustainable for Greece without the Euro."
Candidate 7: "In receiving financial support from the ECB and European Commission to prevent the escalation of a major banking collapse in Greece, the Greek Government would be expected to continue with reforms of the public sector. What’s more, defaulting would grant the Greek Government more time to implement such reforms, making them more likely to succeed and less painful on the Greek populous. The oppositions fears are, therefore, unfounded."

Even in the long-term, continued Eurozone membership for Greece is not sustainable. The size of their total debt % GDP ratio is such that even if Greece were to recover (eventually) with the current austerity measures, Greece would always be susceptible to yet another debt crisis in the event of a future global or European recession. Eurozone membership denies Greece fiscal and monetary policy freedom required to face economic shocks to prevent this from happening. We thus see that in the long-term growth is more sustainable for Greece without the Euro.
