Grexit Risk Overstated

A week ago, after being outplayed by a Czech Republic that had itself been hammered 4-1 by Russia, the chances of Greece progressing to the Quarter Finals of Euro 2012 seemed fanciful. There was still a chance, but a slim one. Or so it seemed even in the light of Greece’s unlikely and unexpected victory in the 2004 tournament.

Similarly, a week ago, ahead of Greece’s second General Election of 2012, with something like 60% of voters having supported parties which wanted to rip up the terms on which Greece had received eurozone bailout funds, it seemed highly likely that the country would soon by forcibly ejected from the euro.

But, football and politics are both funny old games. Today, Greece appears to have voted just enough in favour of the two established governing parties to enable them to form a coalition which will work to keep the country within the euro. Somehow, even more unusually than that, the national football team managed to nick a 1-0 victory against a Russian team that 10 days ago looked like potential tournament winners, knocking them out and taking themselves through to a Quarter Final.

However, just as with the euro, in Euro 2012, the Germans will be the ones to decide. As it is they who will stand between Greece and a Semi-Final. Just as Germany has navigated the global financial crisis comfortably its team has barely looked troubled in winning all three group matches. But, it isn’t inconceivable that Germany might relent and ease Greece’s bailout conditions in order to keep the euro intact even though this would be hugely unpopular politically amongst German voters. And stranger things have already happened than Greece beating them on the pitch on Friday. Who’d bet on Grexit now?


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