Charles Wyplosz — Greece should prepare for Grexit and then not do it
Mike Norman Economics 2015-07-20
There is a high likelihood that Grexit will be back on the table. This column argues that Greece can strengthen its negotiating position if it is prepared for exit. Grexit remains a disastrous choice, but it has become the default option for Greece and its creditors. However, preparing for Grexit does not mean leaving the Eurozone. A credible threat point may deliver a better outcome. The purpose of the exercise should be to make Grexit a plausible solution, then not to do it.This was probably Syriza's mistake in their game plan. But I suspect they believed that if they prepared for Grexit and played it as a card, the bluff would have been called and they really, really didn't want to leave the EZ. But without that card, Greece didn't hold much of a hand.
If they try it now, Schaeuble will almost certainly jump for it.
Which would be a good thing and in the end save Greece a lot of grief. But as another post suggests, the real issue for Greece is addressing rampant corruption. Anyway, this post presents a way to prepare for Grexit so that it is a credible option. Hopefully Greece will reconsider and take it in the future. If the government were preparing for Grexit as an option and using it as a card, this alone would spark a debate in Greece about it, something was not done during the previous negotiation, when Grexit was taken off the table not only as a card but also politically in Greece. It wasn't presented or debated. vox.eu Greece should prepare for Grexit and then not do it
Charles Wyplosz | Professor of International Economics, Graduate Institute, Geneva; Director, International Centre for Money and Banking Studies; CEPR Research Fellow