RLF’s Survey on Grexit

A recent survey conducted by the Rosa Luxemburg Foundation supported that the EU should allow countries in trouble to exit the Eurozone. The Rosa Luxemburg Foundation, founded in Berlin in 1990, is a German think tank associated with the German political party Die Linke (The Left).

The survey’s objective was to examine the reasons of the euro crisis and to point to alternative solutions to overcome the crisis, and was signed by Heiner Flassbeck, former Chief Economist at the United Nations Conference on Trade and Development (UNCTAD) and Costas Lapavitsas, Professor of Economics at the University of London.

The first and basic conclusion of the survey was that the Eurozone has so far failed to handle the economic crisis and now the existence of the EU is threatened. Regarding Greece, Lapavitsas underlined that if Greece stays in the Eurozone and applies the Troika’s policy, this will undermine its economy in the long term.

Both economists support Grexit. Lapavitsas had already suggested that Greece should leave Eurozone in 2010. “In my opinion Greece needs at the moment a coordinated and agreed exit. Greece should pass through a procedure where it will ask from the countries that govern the Eurozone, namely Germany, an exit mechanism. Those who believe that the exit is not possible should only take a look at Cyprus. In fact, the measures that the Troika implemented there, make the exit from the Eurozone possible. Those measures were the controls on capital flows and on the movements of the bank accounts.” Besides, Professor Lapavitsas added that Greece should stop paying off the debt and start new negotiations for its settlement.

Die Linke, which since 2010 has been voting in the German parliament against Greece’s loan programs for being ineffective, agrees with the conclusions of the survey, concerning the procedure for a country to leave the euro. Sahra Wagenknecht, deputy chairperson of Die Linke, noted that “An exit would certainly have negative consequences. For example, the devaluation of the national currency and the increase of the imports’ price. So, it is advisable that the countries of the European South that are under the supervision of the Troika will co-operate and develop a common strategy. This would facilitate Greece’s situation. If Greece leaves the Eurozone alone, that will bring the country in a very difficult position. I understand, though, that  more and more Greeks say, “We can no longer stand the measures that they impose on us, so we should better leave”.