The leader of the Greek Syriza party Alexis Tsipras has compared the ongoing Eurozone crisis with the Cold War, with Greece playing the role of the USA and Eurozone that of the Soviet Union. He believes that neither side will push the ‘button’ and force Greece out of the Single currency.
In an interview with Channel Four news Tsipras said that he believes that Germany and its allies are only bluffing about their stance of forcing more austerity measures onto Greece or pushing the embattled nation out of the monetary union. He believes that Greece has a strong position saying that if Greece leaves the Eurozone it will eventually lead to the breakup of the entire project.
He drew an analogy with the ideology of mutually assured destruction, in which the Russians and USA despite having the ability to destroy each other, knew that neither would let their confrontation descend into nuclear war.
The problem for Tsipras is that Germany and its allies can’t be bluffing. They can’t afford to see Greece get away with openly defying them and not suffering any consequences. His gamble is sure to fail – and spectacularly so, unless of course he is playing a double-game and actually wants to leave the single currency. Already Germany has made clear that if the Greeks do not stick to their austerity measures then it will cut off the cash supply which is expected to run dry in July.
Tsipras has established his whole political campaign on defying austerity and seems to believe that he can get Greece to have its cake and eat it too. As a result, he is the front runner to win the upcoming elections; if he does then we are sure to see the Euro crisis take yet another twist.
After yesterday’s meeting of EU leaders a statement was issued saying; “We discussed the political and economic situation in Greece. We want Greece to remain in the euro area while respecting its commitments. We are fully aware of the significant efforts already made by the Greek citizens.The euro zone has shown considerable solidarity, having already disbursed together with the IMF nearly €150bn Euros in support of Greece since 2010. We will ensure that European structural funds and instruments are mobilised to bring Greece on a path towards growth and job creation. Continuing the vital reforms to restore debt sustainability, foster private investment and reinforce its institutions is the best guarantee for a more prosperous future in the euro area.
We expect that after the elections, the New Greek Government will make that choice.”
It seems that neither side is willing to budge and as a result Financial markets are sure to suffer because of it.
The Pound to Euro exchange rate is currently trading at 1.243
The Pound to US Dollar exchange rate is currently trading at 1.565
The Euro to US Dollar exchange rate is currently trading at 1.259
The Euro to Pound exchange rate is currently trading at 0.803
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