Greece, the Eurozone—and a Game of “Chicken”

A new wave of politicians is unwilling to support painful austerity agreements but convinced that they won’t be kicked out of the eurozone. Are Greece and Germany on a collision course?

One would think the setting of economic policy in the 21st century would not come down to a game of “chicken.” And yet that seems to describe the perilous game being played by some Greek politicians and officials of the 17-state “eurozone,” the troubled inner circle of the European Union.

Playing “chicken”

You may never have played “chicken.” (The fact that you’re reading this blog is some indication that you never have!) Essentially, a game of chicken involves two fast-moving objects, such as automobiles, hurtling toward each other in the direction of a head-on collision, and the nail-biting challenge of refusing to turn aside and thereby avoid the collision. The act of turning aside is deemed an indication of cowardice; hence, the name “chicken.”

When played with two automobiles, it’s assumed that eventually one driver will swerve, thus avoiding the deaths or injuries of two or more human beings—yet the one who swerved assumes the shame of being the “chicken.”

I’ve never tried it—and I don’t plan on doing so. It isn’t recommended.

Fiscal “chicken” strategy

Yet it would seem that some in the eurozone are now conducting fiscal debate via the “chicken” strategy. “I dare you; you wouldn’t dare” is the way the politics of some Greek leaders has been characterized.

For months, Greece has been the worst offender in terms of fiscal breakdown in the eurozone. Its budget deficit is way above the 3 percent maximum decreed by the 1997 “Stability and Growth Pact.” Now, 15 years later, several eurozone nations are in violation of the pact, with Ireland, Greece, Spain, France, Belgium, the Netherlands and Portugal all sailing well above the 3 percent limit, along with the United Kingdom, which is pledged to respect the limit even though it is not in the eurozone.

Saying no to austerity, but yes to the eurozone?

The immediate problem involves Greece, with its weak economy, inability to narrow its deficit and poor fiscal reporting. Its May 6 elections, which it was hoped would lead to a resolution of the problem, seem to have only worsened things.

Austerity-weary Greeks made their statement, withdrawing much support from the center-right New Democracy (ND) party and from the center-left Pasok, and instead throwing support to fringe parties on both the left and the right. Startling pundits, the left-wing Syriza party polled second, after ND, with a surprising 16.78 percent of votes cast (Guardian.co.uk).

The charismatic leader of Syriza, Alexis Tsipras, expresses the frustration of many Greeks, as he rejects both the painful austerity measures imposed by the EU and an exit from the eurozone. “We want to change the austerity measures in Greece, also in Europe. … Because everybody now understands that with this policy we are going directly to the hell. And we want to change this way.” Yet, at the same time, he declares, “We don’t want outside the Eurozone” (CNN.com).

Who will swerve—Greece or Germany?

To some, it seems to boil down to a game of chicken. Who will swerve? Will it be the Greeks, who, according to polls, want to remain in the eurozone, while simultaneously rejecting the pain of austerity imposed on them by Brussels and (ultimately) by Germany, the economic powerhouse of Europe? Or will it be Angela Merkel and Germany, the disciplinarian-by-default of Europe?

Of Merkel, Tsipras says, “We believe that Madame Merkel put the euro and the Eurozone in big danger by keeping these austerity measures” (ibid.). Suggesting that it would be too risky to expel Greece, Tsipras declared, “If they push Greece out, they’ll just move on to the next country.” In the same interview he declared, “It’s true. I like to play poker.”

Grexit?

All this adds a new word to the lexicon: “Grexit.” Economists are now beginning to speculate openly that there may be no choice but Grexit: a Greek exit from the Eurozone (“‘Grexit’ Is the Talk of the Euro Zone, as Crisis Spawns a New Lexicon,” The Wall Street Journal, May 22, 2012).

Because of the inconclusive results of its May 6 elections and the inability of the parties to form a coalition, Greece faces new elections on June 17. Meanwhile the world watches and holds its breath. There is more talk of “contagion,” as the spotlight shines on other, weak eurozone economies, such as Spain and Italy, both of which have seen increases in their bond yields since the Greek elections.

Germany, reluctant fiscal policeman

Germany, the reluctant fiscal policeman of Europe, finds itself more isolated as the May 6 French elections brought to office a new president, Francois Hollande, the first socialist leader since Francois Mitterand left office in 1995. Hollande’s narrow victory over conservative Nicolas Sarkozy was attributed in large part to austerity weariness in France—the same sentiment that is credited with the rise of Syriza in Greece.

Hollande’s victory marks the end of the “Merkozy” alliance; Merkel of Germany and Sarkozy of France shared common views on the eurozone and the need for austerity. Chancellor Merkel now finds herself and her country more isolated, ironically so rewarded for its fiscal self-discipline and insistence that others should follow its example in return for a bailout.

Momentous changes coming

Who will win the game of chicken? Will it be “grexit” or further aid for Greece (and perhaps for other weak eurozone members)? Or will there, perhaps, be some compromise or “muddle through” solution? The coming summer weeks and months will tell. Let’s keep our eyes open and watch European developments.

One thing is for certain: Bible prophecy indicates these tensions are not going to go away. Sometime between now and the second coming of Jesus Christ, tensions in Europe are sure to erupt, with a new and different kind of economic system taking the place of the present liberal free trade alliance. “The beast” referred to in prophecy will arise and impose such an involuntary economic system on the world, a system that will be an affront to God—and a threat to the saints of God.

“He [the beast] causes all, both small and great, rich and poor, free and slave, to receive a mark on their right hand or on their foreheads, and that no one may buy or sell except one who has the mark or the name of the beast, or the number of his name” (Revelation 13:16-17).

In the meantime, let’s watch developments in Europe. We live in momentous times, and there is more to come!

Ralph Levy is a minister of the Church of God, a Worldwide Association, and instructor at Foundation Institute, who grew up in England and now lives in the United States. Dr. Levy enjoys reading, travel and foreign languages. He has a Ph.D. in biblical studies and has worked in foreign language and religious education for much of his life.

For more on Europe and the future, see:

• French Presidential Election May Reconfigure Europe
• Greece: the Burning Question
• Is a “New Europe” on the Horizon?
• Economic Contagion—and Bible Prophecy