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Greek Crisis Prompts Fears for Euro Currency

  • Henry Ridgwell

From Scandinavia to the Mediterranean shores of southern Europe, there are widespread fears over the future of the euro currency and the European Union itself. The EU has been shaken by the Greek debt crisis, but its leaders insist the Union and the currency will hold together. Some say the biggest danger for Europe, though, could lie beyond Greece.

In Athens’ Syntagma Square, a few hundred protestors still remain. Draped in Greek flags, their anger is mixed with dejection.

Despite the protests this week, Greece’s parliament approved spending cuts of $40 billion demanded by the EU and IMF bailout.

Outside the people remain defiant. Teacher Yannis Anagnostaras is among the protesters.

"People and workers will fight on the streets to have these measures canceled,” he said. “These measures that destroy workers rights and ruin our lives, and are in coordination with the European Union and the International Monetary Fund."

In Athens and across Europe there is speculation that everyone would be better off if Greece left the euro currency and the EU altogether.

Not so, said Philip Whyte of analyst group the Center for European Reform. “Greece could not leave the eurozone without, first of all, a run on its banking system. Second, it would not restore Greece to debt sustainability. Third, it would cut off Greece from potentially vital lines of support.”

EU politicians opposed to the Greek bailout - and to European integration in general - have been making their view clear, holding a mock funeral for the euro currency symbol outside the European Council in Brussels. Leading the cortege was British MEP Nigel Farage.

"The euro is not going to survive in its current configuration," said Farage. "I’m sure we will see countries peeling off. It may become in a few years time the Greater Deutschmark zone. That is quite possible.”

President of the European Council Herman van Rompuy said the doomsayers are wrong.

“In my view the state of the Union is not so bad even if the mood is not so good," he said. "But the mood is this afternoon much better than this morning after the positive vote in the Greek parliament. Ladies and gentlemen, political courage still exists.”

That courage will be tested to the limit if the debt crisis spreads beyond Greece. Spain is the eurozone’s fourth biggest economy but it is weighed down with high debts and 20% unemployment. The construction sector was decimated by the financial crisis.

“Greece could not leave the eurozone without provoking contagion and question marks over the continued membership of other countries that are potentially in difficulty,” said Whyte of the Center for European Reform.

There may be talk of countries leaving the EU - but this week the Union prepared to welcome its newest member as Croatia completed accession talks.

Analysts say despite the euro crisis, the opportunities presented by EU membership still outweigh the risks for many countries on Europe’s fringes.