This question was asked during class this week: should Greece exit the EU?
I say no. Greece shouldn’t exit simply because this action would worsen their current economical and financial problems. Greece’s debt does not simply disappear if it leaves the EU – and boiling tensions between Greeks and Germans show that is unlikely that countries like Germany and France will “absorb” Greece’s debt. In addition, if Greece exits, it will have to return to using its older currency, which most likely has lower value than the euro. So what should Greece do, given that it should stay in the EU?
The bailouts that the IMF and EU gave Greece have been put towards narrowly-passed austerity reforms, several of which are starting to see success. There are at least two areas where change has been too slow. The privatisation of state-owned enterprises, which hopes to attract foreign investment and replenish state funds, will be difficult to attain since few investors see Greece as a secure investment. The second area that needs major work is tax reform. Greece is infamous for tax evasion, among citizens and businesses alike. If Greece doesn’t restructure it’s tax systems, the inefficiencies will continue and Greece will continue to lose public revenue.
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