Greece seems heading for the 'exit' of the Euro-zone. Will the EU manage to keep Greece aboard?! Or will it be the first country in a row to leave the Euro?!

After the disastrous elections in Greece of Sunday, May 6, in which the true winners were the neofascist Golden Dawn-party and the extreme left-wing Syriza party, it became clear that Greece is entering the extra time of its Euro-membership. The impossibility to form a viable coalition that supports the European austerity package, supersized the already huge Greek problems. If nothing positive happens soon, the referee will whistle for the last signal and then the Euro-party will be over for Greece.

The leaders of the European Union still pay lip service to the idea that Greece  should be kept aboard at all costs and officially all leaders are still scared of the financial consequences of a Greek exit from the Euro. Unofficially, however, the Greek exit seems like a ‘done deal’ already.

This last week of fruitless negotiations between the Syriza party of Alexis Tsipras at one hand and the former pivotal parties PASOK, led by Evangelos Venizelos, and New Democracy (ND), led by Antonis Samaras, proved that there is no easy solution for Greece.

PASOK and ND combined are still lightyears away from a majority and the radical parties are not willing to give in, concerning the EU austerity measures. The fact that new elections are proposed for mid-June won’t change a thing, unless… the Greek population saw their protest votes for the radical parties as a one-off and return to the moderate parties PASOK and ND. In my opinion there is a very slim chance that such a scenario will happen. This way a Greek exit from the Euro-zone, although officially impossible according to the rules of the Maastricht treaty, seems inevitable.

Everything is said and done already about the erratic Greek behavior in the past and the Greek flip-flopping on their ability and willingness to meet the mandatory austerity measures, laid on Greece by the troika of International Monetary Fund (IMF), EU and European Central Bank (ECB).

Still my stance is that a possible Greek exit is a defeat; not only for Greece, but for the whole European Union. Looking at Greece just as an unreliable, even fraudulent partner severely underestimates the pain and suffering that the average ‘Giorgios in the street’ experiences currently from the austerity measures. ‘You made your bed, now you must lie in it’ would be an oversimplification of the Greek situation. Like in many other countries, a small part of the Greek population caused the problems that the large majority suffers from currently.

On top of that, the Greek case shows the EU’s incompetence of clearing and settling even the smallest crisis. This is a signal that won’t go past the financial markets and will lead to further financial actions against the other European problem childs: Portugal, Ireland and Spain.

Why, will you ask, is a Greek exit of the Euro a defeat?

The European Union, the Euro-zone and the Euro are not just simple political/economic institutions and a simple currency; it are ideas and concepts that should diminish the chance for bloody, pan-European wars and should eventually bring prosperity and stability to all countries that entered into it.

If you think that this is just esoterical blah-blah, created by a bunch of political nitwits, then ask the people in Serbia why they want to enter the EU and the Euro-zone? And ask the Baltic states how being a member of the EU helped them to slowly, but surely find their way back to economic prosperity?

Losing the Greeks would be a sad loss. And a loss that could have grave financial consequences, especially if the Euro-zone would turn out to be a financial house of cards.

The strange thing is that after the election of François Hollande as the next French president, there suddenly seems room within the EU for a policy that isn’t singulary focused on financial austerity and monetary stability. There seems momentum for stimulating growth, instead of focusing only on the 3% budget deficit threshold, that is set by the European Stability and Growth Pact (SGP).

Although you can’t accuse me of being overly enthusiastic for Keynesian stimulus, a stimulated EU focus on economic growth and prosperity is a winner in my opinion. Healthier PIIGS and Eastern European countries, that would be able to export their excess production at fair prices towards the Northern European countries, would bring balance within the EU. Now there is a heavy imbalance between the importing peripheral countries and France and the exporting Northern-European countries; an imbalance that is the proverbial elephant in the German Bundestag: denied by all people present, but still there.

At this time Germany seems the last man standing, while all other leading countries in the Euro-zone are in or close to a recession. Former exports champion The Netherlands is a very prominent member of the latter group with a negative y-o-y economic growth of   -/- 1.1%. Everywhere in Europe consumers are waiving their white flags and there seems no end in sight for the economic hardship, in spite of pseudo-optimistic and unrealistic calls that this is only a mild recession.

Therefore a EU change of plans towards economic growth stimulation, unless executed sensibly and without creating further bubbles in financial markets and the commercial/residential real estate industry, is something that I would applaude.

However, when there is talk within the EU on stimulus in order to trigger economic growth, nobody seems to think about Greece anymore.  The sad reality is that Greece seems to be a lost cause, if you listen to the tone of voice of the EU on Greece and the Greek DEMOCRATIC elections. A Greek exit from the Euro-zone seems to be a bite that can be chewed and swallowed without any problems whatsoever.

This could be a grave mistake, when other Euro-zone countries in the future are forced to chose the same path.