Greece to Leave the Euro Zone Says Igor Purlantov

When the full extent of the financial crisis in Greece first became clear there was hardly any mention of Greece exiting the euro zone despite widespread claims of corruption and financial fraud.  As the Greek financial crisis continued to drag on this tone changed and there is now talk that Greece may exit the euro zone according to Igor Purlantov. 

Although euro zone finance ministers have approved $175 billion (130 billion euros) in direct loans for Greece in return for tough new oversight measures there is still a great chance that Greece will default and exit the euro zone according to Igor Purlantov.  For starters, the bailout package of loans comes attached with government spending cuts that Greece simply cannot afford especially given its high unemployment rate.  Also, Greece will not be kicked out of the 17 nation euro zone, but instead given incentives for an exit that will be too hard to resist.  This all comes at a time when the prospect of a widespread collapse of the euro zone as a result of Greece defaulting appears to be fading.

From the beginning it has been clear that a Greek exit from the euro zone will have to be voluntary as other members cannot force it out.  Furthermore, under current European Union (EU) guidelines, Greece would have to exit the EU in order to leave the euro zone says Igor Purlantov.  Exiting the EU will however be rather easy as Greece just has to notify the European Council of its intent to do so.    

Greece leaving the euro zone will have to be done rapidly to avoid a run on the banks as people rush to withdraw their savings in euros.  Greece will also have to institute some sort of currency control to prevent a collapse of its banks according to Igor Purlantov.  Furthermore a return to the drachma, which was pegged to the euro at 340.70 back in 2000, would have to be devalued by at least 50% for Greece to reap any long term benefit from exiting the euro zone.

Greece defaulting on its debt and exiting the euro zone will initially be painful but in the long run the country will have a chance to finally re-gain control of its currency and ultimately become competitive again says Igor Purlantov.  Hopefully this dramatic exit from the euro zone will also curb the free spending and suspected corruption and financial fraud that many have blamed for why Greece got into this mess in the first place.