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Forget what you're hearing: Greece won't quit euro soon

Pedestrians pass a plaque representation of a Greek one-drachma coin, the Greek currency which was replaced by the euro in 2002, outside Athens City Hall, on Monday, May 14, 2012.

Petros Giannakouris/Associated Press

Greece's worsening political crisis makes its exit from the euro zone seem a foregone conclusion. But this may not happen at all – and certainly not as quickly as some analysts would have us believe – even if anti-austerity forces manage somehow to form a government after what is sure to be another election next month.

The Greeks themselves are infuriated with the old-line parties that ran the country into the ground by spending money they didn't have to buy votes and social peace in elections past. The conservative New Democracy and socialist Pasok got less than half their typical combined numbers. But poll after poll shows that most Greeks have no desire to leave the euro zone and that they trust European institutions far more than their own. The first post-election poll showed that a remarkable 70 per cent still prefer to stay in and let the Europeans oversee their fiscal affairs. Which makes sense, given the sorry Greek governance record. And the assumption that the Germans will simply cut Greece's cash lifeline if and when Athens dumps its commitment to austerity is also a bit premature.

For one thing, the Greek politicians who demand an end to austerity now haven't explained how they intend to find the money needed to keep the lights on if the troika bailout cash disappears. Who will cover pension payments and public-service salaries? People worried about such hard realities are likely to vote their concerns next time, after mainly sitting on the sidelines in the recent election, where the turnout was historically low.

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Whatever shaky government emerges is likely to be satisfied with a tiny bit more flexibility and a longer-term growth strategy, which Brussels is already promising. And the Germans, for all their bluster, are too worried about the effects of a messy Greek exit on Spain to take any precipitous action.

This chess match is far from over.

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About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More

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