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MOSCOW, June 15. /TASS/. Greece’s default and its exit from the euro area are inevitable, many Russian experts believe. This scenario will trigger short-term negative implications but will hardly be a disaster either for Greece or the eurozone but may revitalize the economies of these countries.
Athens is holding uneasy talks with creditors on settling its state debt and unfreezing its bailout aid program. Greece has received 240 billion euros from international lenders under two assistance programs after 2010 and its debt has exceeded 320 billion euros. This year, it has become finally clear that the Hellenic Republic is unable to service its debt.
International lenders want Greece to implement austerity programs worth about 2 billion euros annually or about 0.5-1% of GDP. Greece’s negotiations with the international lenders comprising the European Union, the European Central Bank and the International Monetary Fund, which were held on June 13-14 in Brussels at the technical level, yielded no results.
In late May, the German newspaper Frankfurter Allgemeine Zeitung published an interview with IMF Managing Director Christine Lagarde, in which she publicly admitted for the first time that Greece’s exit from the euro area was possible. The IMF, however, officially refuted this information later but everyone perceived this as an unambiguous signal sent by Greece’s creditors.
"If Greece really exits the euro zone, this will not cause either the demise of the European currency or the collapse of the European Union. Moreover, the euro in this case is most likely to strengthen," the Free Press web portal quoted Deputy Director of the Moscow State University’s Center for Ukrainian and Belarusian Studies Bogdan Bezpalko as saying.
"The red line is somewhere nearby and, possibly, this is a matter of months but it would have been better long ago to declare a default," Associate Professor of the Finance Faculty at the Russian Presidential Academy of the National Economy and Public Administration (RANEPA) Sergei Khestanov told TASS.
"From the economic viewpoint, Greece would have been unable to exist without foreign aid already five years. Meanwhile, it is sabotaging the reforms recommended by the EU and the IMF. And creditors no longer want to pump money into it without the hope of getting the debt repaid. It would be naпve to believe that this will go on indefinitely," the expert said.
But the situation with the time of Greece's possible exit is unpredictable because the EU has long been patient and now no one wants to assume responsibility for Greece’s possible default.
A default would possibly be the lesser evil for Greece than the current situation, Khestanov said. The introduction of the Greek drachma and its subsequent devaluation would reduce the price of Greece’s goods and make them more competitive, the expert said.
"This scenario will not be disastrous for eurozone countries either because Greece accounts for only about 2% of the EU’s economy. Even if Greece fully refuses to repay debts, Germany’s losses will amount to 2.37% of its GDP, according to economists’ calculations. This is an unpleasant thing but this is not fatal. Besides, if the euro depreciates in this case, this will lend big support to exporter countries that include Germany," the expert said.
Also, Greece’s exit from the euro zone may serve as a teaching lesson for other countries. In the final account, it would be better for all the sides, if the default is declared as soon as possible, the expert said.
The option of Greece’s default and its exit from the euro zone are quite real as its debts are too heavy to service, Professor of the Higher School of Economics Igor Nikolayev told TASS.
"Short-term consequences will be negative both for Greece and the eurozone. But strategically, this is not disastrous and, on the contrary, may be helpful," the expert said.
European economies are now growing, especially the economies of the leading countries, such as Germany and France, the expert said.
"For Greece, this is, of course, fraught with serious upheavals and the growth of inflation but strategically this will benefit it," he said.
Besides, "a precedent will be created, which will improve the European governments’ financial and fiscal discipline," the expert said.
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