Little seems certain regarding the fluid Greek debt crisis, except this: A weekend decision looms on a deal that would keep Greece in the eurozone. On Friday politicians seemed cautiously optimistic, even though parliamentary approval will be challenging in Athens. And in Brussels several E.U. leaders have deeply disparate views on giving Greece yet another bailout. Investors, however, threw caution to the wind and rallied equity markets on both sides of the Atlantic in anticipation of an accord.
Caution is wise, on the deal and the difficulties ahead for Greece, mired in a deep depression. And yet efforts to keep Greece from a chosen or forced “Grexit” — an exit from the euro — are in the West’s and the world’s best interest. Greece belongs to Europe, and a failed state in a volatile region during these volatile times risks not just economic, but political instability.
That this is as much a geopolitical issue as a fiscal one is just one of the many underappreciated subplots of this Greek drama. Some of the central characters, meanwhile, are miscast: German Chancellor Angela Merkel is not a villain, and in fact has gone to great lengths to bring Europe into an “ever closer union” — the stated European Union goal. But she too has a domestic constituency that rightly might ask why Berlin is on the hook for Athens. And capitals throughout Europe need to be reassured that yet another Greek bailout won’t embolden anti-austerity and even anti-E.U. parties in their countries.
Similarly, the Greek people are for the most part victims of years of harsh austerity and feckless governance. Despite the overwhelming “no” vote in last week’s poorly worded referendum, it seems that most Greeks want to stay part of the eurozone, and certainly of the European Union, but under different conditions.
And it would be wrong to miscast countries. Despite its debt and deficits, the United States is not Greece. The U.S. economy is much more dynamic and flexible, and there are more fiscal tools to ward off a similar crisis. But a reckoning of some sort is inevitable if U.S. leaders and everyday Americans do not coalesce, soon, over a sensible solution.
For now, it’s important to note that while this weekend may have a denouement, implementation may feature its own drama, too.