Analysts at Eurasia Group, a global political risk research and consulting firm, have warned that the pressure of thousands of migrants and refugees arriving in Greece could push the country out of the euro given the country’s severe economic and social problems, according to a report in today’s CNBC.
“We continue to believe that the EU-Turkey deal is not going to deliver the reduction in refugee flows the Europeans are hoping for,” analysts Mujtaba Rahman, Naz Masraff and James Sawyer from Eurasia Group said in a note Monday.
“This will continue to mount pressure on German Chancellor Angela Merkel, who, rather than conceding to a domestic ceiling, may instead opt to temporarily contain the problem in Greece” by sealing the Greek-Macedonian and potentially the Greek-Bulgarian border too.
“Sealing the Greek-Macedonian border will strengthen anti-European and nationalist sentiment in Greece and make early elections more probable; these could undermine completion of the first review and in a worst case scenario, reintroduce the risk of Greece’s exit from the euro,” Rahman, Masraff and Sawyer said.
The three Eurasia Group analysts believe that Greece remains in an extremely difficult financial situation and that Europe will insist on more austerity measures, which the current government may find impossible to implement.
Specifically, they feel that “even if the government can survive financially in a narrow sense, a rapidly deteriorating political and social domestic context, driven by external factors, could re-introduce another back-to-the-wall crisis negotiation. This would promote uncertainty regarding reforms, as it would once again bring to the fore the risk of destabilizing scenarios such as elections and/or a change in the makeup of the Greek government.”
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