“The Grexit would be the beginning of the end of the Euro” said Minister Tsipras during an interview in Vienna before the summit among the European leaders, increasing the tension in the Euro area. The summit, that will be held on Monday, will need to find a compromise in order to avoid the exit of Greece from the Euro. However, optimism is leaking also because Greece itself is endeavouring in the acquisition of the giant Gazprom in order to bring the pipeline Turkish stream to the Euro area.

The hypothesis that Greece goes away from the Euro implies the risk of turning the unique-currency area into an agreement of currency exchange, especially with regards to the opinion of foreign investors and international markets. This would mean negative consequences especially for those countries where the consequences of the financial crisis had the greatest effects, which might now undergo new pressures due to speculation. Italy, Spain, Portugal, Ireland and, possibly, France are the countries that might be affected by such changes most.

It is possible to foresee two kinds of consequences. The first is in the short run, on the spread: the differential on Treasury bond yields would be bound to increase rapidly, with great repercussions on the cost of the service of the debt and thus jeopardizing, in a measure that is not clear now, the respect of the parameters and the rules implicit in the European Union treaties, both for what concerns the relationship between GDP and deficit and the overall indebtedness. The second is in the long run: in the absence of rapid improvements, the most affected countries would find themselves in a situation of structural imbalance with the outcome of creating a “Eurozone” of second category, undermining even more the stability of the unique area and creating the preconditions for changes in the currency system.

What’s more, the exit of Greece from the Eurozone would bring about a strong depreciation of its currency and thus negative imbalances in the European markets: imported goods would be much more expensive and exported good would be much cheaper and the continental market would be severely vituperated. Also repaying the debt to European creditors would become much more expensive and the scenario of an halt in such repayment would not be impossible. Last but not lease, the credibility of the country would definitely decrease and any deal would be more difficultly undertaken, leaving Greece in a situation of isolation.

Overall, the so called phenomenon of “Grexit” would lead to a fast regression. The European leaders are striving to avoid such scenario and a wave of optimism is leaking, but if no agreement is found the shadow of a separation might prevail, and consequences should not be underestimated.