The eurozone is strong enough to kick out Greece if Syriza wins

Ever since European Central Bank president Mario Draghi declared himself ready, in July 2012, ‘to do whatever it takes to preserve the euro’, the likely disintegration of the single currency — as predicted by pundits such as yours truly over the preceding years — has all but disappeared from the comment agenda. The combination of a persuasive ECB leader with reform in some bailed-out eurozone states (notably Ireland and Spain) and an easing of bond market pressures, plus the iron will of Germany to see the euro survive, drove the break-up argument into retreat. Indeed it seemed for a while to have been vanquished, and that ex-president Valéry Giscard d’Estaing had been right when he told me, also in 2012, that ‘what you have been writing about the euro is completely crazy’.

But now the exit of Greece is back on the cards — and the accession of Lithuania as the eurozone’s 19th member (or, as it may be, early substitute as the 18th) is a reminder that currencies are dynamic reflections of political reality rather than static institutions in themselves. On 25 January, a Greek election may bring to power the hard-left Syriza party, which will seek to reverse austerity measures and renegotiate bailout debts. The Germans have been emitting mixed signals — that EU powers cannot be ‘blackmailed’ by Syriza, but that they do not wish anyone to leave the euro. In the end, however, the choice for Europe’s leaders may be between blatantly undermining a Syriza regime in the hope that it falls before it does irreparable harm — a very dangerous game — and issuing a serious ultimatum for expulsion.

At an earlier stage in this game, that second choice was impossible because of the domino risk; now, arguably, the rest of the bloc looks relatively stable, if economically stagnant, while Greece is a sore thumb.