Milton EzratiGerman politicians seem to have lost patiencewith Athens. Blustering about throwing good money after bad, theyhave shown a new eagerness to throw Greece out of the currencyunion, at least rhetorically. They are not alone. Similarsentiments have surfaced in Austria, Finland, the Netherlands andeven Estonia. Understandable as such talk is, an expulsion ofGreece is not as easy as these naysayers seem to believe and wouldalmost surely cost the eurozone more than further accommodation, alot more. On the assumption that politics will follow at leastvague cost-benefit calculations, the likelihood then is thatEurope, for all the tough talk, will find a way to keep Greece inthe currency union.

The rhetoric certainly has intensified. Though German ChancellorAngela Merkel has remained circumspect, her own economy minister,Philip Rösler, stated bluntly that “a Greek exit has long sincelost its horrors.” In only slightly less blunt language, herfinance minister, Wolfgang Schäuble, said: “It is not responsibleto throw money into a bottomless pit.” Volker Kauder, who heads theconservatives in Merkel's own party, the Christian DemocraticUnion, declared that Greece has run out of “wiggle room” and thereis “little chance of a third aid package.” Stefan Müller,parliamentary secretary of a coalition partner, the BavarianChristian Social Union, believes any concession would send “thewrong message entirely.” Bavarian finance minister Markus Söderopenly called for expelling Greece from the currency union, whileAustria's finance minister sought ways to add language on expulsionto the union's governing documents.

If the problem were just Greece, Europe would have littledifficulty acting on such tough talk. Merkel, no doubt, would joinin, and Europe would have banished Greece from the euro months ago.The Greek economy, after all, is less than 2% of Europe's grossdomestic product, and its outstanding government debt amounts toless than 1% of all European bank assets. The problem is thatGreece's fate casts a shadow over all the countries in Europe'sbeleaguered periphery, including the significant economies of Spainand Italy. Even while Greece remains in the union, the continentfaces a profound risk that a contagion of fear that could bringdown the finances of Portugal, Spain, Italy and others. Theexpulsion of Greece significantly raises the probability of such apanic.

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