Maybe Germany Actually Wants Cyprus to Leave the Euro

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


I was noodling over Cyprus last night and a thought occurred to me. Maybe, from the perspective of Germany and the other core EU countries, a default and exit from the euro would be a good thing.

I’m not really serious about this, but here’s the pitch. Cyprus is tiny enough that default and exit wouldn’t have any actual effect on the broader EU economy. It would be a rounding error. And because (a) Cyprus is tiny, (b) Cyprus adopted the euro only five years ago, and (c) Cyprus has a unique status as an offshore banking haven for Russian billionaires, it would be fairly easy to convince the financial community that their default is a special case that doesn’t have any broader implications for the eurozone.

So the eurozone would be OK. But if Cyprus chooses this route, the Cypriot economy is going to be in shambles. Sure, in the long run, they might do OK by readopting the pound and devaluing it, but in the short term it would be ruinous. Residents wouldn’t just lose 6.5 percent of their savings, they’d lose something like a third of their purchasing power thanks to recession and devaluation. It would be a long, grinding disaster.

And perhaps that would be a very pointed object lesson for voters in Greece and Spain and Portugal that default and exit is even worse than the austerity the EU is insisting on. The implicit message would be: You might not like it, but you better go along if you know what’s good for you. Just look at what happened to Cyprus.

So….from the German perspective, Cyprus could provide a very cheap demonstration of the dangers of calling their bluff. Who knows? Maybe they think that would be worth it. This should give Cypriots pause for thought.

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up to $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate