Greece and the flight of dollars from Asia

It is increasingly evident that even as we Greeks struggle with our economic crisis and our society’s abrupt adjustment to the seemingly endless recession, greater misfortune in the wider region has worked in our favor.

Many countries are facing problems that are jeopardizing their stability, thus increasing Greece’s geostrategic importance.

This country has benefited from fears that allowing it to sink would create unpredictable troubles for the rest of the eurozone, that instability here would undermine Greece’s role as a pole of stability in an increasingly troubled region.

Repeatedly, at critical moments, the United States pressed European leaders to take decisions that kept Greece in the eurozone and contributed to stability in our country and Europe.

These days we are seeing the first signs of new turbulence in the global economy, as the increase of US interest rates has set off a flight of capital from emerging markets toward the United States. On Thursday, the currencies of India, Turkey, Indonesia, Malaysia and Thailand continued their steep fall, prompting a rise in interest rates (and higher costs for local companies), more expensive imports and higher inflation. This might not seem to have a direct implication for Greece, but if it balloons into a crisis it will be a double-edged sword for our country: On the one hand, the threat of greater instability in the global economy will make Greece’s rescue even more urgent, while on the other, if Greece does not manage to stand on its own feet, it may be swept away in the confusion. Global economic ties are so delicate that troubles in some countries inevitably increase problems in others – big or small – and lead to greater uncertainty and slower growth.

The consequences of such turmoil would be felt in Europe because of a drop in EU exports, because of a slowdown in significant markets and countries, and because of any economic or political uncertainty in Turkey. Greece’s geographic position and its dependence on support from its partners and creditors place our country at the center of any developments. Even as the eurozone seems to be heading for a slight recovery (with growth in this quarter predicted at 0.2-0.3 percent), European and other economies will feel the consequences if the capital flight from Asia continues.

The problems piling up in our region, in Europe and in the world make it even more necessary for our partners to support our country, but also imperative that we decide to do all we can to survive.