Theodore Pelagidis is a professor of economics at the University of Piraeus, Greece, and a nonresident senior fellow in Global Economy and Development at Brookings. He has also been a NATO scholar at the Center for European Studies at Harvard University, a Fulbright scholar at Columbia University, and an NBG professorial fellow at the London School of Economics.
The Europeans will try to give Tsipras something because they need
him. I think they could invest in him. They will give him
frontloaded structural funds from the European programs and some
kind of reprofiling of debt, which does not need to be a haircut.
No one has an interest in Greece leaving the euro. Those who say that there’s an incentive for Greece to be kicked out so that it is made an example for other nations in the euro area are wrong. Nor is there an incentive to allow anything to happen with Greek bank deposits.
Yields are rightly high, as they price in a risk. But if every actor thinks rationally, and given that the vast majority of the Greek people and the middle class that votes for Syriza want Greece to stay in the euro, Tsipras will be forced to do what voters want.