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The current debate in Europe and abroad focuses on the future of the Euro as the single currency in Europe and the ability of the European Union to deal with the debt crisis in several Eurozone member states. The case of Greece, in particular, has led to numerous discussions about a potential restructuring of the Eurozone as a result of the debt crisis in Southern Europe. European leaders are focusing on calming the markets and are refusing to openly discuss Greek bankruptcy as an option. As the German news magazine “Der Spiegel” reported, however, there appears to be evidence that at least the German finance ministry preparing strategies on what to do if Greece defaults.

Time has come to reveal the uncomfortable truth, which is that Berlin, Brussels and other European capitals do not actually have a plan B concerning the debt crisis. But how could this be case? After all, administrations tend to have a number of contingency plans for prestigious policies. So how is it possible that there is no backup plan on an issue of such economic and diplomatic gravity for the entire EU?

Placing the blame entirely on the short-sightedness of European politicians is not a sufficient explanation. The real reason behind the lack of a plan B is a general understanding among European officials that Greece’s bankruptcy would have fundamental consequences for the Euro and the European Union. It is at this stage that it might be worth thinking about the consequences of Greece’s bankruptcy to understand why it is worth fighting for the Euro and the EU integration process.

1. If Greece would be allowed to declare bankruptcy, leave the Euro-zone and reintroduce the Drachmae, this would have fundamental consequences for the economies in other European states. Banks that provided loans to Greece, in particular, will find themselves in trouble. Greece’s economic and financial woes are European problems as well because all the states involved share a single common market. A massive crisis in one member state will ultimately have effects on the EU as a whole.
2. If Greece were to go bankrupt, the message sent to debt-ridden countries such as Ireland, Portugal and Italy would be that the other EU member states are willing to accept bankruptcy across throughout and will not show solidarity. This will further weaken the economies and financial markets in these states and might indeed lead to a domino effect.
3. Greece leaving the Eurozone will have an impact on other Eurozone members. Not only will it demonstrate that there is no solidarity among the members, but it will also confound markets in smaller and weaker Eurozone members. One of the main reasons why these markets have remained stable is the demonstration of solidarity by the Eurozone members in the case of Greece, Ireland and Portugal.
4. Greece’s bankruptcy could hit countries like Italy and France especially hard. New economic difficulties for these countries would lead to turbulences not only in Europe, but worldwide.
5. The Greek economy is closely intertwined with countries in the Western Balkans. A Greek failure would catapult these economies into a new crisis with possible negative consequences for inter-ethnic relations and the emergence of new tensions in the region.
6. The failure of the Eurozone members and the EU to save Greece would seriously undermine the European integration process. If Greece abandons the Euro, there will be calls for it to also leave the EU.

A large part of the current problems in Greece were created by mismanagement and inefficiency. This does not, however, mean that the current government is not sincere in its effort to tackle the debt crisis in the country. What Germany, France and the other Eurozone members desperately need to do is to calm the market and make sure that there is no doubt on the ability of the Eurozone and its leaders to overcome the current crisis. Leaders need to explain why a bailout makes sense and they need to argue against the popular and false belief that the lazy Greeks are now receiving free money from the rest of Europe. This is not the case.

Europe’s future depends on how it will be able to deal with the current financial and economic crisis. It is a watershed moment that could turn Europe into a new economic super power or force the EU to fall apart.

Dr. Soeren Keil is Lecturer in International Relations at Canterbury Christ Church University, UK.