If the eurozone blinks then both Spanish and Italian governments risk falling to insurgent anti-austerity populist parties, Spain’s Leftist Podemos and Italy’s Five Star Movement, threatening the future of the euro. Many in Berlin, Frankfurt and Brussels believe the costs of lending to a rebel government in Athens would soon outstrip the cost of "Grexit", Greece leaving the euro.
Unfortunately for Mrs Merkel, Mr Tsipras has built his political base on opposition to austerity measures and his his party’s rank and file are unlikely to tolerate betrayal. Indications are that a new Greek government will force the issue by presenting it as a clash between the eurozone and democracy. “It will not be easy to ignore the democratic mandate of the Greek people. Such a stance would send a very powerful message to others in Europe that the EU cannot incorporate democratic processes,” said Efklidis Tsakalotos, a Syriza MP and likely future Greek finance minister this weekend. “It is not clear that the EU can survive showing such disdain for core European principles, such as democracy and social justice.”
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