Ground zero after euro exit

Nieuws | de redactie
21 mei 2012 | What will happen to Greece if it leaves the Eurozone? Cross-border expert Vangelis Tsiligiris draws a dire scenario for the country’s universities. He warns of the consequences of further austerity, a permanent brain drain and a reform deadlock.

“The scenario of Greece leaving the euro has become increasinglypopular over the past few months and has gained even more momentumfollowing the outcome of the recent Greek elections. The narrativeabout a possible Grexit usually involves looking at macroeconomicconsequences within Greece itself and the Eurozone in its entirety.A big fear is that Greece leaving the euro could trigger a dominoeffect in the periphery of the Eurozone and the so-called P.I.G.S.Nevertheless, for those like me, who are interested in highereducation policy the Grexit scenario imposes some specificchallenges for Greek higher education.

No euro and further austerity

First, we have to realize that Greek higher education is solelyfunded and dependent on government funding. Greek higher educationinstitutions (HEIs) are not familiar with generating funding fromother income sources (i.e. research, partnerships andcollaborations). Additionally, the degree of internationalisationof Greek higher education institutions is pretty low. This ismainly due to their failure to offer programmes in languages otherthan Greek and their inability to develop their internationalreputation. This has reduced significantly the number ofinternational students who currently study in Greek HEIs as well asthe short-term prospects for attracting international students.

Therefore, in a Greek exit scenario where Greece will have to,most likely, violently rationalize its public expenditure so as tocover the existing government primary deficit, Greek HEIs will seetheir budgets cut or even disappear without being able to sourcefunding from alternative sources. It is very likely that severalGreek higher education institutions will close as they will beunable to source their operating funding needs.

Permanent brain drain will be the norm

Second, the brain-drain of Greece, which is currently booming,will worsen. The outflow of talented and well educated Greeks hasalready started in 2010 when it was announced that Greece will seekthe contribution of the IMF and the EU mechanism (The Economist,2012). Since then a great number of young Greeks has been leavingthe country on a daily basis. I anticipate that a possible Grexitwill significantly worsen this phenomenon and trigger even moreyoung people to seek employment abroad.

What would be even more problematic, I think, is that a possibleGreek exit will change the intentions of those who leave thecountry. So far, young Greeks emigrate with the prospect of returnsome time in the near future after the easing of macroeconomic andfiscal austerity. If Greece exists the Eurozone, young Greeks willanticipate a significantly lower degree of possibilities forrecovery in the medium to long-term, thus they will choose to staylonger or even permanently abroad. This will have an added negativeeffect on both Greek economy and society. It will be of similarmagnitude as the one created by the continuous harsh austerity andcould ultimately initiate a ‘death spiral’.

Modernization or deadlock

Third and most important to me, a Greek exit from the euro willmean the loss of an important opportunity for modernization ofGreek higher education and its long-awaited compliance with theEuropean Union policy and guidelines. For long, Greek highereducation has been subject to severe criticism for its lack ofaccountability, low quality standards and programmes which fail torecognise the needs of contemporary labour markets (OECD, 2011;International Committee, 2010).

The “Memorandum of Understanding on Specific Economic PolicyConditionality” which accompanied the bail-out loans by the Troikaincluded significant reforms for higher education. These reformsalong with the new legal framework introduced by the formereducation minister Anna Diamantopoulou have yet to be implemented.It is anticipated that an exit from the euro will mean a delay oreven the abandonment of these long-awaited reforms.

Overall, a possible Grexit will mean an immediate negativefinancial impact and a medium to longer term policy/strategicdisorientation of Greek higher education coupled with devastatingconsequences on brain-drain dynamics.”


  • Vangelis Tsiligiris is a cross-border expertand Greek College Principal
  • Grexit is a term which derives from the combination of thewords Greece and Exit and was created by the chief economists ofCitigroup Ebrahim Rahbari and Willem Buiter (


  • International Committee (2010).Report of the InternationalCommittee on Higher Education in Greece. [Online]. Available from:
  • OECD (2011).Strong Performers and Successful Reformers inEducation. Education Policy advice for Greece. [Online]. Availablefrom:
  • The Economist (2012).Greek woes: The Mediterranean blues.[Online]. Available from:


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