For Europe’s Sake, Keep Greece in the Eurozone

The resounding victory for the “no” vote in Greece’s referendum has left European leaders like Chancellor Angela Merkel of Germany with a stark and clear choice. Only they have the power to decide what happens next — whether to shove Greece out of the eurozone or offer some path forward for the Greek economy, starting by writing down its huge and unpayable debts.

Greece has suffered and will continue to suffer: its unemployment rate is over 25 percent; its gross domestic product has fallen by a quarter since 2008. What the past several years have shown is that suffering and austerity did nothing to help Greece or its creditors. And no more moralizing and punishment at this point will change that reality.

Ms. Merkel, the most powerful political leader in Europe, now has to decide whether she is willing to risk the stability of the European Union, consign Greece to economic depression and threaten global financial markets, or do the rational thing at this critical moment.

Leaders of the eurozone will meet Tuesday to discuss their options and consider a new proposal from Prime Minister Alexis Tsipras of Greece. They will have to act quickly because Greek banks are running out of cash after the government shut them down and imposed capital controls a week ago.

From an economic perspective, it is clear what Europe’s leaders should do. They need to restructure Greece’s total debt of 317 billion euros — about 177 percent of its G.D.P. — and keep the country, a member of the European Union and NATO, in the eurozone.

Letting the country leave the euro will, of course, hurt Greece by making its banks insolvent and bringing most economic activity to a halt while the government issues new scrip, most likely followed by a return to a greatly devalued drachma. Nobody really knows how bad things will get in that scenario.

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