ANALYSIS:A Greek departure from the euro zone could produce the opposite effect of that intended, leading to contagion in other countries

MARIO MONTI, months before becoming Italy’s premier in November, partly attributed the euro zone crisis to “unhealthy politeness”.

Europeans, he said, had been too polite to each other in the past when problems in one country, which had implications for others, needed to be addressed.

That era of politeness has passed. The era of ruthlessness has begun. With the stakes so high in the euro area, hardball is the name of the new game in European politics.

The continent’s leaders now effectively push their counterparts from office if they don’t cut the mustard, as George Papandreou and Monti’s predecessor, Silvio Berlusconi, have discovered to their cost. Some of the same leaders are now speaking openly of pushing entire countries out of the currency union.

It is not hard to see how it has come to this. Two years ago this week European leaders first acknowledged that Greece would be bailed out – and that despite an EU treaty-enshrined prohibition of bailouts. Over that time, whatever goodwill and sympathy that existed towards Athens’s political class among its counterparts elsewhere in the EU has evaporated.

The failure to keep promises, the inability to steer a clapped out public administration to reform itself and the economy and the playing of politics at a time of existential crisis for the euro has caused exasperation, anger, contempt and sometimes loathing.

For those who argue that Ireland – another small, enfeebled euro zone state – should engage in aggressive brinkmanship in the pursuit of its interests need only observe the ill will directed towards Greece and the absence of gain from its politicians’ game-playing.

With the offer of carrot having failed to yield returns, the Greek government’s interlocutors have attempted to create sticks to prod it to reform.

Last week Germany raised a suggestion to have a eurocrat become the de facto finance minister. The proposal was hastily withdrawn.

An idea of depositing fresh bailout funds in an escrow account is more likely to happen. That would increase pressure on Athens to deliver while reducing the risks of a hard default when almost €15 billion worth of Greek government bonds are due to be repaid next month.

The biggest stick of all is the threat of ejection from the euro zone. Political leaders first mooted the idea publicly last summer, despite the absence of any legal mechanism by which to achieve that end. But just as a way to get around the no-bailout clause was found when it had to be, a way will be discovered to expel countries as a last resort. Political realities will always trump legal niceties if a situation becomes sufficiently grave.

Although nothing is inevitable, and nothing can be ruled out, the situation has not yet reached a point of last resort for Greece and its membership of Europe’s currency union.

The best reason for Lucas Papademos’s frustrated counterparts not to eject him and his country from the single currency is self-interest. A departure would be hugely risky for everyone.

If one country can leave, then others can too. There have already been large capital movements out of the European periphery. The reintroduction of the drachma – whether by choice or by imposition – would accelerate those flows. Everyone from small savers with a few euro on deposit in banks to giant institutional investors would stampede for the exit for fear of having their euro converted to funny money.

That could cause Greek-style meltdown in the countries concerned. Stopping the chain reaction could become impossible.

Rather than making the euro zone stronger by removing its weakest link, kicking Greece out could precipitate its collapse.

Another reason not to start an unravelling process is Greece itself. Regardless of how other member states feel about the country, it will have to be helped whether it remains in the euro or not. It is in nobody’s interests to see it go the way of its neighbour Albania in 1999.

Then, that impoverished Aegean nation experienced the collapse of a giant, countrywide Ponzi scheme. Economic activity came to a shuddering halt and order quickly broke down. Anarchy triggered an exodus of refugees and Italy was obliged to send in its military.

If Greece leaves the euro, or is ejected, it could easily come to resemble Albania circa 1999 given the appalling and weakened state of its economy. November jobless figures show that in a single month the unemployment rate rose from an already eye-popping 18.2 per cent to 20.9 per cent.

For comparison: even at the moment of steepest decline in Irish output and employment in late 2008 and early 2009, when construction workers were being let go in their tens of thousands, the jobless rate never jumped by even one percentage point in a single month.

Looking at the collapse of the Greek economy increasingly brings to mind what happened in communist countries more than two decades ago when they decided that the central planning game was up.

If that is the case Greece has much further to fall before it hits bottom, regardless of what happens.