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Imagine a country losing all of its college grads

Like thousands of young, college-educated Greek up-and-comers, Nefeli Varhaliti has abandoned all hope of a future in her home country. So she's leaving.

Protesters shout slogans during a rally in front of the Greek Parliament during a debate prior to a confidence vote in Athens in 2014.
Alkis Konstantinidis | Reuters

The 22-year-old, now an exchange student studying counterterrorism at Mercy College in New York, has carefully plotted her own personal "Grexit" since entering the American College of Greece in Athens in 2012. First, she snared business internships in Istanbul and Berlin in order to get work experience. Then she applied for academic scholarships so she could study in the U.S.

Her long-term goal: to get a job anywhere in the world where she can utilize her skills. It won't be in Greece.

"I don't ever want to go back to Greece," Nefeli admits. "There is no opportunity. The unemployment rate for job seekers under 24 years old is 50 percent."

Nefeli's tale is common. It pulls back the curtain on the real Greek tragedy overlooked by many mainstream economists: the brain drain, or flight of home-grown talent. A groundswell of individuals with bachelor's, master's and Ph.D. degrees—in fields ranging from computer science, economics, engineering and medicine—are planting stakes abroad and getting out. The result: a bankrupting of the country's intellectual assets.

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The trend may hold even more dire consequences for Greece's economic future than its 245 billion euro ($270 billion) debt burden, which has pushed it into seven years of depression and wiped out 25.9 percent of GDP.

Greek crisis: Timeline
Greek crisis: Timeline

Statistics tell the story. An estimated 160,000 to 180,000 university graduates have left Greece since the crisis hit—this from a country with a total population of only 11 million—according to Lois Labrianidis, an economic geographer who researches migration at the University of Macedonia in Thessaloniki. In his book "Investing in Leaving: The Greek Case of International Migration of Professionals in the Globalization Era," he points out that half of these migrants have Ph.Ds.

Endeavor Greece, an international group that supports entrepreneurship, has even higher estimates. In its "Creating Jobs for Youth in Greece" report, it puts the tally at 200,000 people since the crisis hit five years ago.

According to the Endeavor Greece study, to date about 71 percent of the Greek migrants have gone to countries in the EU. The other 29 percent have gone to Australia, Canada, the U.S., the Middle East, Africa and Asia. Specific countries also appear to be absorbing specific types of professionals. For example, finance graduates have gone primarily to the U.K., medical graduates to Germany, computer science graduates to the United States, and engineers to the Middle East.

Emigration figures were highest in 2013, tripling in comparison to the pre-crisis period, the study revealed. But the most disturbing statistic from the study showed that the trend is not dissipating: a stunning 46 percent of Greeks living in the country are considering relocating.

That's not surprising, considering nearly 1 million jobs have been lost in Greece over the last six years, the Hellenic Statistical Authority and Endeavor analysis reported. Many were in sectors that were fueled by the consumption bubble of the past. About two-thirds were in construction, non-food manufacturing and retail and wholesale. And it's worth pointing out again: those 1 million jobs are in a country with only 11 million people.

The phenomenon has caused a backlash among other European countries, some of which have become more cautious with immigration policies. In the United Kingdom, for example, Prime Minister David Cameron and his Conservative party are trying to gain EU support for far-reaching curbs on migration and worker mobility within the EU. Under his plan, migrants would have to wait four years for certain benefits. They would be removed after six months if they fail to find work. While his proposals would require changes to the treaties governing the European Union, the rhetoric is casting a spotlight on the issue.

'These minds cannot be retained'

"The brain drain has huge implications for Greece," according to the University of Macedonia's Labrianidis.

As he explained, the percentage of Greeks with college degrees is high. According to Eurostat, 37.5 percent of Greek 25- to 34-year-olds have a tertiary education. The most popular degrees are engineering, manufacturing, construction, science, math, computing, business law and architecture.

"Unfortunately, these minds cannot be retained, because the economy keeps sinking and there is no one left to create high-value-added products or services," he said, adding: "It is a vicious circle."

At a time when the European Union wants Greece to try to pick itself up by its bootstraps and restructure its economy, the brainpower needed for this transformation is leaving.

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"A lot of the impetus is psychological," explained Alexis Pantazis, 38, co-founder of Hellas Direct, an online auto insurance provider based in Athens that recently raised equity capital from the Third Point Hellenic Recovery Fund, whose top investors include private-equity veteran Jon Moulton.

The former Goldman Sachs banker should know. Pantazis left Cyprus to study and work abroad in London for 15 years and then returned to Greece in 2009 once he saw an opportunity to disrupt the $2.6 billion car insurance market. Since the company's launch, it has raised 17 million euros ($19.3 million) in equity capital. "Most people say to themselves, 'Screw this. I am not going to sit here every day and worry about my future,'" he said.

That uncertainty has people from so many walks of life stymied. "There is a sense of paralysis, and it's gotten worse since the elections in December," said Haris Makryniotis, managing director of Endeavor Greece.

As he explained, everyone is waiting to see how the four-month extension of the new EU bailout plan approved on Tuesday will go, and if Greece will bail on the euro. The approval bides time for the country to repay its international creditors.

The spillover effect on daily life can be felt by everyone. As he pointed out, the banks are not lending, instead keeping approvals on hiatus. That means that if you are running a business, there is no debt financing available for working capital right now. And if you are an entrepreneur looking for start-up capital, investors are not untying their purse strings. Instead, they are waiting to see what will happen to the euro in Greece, since any change will affect valuations.

It's the uncertainty over a confluence of factors that has the country at the tipping point. Those include how the new Syriza government, led by Prime Minister Alexis Tsipras, will work to spur foreign investment in local businesses, reform the tax code and business licensing requirements, promote entrepreneurship and address high unemployment, government corruption and bureaucracy.

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"In order for things to change, people must see a future of change," said Varhaliti, the Mercy College exchange student.

If that should happen, there could be a movement among Greek expatriates to return home. Manolis Pratsinakis, Ph.D., a Greek who has been working at the University of Amsterdam in the department of social sciences for nine years, is still hopeful that one day he can return to his native land. "Since I left in 2006, I have been waiting for things in Greece to get better so I could go back. Until then, it is sensible to stay in Holland."

Whether Pratsinakis' dream will become a reality is anyone's guess. Until Greece enacts structural reforms—such as reducing its high Social Security tax and investing in job training—the brain-drain exodus of young, talented Greeks will continue.

"Such dramatic change cannot happen in a year or two," said Labrianidis. "It is a very long process."