For the previous weeks and months, the European news networks have seemingly been dominated by one subject: Greece.
Every time that we tune into the news channels a previous deadline has been missed or a new one has been set, the camera bulbs are flashing as Cameron and co. arrive in Brussels with very serious faces and we are shown the Greek streets full to the brim with unhappy countrymen, desperate to access their money.
Greece is in dire financial trouble and there are countless ongoing attempts within the European Union to get rid of this burden from the biggest currency union on the planet; whether that be by providing another bailout and giving Greece some extra cash, or alternatively, metaphorically sweeping the problem under the carpet by stripping the nation of its Euro currency status. Not our currency, not our problem.
There are just so many questions: how has Greece found itself in this mess? What does this mean for the Euro and the European Union? What will eventually be done to resolve this crisis?
In 2002, Greece became the 12th country to join the ‘Eurozone’ – a significantly smaller economy in comparison to many of the other members, including France and Germany, despite half a decade of relative economic safety and success, it was no surprise that Greece faced greater difficulty than its larger neighbours when the world economy began to fall into disrepair in 2007/08.
By 2009, Greece had acquired more than €300 billion in debt, most of which was owed to the European Commission, the gatekeepers of the Eurozone, the European Central Bank and the International Monetary Fund. The country desperately needed money, and in return for austerity measures, higher taxes, smaller pensions, was granted its first bailout by the European Union.
After more than half a decade of harsh austerity, caused by the three necessary European bailouts worth more than €110 billion each, mass unemployment and discontent on the streets, at the beginning of this year, Greece took a stand against their own economic suffering and voted for a radical new leader and regime. Alex Tsipras, leader of the left-wing, anti austerity Syriza Party was elected as the country’s new Prime Minister in January this year. Syriza, led by Tsipras had pledged to take a stand against the harsh economic sanctions that were being placed on Greece by the European Union and fellow Eurozone nations as the nation struggled to repay its debts.
After months of negotiations and one final extension on the bailout return, granted in February of this year, Greece finally defaulted upon all of its debts last month as the European Central Bank stopped providing financial aid and Greece became the first developed country to ever miss a payment to the International Monetary Fund. Once again, Greek leaders were faced with another harsh set of proposals from European leaders: the EU wanted to see higher levels of tax, smaller pension payments and greater levels of austerity based financial legislation in order to raise the money that was internationally owed. After previous austerity measures demanded by the Union had proved unpopular with the Greek population, Tsipras announced that this latest set of measures would either be accepted or rejected by the will of the people: it was to be put to a referendum to be held July 5th.
News outlets in Europe and across the planet went into meltdown as it became clear the referendum could also effectively signify a ‘Yes/No’ answer as to whether Greece wanted to stay in the Union and fears were growing that either a Greek exit from the Eurozone or allowing the nation to continue in its indebted state could both risk the collapse of the biggest and most valuable currency union on the planet. Of course, this was always highly unlikely, the clue is in the headline itself, the Euro is the greatest and most valuable currency union on the planet; the removal of one of the least powerful counterparts, whilst it may have caused slight instability for a short amount of time, would not wield enough power to ultimately cause a collapse. Think of it as political Jenga.
61% of the people voted to reject these new proposals, they wanted to trust their new leader to negotiate a better deal for the now desperate nation. The potential for a ‘Grexit’, a move that would have been supported by several powerful Eurozone partners, was now a real possibility.
Greece had two options: go it alone, free to set their own financial laws but lose the security blanket offered by the Union, or continue negotiations from their new slightly empowered position awarded by a strong referendum result.
Finally, after the initial citizen led rejection of a new set of plans merely a week previously, in the early hours of July 13th, after 17 hours of negotiations, a new agreement was reached between Greece and the Union to keep Greece in the Eurozone as Tsipras faced intense pressure from more powerful European leaders. Further reforms to both the taxation and pensions systems must be legislated immediately, Sunday Trading Laws have been forcibly relaxed, as have many secondary industries such as farms and bakeries been deregulated. If this plan is approved by the Greek Parliament on July 15th, it will put an end to more than half a year of intense negotiations between Greece and its creditors and ensure the future fourth bailout package.
However, this agreement does not guarantee economic security for the country. Greece is still yet to face some of its harshest measures of austerity, and money must be found and returned to the creditors quickly; before the week is out Greece has to pay more than €3 billion to the European Central Bank.
Things are surely set to continue to get tougher for Greece as they attempt to repay their ever growing debt, build better relations with the Union and get millions of their unemployed back into work. The headlines may be ones of relief this morning, but angry Greeks, Tsipras, Merkel and their worried faces will still be gracing our front pages for some time to come.