The Greek Debt Crisis: What You Need To Know
Since 2009, Greece has been in the news for continual financial problems. The ongoing crisis originated when Greece was struggling to pay off a 300 billion euro debt, and since then has affected the global economy in numerous ways. Over the past five years Greece has been working with the rest of the European Union and the Greek citizens to make deals and set up repayment plans in an effort to pay off the large sum. Though Greece has gone through multiple bailouts and write-offs, the nation continues to suffer through financial difficulties, political uncertainties and staggering unemployment rates.
Recently, Greece became the first developed country to miss a payment to the International Monetary Fund. The payment had already been delayed once to give Greece extra time to raise the money, but in early July, Greece found itself unable to make the necessary payment. The government was left with a choice: attempt to make another austerity deal, or seek other options to repay their debt. In a well-publicized referendum, the decision making was turned over to the people. The Greek people held the voting power on whether to accept another international bailout or to seek a new and completely uncertain path.
Lead by Prime Minister Alexis Tsipras’ public declaration that he would not vote to accept another bailout, 60% of Greeks voted “no” on July 5th. Many Greeks interviewed claimed they wanted more control over their country’s finances, and that bailouts had not proven effective in the past. “I voted no because in all these previous years nothing has changed and nothing has been improved. In fact, it’s only been the opposite. It has been a struggle without any outcome,” Georgia Anastasiadou told The Guardian.
For many, the “No” vote was the lesser of two evils. There really wasn’t a solid and clear choice, as Greeks politics and the leaders’ campaigns muddied the water when it came to what the people were actually voting for. There is some debate over how much detail the people were given about the potential consequences of each vote. As this vote has put Greece at odds with the unified European Union, it has been turned into a symbol of independence and democracy. Greeks prided themselves on making a decision to be independent, but this nationalist mindset may have ignored the fact that the real issue is the economy.
It is uncertain where Greece will head now. Yanis Varoufakis, Greece’s finance minister, has resigned following the national referendum. Greece’s “no” vote may or may not result in the country leaving the Euro zone in the coming months, although it appears that many efforts are being taken by both the EU and Greece to avoid that conclusion. Greece’s banks have either been closed or have restricted cash withdrawals, as there is a shortage of Euro bills. Greece has pledged to continue talks with its creditors in the hopes of reaching a more permanent solution.
Sunday will bring a meeting of 28 European Union leaders to discuss and hopefully come up with ways to resolve the crisis. The European Central Bank is continuing emergency loans to Greece to keep the banks afloat and running, but this is not a long term solution. It is likely that another missed payment will result in the end of these emergency loans. In order to salvage its place in the Euro-Zone, Greece desperately needs to scrape together money and repay its debts.