Steven Petrov
The Paw Print
Greece announced on Friday, March 27th, that it would stop servicing its debt obligations if its creditors don’t release the previously procrastinated and stopped packages of additional financial help. Associated Press, citing a Greek government employee who asked to remain anonymous, presented the information. The Greek crisis and the potential exit of the country from the European Union have been occupying the center stage of the world’s news since the beginning of 2015. The reason for that was one of the deadlines that Greece was facing at the end of February, in regards to the country’s service of its multi-billion dollar debt obligations to the so-called “Troika” (ECB, IMF, and the EC). The South-eastern European country has received two major bailout packages since 2010, accounting for close to 240 Billion euros from the above-mentioned institutions in trying to help recover the Greek economy from the detrimental effects that the “Great Recession” had. The first bailout came in 2010 and was for 110 billion euros, which aimed to save Greece from sovereign default and cover its financial needs through June of 2013. The outstanding financial help from the “Troika” came in with some major structural and economic reforms for Greece, called the “austerity measures.” After facing even worse economic outlook in 2013, due to the poor and delayed implementation of the proposed mandatory structural reforms by the government, the “Troika” gave a second bailout package for 130 billion euros, which included a bank recapitalization package worth 48 billion euros.
With the continuous help that the EU has provided Greece, the tensions have gradually risen in the last 4-5 months because no significant improvement is being observed and the Greek debt is still standing at over 140% of the country’s GDP, making it realistically impossible for the country to repay it in the near future. There has been a new party in the Greek Parliament since January this year, when the radical left oriented “Syriza” won the elections. This has been seen as a negative towards the potential resolution of the Greek crisis in a calm and economically reasonable way, because “Syriza” leaders have expressed on numerous times their readiness to exit the European Union and even potentially go back to their own currency the “drahma.” This would cause extreme market volatility and will fill the world with panic that other of the so-called “PIIGS” countries in Europe could end up leaving the union. For this reason the EU has been trying to be patient and even express more lenience toward the Greek situation by granting extensions and further procrastinating the issues. The Greeks, however have been acting in an exact opposite manner, stating their terms and conditions as if they were not the country in debt and showing much less readiness to make any type of moderation of their economic views and projections.
What’s Been Said…