The book examines the European debt crisis with particular reference to the case of Greece. It investigates its spillover from a Greek-specific problem to a Eurozone-wide crisis and chronicles the policy responses to combat it. The central argument of the book is that the principal cause of the Eurozone’s problems was, and still remains, the indecisiveness of European elites to tackle its underlying deficiencies. Leading Eurozone countries have been unwilling to commit to a common long-term plan which could deal convincingly with complex and inter-related problems affecting both its ‘core’ and its ‘periphery’. The guiding principle of policy responses thus far has been the pursuit of permanent fiscal discipline. Yet, fiscal discipline alone would not provide the long-term solutions required; a steady course towards economic governance and political unification is necessary. Through the detailed tracing of the evolution of the crisis, the book provides valuable insights into the crucial interconnection between Greece’s own economic troubles and the wider European search for macroeconomic stability and sustainable economic growth. As such, the book appeals well beyond those with a narrow academic interest in Greece. This is very much a discussion about the future of the Eurozone and the European Union as a whole.
The chapter reviews the conditions under which Greece entered the Eurozone in 2001. It discusses the controversies surrounding the manipulation of Greek statistics and sets the scene within which the Greek debt crisis unfolded
The chapter discusses the economic record of the New Democracy government in Greece during 2004-2009. It argues that much needed structural reforms were abandoned during that time and that the government lost control of macroeconomic policy, leaving Greece perilously positioned during the onset of the global financial crisis.
This chapter discusses the economic programme of PASOK in the run up to the 2009 election. It argues that the party failed to realise the seriousness of Greece’s economic peril and did not communicate to the electorate the hard choices ahead.
The chapter traces the early economic record of PASOK following its electoral victory in 2009. It argues that the new government failed to act quickly and convincingly in order to calm fears over the health of the Greek economy. Instead the government wasted its energies in diverting attention away from the real economic problems facing the country.
This chapter discusses the strategy of the Greek government in its efforts to avert an escalating economic crisis during the first months of 2009. It is argued that the message sent by Athens over the nature of its economic troubles was unclear. So was its preference over who should lead a potential rescue of the Greek economy, with both the EU and IMF receiving conflicting signals from Athens.
The chapter discusses the circumstances under which the Greek government was forced to seek a bailout from the EU and the IMF. It is argued that the economic measures taken by the Greek government did not prove sufficient to restore conference in the international markets, leaving Greece with no alternative but to seek external rescue. It is also argued that the Eurozone itself was unprepared to deal with the severity of the unfolding Greek crisis.
The chapter examines the provisions of Greece’s first Memorandum of Understanding with the IMF and the EU. It is argued that the targets set by the Memorandum were not realistic and the severity of the envisaged macroeconomic adjustment was unprecedented in the developed world. It is also argued that the Greek government failed to negotiate with its creditors a deal that would be better tailored to the socio-economic realities in the country.
The chapter discusses the circumstances under which the Greek crisis spread to the European Union. It is argued that, despite the creation of the European Financial Stability Facility (EFSF) in May 2010, the financial markets remained sceptical over the sustainability of debt in a number of Eurozone countries. This led both Ireland and Portugal to resort to the EU/IMF for a bailout package.
The chapter reviews the record of economic reform implemented in Greece during 2010. It is argued that confidence in the Greek economy began to erode further as a result of the government’s inconsistencies, but also due to the fact that many of the fundamental assumptions of the Memorandum proved erroneous. These uncertainties fuelled speculation about a possible restructuring of Greece’s debt.