Greece – Forever A Loan

You don’t need to be a newspaper-addict to have realized by now that something’s going on – or should I say, going wrong – in the country of Greece. So why should you care about some ancient Mediterranean nation that you last heard of from your history teacher? Why has Greece suddenly become the center of attraction for the global media vultures? Does this money-talk sound all Greek to you? Well, hopefully you’ll feel a bit more enlightened after reading this through.

This tragic tale started in 2001, when several European nations agreed to replace their currencies with a new, common currency – the Euro. This group of nations came to be known as the Eurozone and Greece was a part of it. For joining the Eurozone, a country needed to be economically well off. If a country with massive debts would adopt the Euro, then it would negatively affect all the other nations using the Euro. Now, Greece had been spending more money than they could earn (it’s called running a fiscal deficit) and was economically fragile. In an honest world, Greece wouldn’t have been allowed in. But the political bigwigs furnished bogus accounts and made it appear as though Greece was doing all well, and hence they were permitted into the Eurozone.

Big mistake.

In 2004, the new Greek government soon realized that their predecessors had been fudging the money books big time. But they kept shut because the Athens Olympics were coming up and they didn’t want to embarrass the country in front of the world.

In came the fateful years of 2007-08, when the entire world was hit by recession. Economies all over the globe were hit, but Greece, with its secret load of debts, was slammed the hardest. Visibly beaten, they knew they couldn’t hide it anymore and shocked the world with the truth.

When you take a loan but you can’t repay it, you take yet another loan to repay the first one. But this second lender will charge higher interest rates because he knows you won’t repay him anytime soon. So now you have a bigger debt and to clear it, you end up taking a third, even steeper loan.

This is exactly the kind of bottomless pit that Greece had fallen into.

In 2010, the European Commission, European Central Bank and the International Monetary Fund collectively offered 110 billion euros as a bailout loan (a last-minute life-saver). This group of three came to be known as the Troika (you can call them a trio, a triumvirate, a trinity or a threesome but then Russian words always sound cooler). In exchange, Greece had to accept austerity measures (less incomes, less jobs, less pensions and anything else that would save money).

More unemployment, more failed payments, more loans and more austerity. 30% of Greeks were left jobless. Early this year, the Syriza party came into power led by PM Alexis Tsipras and FM Yanis Varoufakis and declared that Greece can’t take this anymore and they’ll change things. By late June, they had missed yet another payment and the banks were out of money. People were helpless. A referendum was held and 61% of Greece voted “NO” against the Troika’s austerity conditions, a decision that would apparently result in a Grexit – Greece’s exit from the Eurozone and return to its former currency, the drachma. A YES vote would’ve meant a 7.2 billion euro loan but also heavy austerity.

As it stands now, the Troika seems to have called off the Grexit and Greece continues to battle through the vicious circle of debts, loans, defaults and more loans. What next? Only time will tell.

- Rtr Aman Vasavada

Rotaract Club of NM College