Greece’s Economic Troubles
Media by: Garrett Streeter
Last week, the European Central Bank took a stance against Greece’s economic turmoil, stating that it would no longer accept Greek government bonds as collateral for lending money to commercial banks. This ultimately puts Greece in a position to accept emergency funding and assistance, but other countries in the European Union are hesitant to support the down-and-out country.
The newly elected far-left party of Syriza of Greece is led by Prime Minister Alexis Tsipras whom has promised to raise minimum wage, pay pension bonuses, and rehire public workers. However, with the ECU denying any bailout for Greece, Tsipras acknowledged that reforming a the bailout plan would not help Greece in dealing with its debt.
Instead, the European Commission, ECU, and International Monetary Fund are seeking that Greece’s new government create an extension beyond Feb. 28 of the country’s bailout of 240 billion euros ($270 billion). The government, however, doesn’t agree with the short-term plan, and wishs to build a bridge between the beginning and the end of May to raise short-term funding by issuing treasury bills.
Tsipras has even gone as far to demand World War II reparations from Germany after destruction and chaos was brought upon Europe by the Nazi party. According to the Prime Minister, Greece has a “moral obligation to our people, to history, to all Europeans peoples who fought and gave their blood against Nazism.” Germany has lead the EU in terms of economic success, and hasn’t looked back since the end of WWII.
Historically, Tsipras does seem to have a point as Germany occupied Greece for four years and economically made the country dry after the Third Reich demanded war-time loans. Today, Germany would owe Greece $8.25 billion in war reparations.
Italy and France have also shied away from Greece’s austerity, and have downplayed Greece’s ambitions. During a tour of European capitals, Tsipras and Finance Minister Yanis Varoufakis were unable to gain support for a Greek debt burden, and in revoking some cutbacks. In trying to lie out their economic plan, some were left even more skeptical than before.
The Eurozone, which consists of 19 EU members regarding financial topics, is allowing for Greece to design its own reforms as long as the reform results in stronger public finances, debt repayment, and reforms, an official said. As stated before, because the EU will not accept Greek collateral bonds, Greece has a short time to reach a deal with the Eurozone, or seek emergency liquidity assistance from the Greek central bank, which would be more costly for the country, and could possibly be stopped by the ECB if a deal does not arise between the Eurozone and Greece.
Greece is ultimately left on its own to sort through its own problems, and some have even speculated that Greece may have to leave the Eurozone in order to pay off its debt. If Greece does leave the Eurozone, it creates a bigger disaster for the economic union of Europe as a whole.