Over the past decade, there has been an economic phenomenon that has gripped several powerful countries in the European Union, causing an economic crisis that has caused several countries to spiral into a conflict of identity and policy. While some of these countries have gotten better, others have not. This series is devoted to looking at the actions of each country that faced a sovereign debt crisis, and the actions they took to combat it. Some of these actions have worked tremendously, while others have not. Looking at these actions can give us knowledge about how to handle such issues in the future, while also giving an idea of the strength of the European Union to handle handle such disasters…
The big one
In looking at the other countries that suffered from the sovereign debt crisis, and examining how they recovered, this entire series has been leading up to the situation with Greece. This is the only country in the Eurozone that hasn’t been able to experience any recovery from the crisis. Not only is Greece the last country to still be suffering, but it was also the first of the five countries to collapse from the sovereign debt crisis. Let’s take a look at how the Greek situation has been different...
Greece had the fastest growing economy in the entire Eurozone in the early 2000s. The economy was growing at an astounding rate of 4.2%, annually. With the newfound economic boom, the Greek government put lots of its new capital into public sector jobs, particularly the military. This made Greece become the second highest defense-spender in all of NATO, just after the United States. While this grew Greek prominence in the world, it also came with a significant economic setback...
The problem with the rising military spending was that it was taking all of the money that Greece was making so quickly, and putting it towards a non-growth sector. While this isn’t what caused their eventual collapse, analysts have put forward the idea that if they had instead invested their money towards things like energy, sectors with high returns, then they could have shielded the country from much of the recession. Eventually, this spending pattern caused the deficit to reach insurmountable levels, which made Greece helpless when the economy began to retract around Europe.
In early 2015, voters rejected the Troika’s terms of a bailout, due to the extreme austerity measures that would have accompanied it. After Greece’s finance minister, Yanis Varoufakis, negotiated new terms with the Troika, a vote in July of 2015 also yielded no better results from the Greek people. Now, after Varoufakis resigned, a third round of deals about a Troika bailout is in the works, but is working its way through several Greek parliaments. If this next round of deals fails at the Greek voting booths, many fear that it would lead from Greece’s departure from the European Union, which would put greater uncertainty on the future of Greece and the rest of Europe.