Money Talks: Preventing a Grexit

By: Eryn Halvey

Looking at photographs of Greece today, you’ll see that the poverty they often depict calls to mind the grainy black and white photos of America’s Great Depression. This began back in 2010, when Greece’s debt began threatening the stability of the euro. In order to prevent a “Grexit,” in which Greece would be forced out of the Eurozone, the Troika (the International Monetary Fund, the European Commission, and the European Central Bank) imposed austerity policies in exchange for the bailout funds the nation needed to remedy its financial situation.

Simply put, these austerity measures involve policies that reduce government spending and/or higher taxes with the goal of reducing budget deficits. Nowhere have austerity policies been tried more aggressively than in Greece, and nowhere have they resulted in such failure.

Last year, Greece’s national unemployment rate reached 27%, and the majority of out-of-work Greeks had not received a paycheck in over two years. The number of incidences of suicide, marriage discord, and mass emigration of college graduates skyrocketed. So what’s the solution?

On January 25th, 2015, Alexis Tsipras came into office as Greek Prime Minister, representing the Syriza Party; two days later, his unorthodox finance minister, Yanis Varoufakis, joined the team. Syriza called for the restoration of Greek sovereignty and the end of austerity through confronting the nation’s humanitarian crisis, restarting the economy and promoting tax justice, regaining employment, and transforming the political system to deepen democracy.

Last week on February 20, 2015, the Eurogroup met to discuss Greece’s second bailout, which was set to expire on February 28th. After Greece dropped nearly all of its demands, Europe agreed to extend the bailout for another four months. Now Syriza has to answer to its voters. Alexis Tsipras was elected on the promise that he would leave bailouts and austerity behind. Yanis Varoufakis has spent the last few weeks developing an alternative to a bailout extension, a plan called the “bridging arrangement.” Now that they’ve broken the trust of their citizens, future negotiations will be even more difficult moving forward.

For portraits of Greece in crisis:

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