Greece reached today’s impasse by coming clean about a secret, to begin with.
Soon after he was elected to lead the country in autumn 2009, the prime minister blew the whistle.
George Papandreou said Greece had lied to join the euro currency:
“Today, we are facing a deficit of up to 12.7 percent of GDP, and a soaring national debt of nearly 300 billion euros. Greece faces the risk of sinking under its debt.”
At the first crisis summit, the countries of the European Union promised to support Greece.
Austerity policy promised and then executed by Greece proved to be economically toxic, and therefore toxic to ordinary people, whether the massive expansion of a bipartisan clientelist state in the 1980s was to blame or foreign bailiffs.
The Greek debt was revised upward, to 15 %. Come December 2010, the markets all but stampeded. Ratings agencies downgraded the country, circling, watching.
In 2010, the debt climbed to 350 billion euros, unsustainable. Greece asked for outside help. It became the first euro country to receive an international rescue package, less than one third of what it owed: 110 billion euros.
One year later, it got another bailout loan, of 130 billion. But a sovereign default still threatened. This was averted thanks to four out of five of its private creditors accepting later payback, lower interest, and wiping off more than half the value of what they were owed.
Public belt-tightening churned up politics.
The Radical Left Syriza won parliamentary elections in January this year, on leader Alexis Tsipras’s promise to renegotiate bailout conditions and end austerity, which had accompanied a 25% fall in GDP and a quarter of Greeks to lose their jobs.
They turned to him to get them out of this.