A Primer on the Greece Bailout

by: Mariann Devlin

Greeks has been demonstrating for weeks now over the government’s new austerity measures, but this isn’t the first time the country’s policies have led to public protests. Read this Q&A to find out the details of the Greek debt crisis and how they relate to our own struggles.

When did all of this start?

It’s hard to pinpoint precisely when any country’s economic crisis truly begins, as opposed to when it has snowballed into something so large and threatening we can’t ignore it (see the U.S. housing bubble of 2007).  The sovereign debt crisis in Greece reached its peak at the end of 2009, when its deputy finance minister announced that the country’s debt stood at 300 billion euros ($442 billion), the highest in its modern history. At that point, Greece’s debt amounted to 113% of its GDP, and as a result its credit rating was severely downgraded.

The IMF and Eurozone countries agreed on a rescue package of 110 billion euros ($146.2 billion), in order to prevent the country from defaulting. However, in exchange for such massive loans, Greece would have to implement strict austerity measures- including raising taxes and cutting public spending- leading to an outpouring of public anger.

Those austerity measures were announced in the beginning of May 2010. What happened after that?

It should be noted that in December 2008, Greek citizens spent weeks rioting after the shooting death of a 15-year-old boy by police officers. But as with all riots, there were more reasons for the public’s unrest than the death of one teenager. There was already a swelling of economic discontent amonst young Greeks prior to the shooting, an anger which revealed itself again in the May 5th protests.

Greek citizens began protesting- as well as rioting- on May 5th in outrage against Greece’s austerity measures.

This month, Greeks took the streets again in protest against latest austerity measures. What are they?

German Chancellor Angela Merkel called for a renewal of the IMF and EU loan package, this time 130 billion euros ($170 billion), which would require more stringent fiscal policies lest Greece be faced with default again. Greek members of parliament passed the austerity measures on February 13th, which quickly led to even more unrest. Tens of thousands of Greeks have taken to street in protests that are both violent and non-violent.

The new measures include $4 billion in budget cuts and the elimination of 15,000 public-sector jobs. The minimum wage will also be lowered by 20 percent (32 percent for people under 25), pensions will be cut by 12 percent, and limitations will be placed on collective bargaining.

What does this have to do with us?

The Occupy movement has expressed its solidarity with Greek protesters because of a shared plight. “Average” Americans, not just the old, the poor, or the sick, are growing more and more disenfranchised because of the mistakes made by powerful and greedy Wall St. investors, and the politicians who advance their interests in Congress. Greece’s problems didn’t arise out of nowhere, either. Greece is considered one of the most corrupt countries in Europe next to Italy, due to its long-spanning history of bribery, cronyism and tax evasion. Yet it is the average Greek, and the average American, who is forced to foot the cost of lifting our countries out of crisis.

And another thing. The austerity measures that Greece is undertaking to renew its IMF lending package aren’t that bad compared to the bogus deals made with impoverished countries like Haiti, who received another $100 million loan from the IMF after the earthquake- on the grounds that it would keep inflation low and deny pay increases to public sector employees. Even worse was the deal it made in the 1990s with the IMF, which required Haiti to cut its rice tariff from 35 percent to 3 percent in exchange for aid, deepening its economic instability to the benefit of the U.S. rice business.

Loans can seem like a beacon of hope to a country in severe economic need, but loans- as poor and struggling Americans know very well- come with a price.

We’re all suffering, it seems. What can I do?

In May, the NATO/G8 summits will be held in Chicago, which gives Chicagoans the opportunity to protest economic injustices that occur on a local, national, and international scale. The plight of people living in Greece is something we can sympathize with, for they mirror our own frustrations at the series of bank bailouts which do nothing to alleviate our personal economic burdens. Yet we should also protest on behalf of countries like Haiti, Jamaica, Zimbabwe, and Ghana, that suffer under IMF deals which only lead to greater impoverishment and dependence.

For more information on the NATO/G8 summits, read one of my earlier posts.  Although there will probably be calamity, I’ll be there! For more information, or to join in the protest, see this Facebook event put together by one of many Chicago activist coalitions.

Hope to see you there!

Mariann Devlin is a journalism school graduate from Loyola University. She’s a reporter for Patch.com, and a volunteer contributor to Streetwise magazine, a publication dedicated to ending homelessness. Originally from Anchorage, Alaska, Mariann moved to Chicago four years ago and still complains incessantly about the cold winters.


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