March 23, 2015    3 minute read

Greece’s Bailout Crisis: The blame game

   March 23, 2015    3 minute read

Greece’s Bailout Crisis: The blame game

When the Syriza Party emerged victorious in the Greek elections early this year, countries across the globe were shocked. Many predicted that the party’s anti-austerity principles would stir economic and geopolitical tension in the Eurozone – their concern was spot on. Last Friday, the European Union (EU) summit that was aimed at putting aside all differences ended without a final decision made on the bailout of Greece.

The Eurozone’s peripheral economy is undoubtedly at a critical stage. Despite Prime Minister Tsipras’ assurance that Greece has no short-term liquidity problem, according to Athens’ bankers, the economy is in dire need of cash to pay wages and pensions. Since the 2008 financial crisis, the Greek economy has contracted rapidly, with unemployment at 26 percent as of December 2014. The fiscal adjustments undertaken by Greece’s previous government (cuts in government spending and tax increases) have inflicted massive pain onto the economy: Greece, being a more domestically reliant economy, faced huge falls in Gross Domestic Product as disposable incomes within the country decreased. This has resulted in mounting debt figures with Greece resorting to borrowing more.

The scheduled meeting of the EU to discuss the bailout issue on the 23rd of March is due to take place later today. Greece is expected to present its final list of reforms during this meeting and convince other nations about the Syriza Party’s commitment towards implementing these reforms before any further bailout. Tsipras will do his best to claim the remaining 7.2 billion euros of the bailout programme. However, reaching an agreement with Greece’s largest creditor, Germany, is unlikely to be easy.

Most German taxpayers are already in support of Greece leaving the Eurozone as they believe that their money is being wasted to save a country whose leaders are not honouring their promises of budget cuts and reforms. Such resentment among Germans explains Angela Merkel’s determinacy to ensure that Tsipras’s government adopt the necessary reforms before they receive any more bailout money.

But it is important to note that the Syriza party is also in a tight spot. They won the elections on the basis of their anti-austerity campaign. If they introduce reforms to satisfy the demands of EU, the Greek people will not at all be pleased. So, while the Germans are pointing the finger towards Greece’s incompetency, Greek leaders are left with no options but to put the blame on Germany’s ‘military’ treatment towards Greece, and to fight the bailout claims with post-Nazi era claims.

If the Eurozone would like to see the bailout crisis solved soon, the blame game must stop. Alexis Tsipras’s government needs to embrace the reforms required to prevent Greece from defaulting on its debts and rebuild its reputation among other EU countries. Tsipras has to take the initiative and explain to the worried people of Greece why these reforms are necessary and how they will benefit from them in the long run. Simultaneously, it is essential for the Greek government to start dealing with corruption issues and focusing on its main industries of tourism and industrial products to stimulate economic growth.

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