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The Greek crisis, And what it means for Europe Ruby Gropas University of Thrace & Hellenic Foundation for European & Foreign Policy, Athens

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Page 1: The Greek crisis, And what it means for Europe

The Greek crisis,

And what it means for Europe

Ruby Gropas

University of Thrace &

Hellenic Foundation for European & Foreign

Policy, Athens

Page 2: The Greek crisis, And what it means for Europe
Page 3: The Greek crisis, And what it means for Europe

Main points Background & brief outline of the main aspects of the Greek crisis

Understanding what led to the crisis

How the Greek crisis impacted the rest of Europe

The wider context & why this is not exclusively a Greek problem

The challenges for Europe:

Disintegration & Global Irrelevance?

Protest & citizens’ opposition

What next for Greece? What Kind of Europe?

What does this mean for democracy?

Relationship between democracy and financial markets: tense & fragile

Page 4: The Greek crisis, And what it means for Europe

The Greek crisis in numbers

5th consecutive year Greece has been in a recession.

GDP has declined by 20%

Official statistics put unemployment rate at 22%.

350,000 jobs have been lost in the past year alone.

Youth unemployment rate for (up to 24), has soared over 46% while the EU average is at just over 20%

Demonstrations, riots, sit-ins, strikes are a daily phenomenon in Athens

average of 3 demonstrations per day over the last two years—

The economic cost of these protests are huge. Especially during this time of crisis

In Athens, there was up to 60% fall in revenue for businesses directly associated with the Indignados sit –in and the riots over the past year

Page 5: The Greek crisis, And what it means for Europe
Page 6: The Greek crisis, And what it means for Europe

Greek crisis in numbers

3 fundamental deficits: Sovereign debt

Current accounts

Credibility

March 2012: Biggest sovereign debt restructuring in history

Yet its still not enough

‘Haircut’ to ensure that the public debt will fall from 164% to 120.5% of GDP in 2020 to make it ‘sustainable’ according to the projections of Troika (IMF, EU Commission & ECB).

53.5% reduction in its debt burden to private creditors, while any profits made by eurozone central banks on their holdings of Greek debt will be channelled back to Greece.

Bailout:

110 bln euro 2010-2011

130 bln euro in 2012

Page 7: The Greek crisis, And what it means for Europe

Fragmented political scene at May 6th

elections and polarised pro & anti-bailout

camps 18,85

13,18

16,8

8,5

6,11

10,6

6,7

0

2

4

6

8

10

12

14

16

18

20

Political Parties in May 6th Elections

ND

PASOK

SYRIZA

KKE

DHMAR

Ind. GR

Xrisi Avgi

Page 8: The Greek crisis, And what it means for Europe

Austerity

Salaries & pensions have already been cut by 20-25%

Further cuts in government spending equal to 1.5% of GDP, cuts in pensions and thousands more civil service job cuts.

Taxes will increase by 3.38bn euros in 2013, following a 2.32bn euro increase in 2011.

The increase includes a solidarity levy of between 1% and 5%, a cut in the tax-free threshold, a rise in VAT rates, and luxury taxes on yachts, pools and cars.

In the public sector, pay will be cut and many bonuses scrapped.

Some 30,000 public sector workers are to be suspended, wage bargaining will be suspended, and monthly pensions of above 1,000 euros cut by 20%.

The government also aimed to raise about 50bn euros by 2020 from privatisations by selling land, utilities, ports, airports and mining rights, but recently this target has been revised down substantially because of the worsening economy.

the cost of doing business in Greece must also go down

Page 9: The Greek crisis, And what it means for Europe

How did we get here and why?

From periphery to core Europe

Persistence (if not exacerbation) of structural weaknesses of state, politics and economy

Clientelism, corruption, bribery, populism

Failure to reform

The ‘Golden’ years 1999-2004

December 2008 riots

Global financial crisis 2008

Spill over to Europe & Greek debt crisis breaks out in 2010 “We are all Greeks now”

“Greek crisis and the End of the End of History”

“The Greek crisis & the end of capitalism”

Page 10: The Greek crisis, And what it means for Europe
Page 11: The Greek crisis, And what it means for Europe
Page 12: The Greek crisis, And what it means for Europe
Page 13: The Greek crisis, And what it means for Europe
Page 14: The Greek crisis, And what it means for Europe

The European dimension:

Europe ‘broke’ or broken?

From Euro-euphoria to deep crisis

Systemic failures

Completely unexpected & unthought of developments

Financial lobbies, political power: disconnect between ‘elite Europe’ & ‘people’s Europe’

Tense relationship between financial markets and democracy

Discontent from both the North (EU as a Transfer Union) and the South (EU as a Neoliberal Austerity driven Union)

Debate about what kind of Europe?

Page 15: The Greek crisis, And what it means for Europe

Trends of this period of transition,

contestation & decline…

Disintegration

Weakening of EU institutions & return to

intergovenmentalism

Populism

Contestation & protest

Return of ‘nationalists’

Economic Decline

Global Irrelevance

Page 16: The Greek crisis, And what it means for Europe

Priorities & challenges

Challenges of adjustment & reforms,

especially for the weakest economies- distribution of the

pains and costs of reforms

Rethink Europe: Need to openly debate again what

kind of Europe we want and can have

Political leadership to articulate a new vision/

narrative for Europe’s economic development

Page 17: The Greek crisis, And what it means for Europe
Page 18: The Greek crisis, And what it means for Europe

Politicians who didn’t

“survive” the crisis across

Europe

Romania, Hungary,

Ireland, Portugal, Spain, Italy, &

Greece

Page 19: The Greek crisis, And what it means for Europe

Ireland: Brian Cowen (Fine Gael) was replaced by Enda Kenny (Labour).

Brian Cowen

(7.5.2008-9.3.2011)

Enda Kenny

(9.3.2011- )

Page 20: The Greek crisis, And what it means for Europe

Portugal: José Sócrates Carvalho Pinto de Sousa (Socialist) was replaced by Pedro

Manuel Mamede Passos Coelho (People’s Party)

José Sócrates Carvalho Pinto de

Sousa (12.3.2005-21.6.2011)

Pedro Manuel Mamede Passos

Coelho (21.6.2011- )

Page 21: The Greek crisis, And what it means for Europe

Spain: José Luis Rodríguez Zapatero (Socialist) was replaced by Mariano Rajoy Brey

(People’s Party )

José Luis Rodríguez Zapatero

(17.4.2004-21.12.2011)

Mariano Rajoy Brey

(21.12.2011- )

Page 22: The Greek crisis, And what it means for Europe

Italy: Silvio Berlusconi was replaced by Mario Monti (technocrat)

Silvio Berlusconi

(8.5.2008-16.11.2011)

Mario Monti

(16.11.2011- )

Page 23: The Greek crisis, And what it means for Europe

Romania: Emil Boc was replaced by Mihai Răzvan Ungureanu (political party:

Independent). Cătălin Marian Predoiu served as the interim Prime Minister from only

6.2.2012 to 9.2.2012.

Emil Boc

(22.12.2008-6.2.2012)

Mihai Răzvan Ungureanu

(9.2.2012- )

Page 24: The Greek crisis, And what it means for Europe

Hungary: György Gordon Bajnai was replaced by Viktor Orbán (political party:

Fidesz)

György Gordon Bajnai

(14.4.2009-29.5.2010)

Viktor Orbán

(29.5.2010- )

Page 25: The Greek crisis, And what it means for Europe

Greece: George A. Papandreou (Socialist) was replaced by Lucas Papademos-

technocrat (unity government)

George A. Papandreou

(6.10.2009-11.11.2011)

Lucas Papademos

(11.11.2011- )


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