Why the European Union Treated Greece as They Did
The European Union's treatment of Greece during the financial crisis has been a subject of numerous discussions and analyses. Why did the EU adopt such a stringent approach towards the Hellenic Republic? This article sheds light on the underlying reasons and the complex dynamics at play.
Introduction
Greece has faced significant challenges since the early 2000s, yet the EU's response has often been seen as harsh and unyielding. This article explores the historical context, the economic and political factors that led to the current situation, and the impacts on both Greece and the EU.
The Genesis of Greece's Financial Struggles
The roots of Greece's financial troubles trace back to 2004 when the country's deficit started to rise, initially unnoticed due to a lack of strict monitoring systems. While Italy and France also had large deficits, the EU decided to overlook these issues until 2008, when Greece's stance became unsustainable.
The Economic Crisis
When the deficit became publicly known, bond markets reacted with concern, leading to a significant drop in investment. The resulting economic crisis continued to haunt Greece, with subsequent governments failing to implement necessary reforms.
Taxation and Public Sector Reforms
Despite talks of economic reforms, successive governments increased taxation on the middle class and cut wages and pensions. Some of the collected funds were directed towards propping up banks, some of which became ghost institutions, absorbing money meant for the citizens.
The inefficient public service system remained untouched due to its political support. The reopening of public broadcasters, like the national TV, further burdened the middle class through increased electrical bills, exacerbating the economic burden.
The Political Dynamics
The political figures in Greece were accused of acting in a shady manner, with some believing they aimed to destabilize the country. In the eyes of the EU, Greece was seen more as an investee to be repaid, rather than a partner to be supported.
Vassilis Varoufakis' Perspective
Vassilis Varoufakis, in his book The Global Minotaur, revealed that Wolfgang Schuble, a prominent German politician, aimed to set an example of intimidation for others, making them follow the stringent policies more diligently.
The External Factors
Greece's competitiveness, productivity, and corruption issues have persisted for decades. Internal factors like clientelism and external pressures have contributed to its prolonged struggle. The Euro, while beneficial for trade, was not ideal for Greece's commercial success given its economic environment.
The Bailouts and Their Intentions
At the onset of the financial crisis, Greece required a bailout to prevent the collapse of major European banks. Tensions arose as anti-bank sentiments were not openly addressed by European politicians. They chose to focus on the usages of Greece instead, painting a picture of a lazy and corrupt nation.
The Media and Public Perception
The media played a significant role in shaping attitudes towards Greece. Negative portrayals in German and other European newspapers were replicated in Greek media, leading to a widespread feeling of demoralization and hate.
Conclusion
While the EU could not have acted differently in certain aspects, the communication of these actions could have been handled more tactfully. Understanding the dual challenge—both the Greek shortcomings and the EU's harsh public stance—helps in comprehending the complexity of this global economic crisis. Moving forward, a more balanced approach is essential for sustainable economic recovery and mutual trust between Greece and the EU.