Who is to blame for Greece’s Debt Crisis?

By Oliver Green

Firstly, to understand the scale of sums involved, according to the IMF, Greek Debt at a height of the crisis in 2015, stood at 320 Billion Euros, while according to ‘Focus Economics’, Greek annual GDP at that time stood at a mere 176 Billion Euros.

I would say that the European Federalists are responsible for creating the undemocratic and economically regressive monstrosity of the Euro in the first place, which was created for the mere political fanaticism of imposing a United States of Europe on the peoples of Europe, and has brought nothing but pain and distress to the peoples of southern Europe in particular. These “formerly Sovereign” nations no longer have the capacity to employ the monetary policy tools of currency devaluation and inflation to inflate and export their way out of debt, and are now straitjacketed into and subject to a Currency Union, with interest rates and monetary policy designed to cater largely for the requirements of the much wealthier and larger economies of France and Germany, and for Germany in particular which is exploiting this parity in order to benefit from a relatively weaker currency, enabling it to maintain a healthy sector in industrial exports to the emerging markets.

Successive Greek Governments bare much of the blame for having manipulated and schemed to join the Euro, along with continually sacrificing their sovereignty and prosperity by continually leaning upon Berlin and the rest of the Eurozone and Troika for hand-outs and debt relief to stay in it at any cost. I say manipulated and schemed, as they did precisely that. Greece’s entry into the Euro was murky right from the start. There were clear criteria for joining the currency union, which the Greek government knew it didn’t meet. The criteria included having an annual overspend of less than 3% of GDP which initially disqualified it from joining in 1999, so the Greek government later cooked its figures to enable it to enter in 2002.

From that time on, Europe’s statistical body Eurostat repeatedly queried the figures they were presenting, and every time successive Greek governments revised them slightly so as to get them off their back, whilst not giving too much away. But it wasn’t until 2011 that the then Greek government was forced to reveal the true figures, and this exposed once and for all their unwillingness to take deficit targets and fiscal responsible seriously.

Germany also deserves much of the blame for the deception due to its willingness to look the other way in the pursuit of its sizable trade surplus, (which even Emmanuel Macron has stated needs re-balancing) and for wishing to see Greece remain. According to Open Europe, 60% of Greek debt is owed to the Eurozone, with Germany having the highest exposure of any Euro member state, but 66% when including the additional 6% owed to the European Central Bank. Regarding the remaining 34%, 5% of it is held in Banks, with only 10% being owed to the International Monetary Fund (which is why they have tended to be much more conciliatory and flexible in the crisis negotiations), 15% is held in bonds and the remainder in loans.