Culture & Lifestyle / Greece’s Eurozone Crisis: What You Need To Know

Greece’s Eurozone Crisis: What You Need To Know

Culture & Lifestyle Jul 07, 2015

by Rumnique Nannar

Whether you’ve seen the dramatic headlines or the crushing photos of Greeks lining up at their ATMs, it’s hard to ignore the Greece-Eurozone Crisis without scratching your head as to what it all means.

We’ve decided to break the issue down in the simplest terms we can so that you’ve got a good armchair opinion come Sunday when we’ll see if Greece exits the Eurozone.

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So how did this all begin?

As you might remember, the economic recession in 2008 exacerbated Greece’s debt, which the country had been underreporting. This made Greece's creditors highly suspicious that the country wouldn’t be able to pay its creditors back. So, in 2010, the European Central Bank (ECB), the European Commission, and the International Monetary Fund (IMF) — known as the fearsome Troika, the type of kneecap-breaking creditors whom you really don’t want on your case — lent the first of two bailouts to Greece. These bailouts reached more that €240 billion, or $264 million in today’s rates. One of the credit conditions was harsh spending cuts that slashed pensions and increased taxes. The Troika also wanted Greece to streamline its economy in order to stop Greece from being a tax haven and a better place to do business.

How much is Greece's debt?

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When you ask your friends for money, at some point, they’ll ask for it back. This was also the case with the IMF and ECB, which aren't happy that Greece has “arrears” on their loans. While they don’t use the word “default,” Greece has basically defaulted since it owes the IMF €1.7 billion, which was due on June 30. So now Greece has beaten Sudan to win the largest missed payment. Greece also owes the ECB €3.5 billion that’s due on July 20.

What did that yes-or-no vote mean?

That referendum was to decide whether to accept the latest bailout, which meant another round of austerity measures. The country voted no or oxi to much celebration, but the coming days leave the country's future incredibly uncertain.

What are the consequences of saying no?

But the bigger ramifications of the no vote are that Greece may soon exit the Eurozone and would need to make its own currency to replace the euro. Greece's departure from the union would be unprecedented because it would be a legal minefield, and there are no provisions left for a departure — even if it’s voluntary or if Greece is kicked out.

What’s with all the meeting mishaps?

Greece’s creditors were deeply dismayed at the outcome of the referendum and asked that the country’s prime minister, Alexis Tsipras, and the former finance minister, Yanis Varoufakis, would hold an emergency meeting with Greek banks on Sunday. But the next day, Varoufakis resigned, claiming that Greece’s European partners pressured him. Euclid Tsakalotos was quickly sworn in. Tsiprias and Tsakalotos met with Germany and France’s leaders on Tuesday to discuss negotiations, but then Tsakalotos brought nothing to the table, further frustrating Greece's partners. Today, they'll have to reform their blueprint of tax cuts and radical reform in order to appease Greece's creditors, who will, hopefully, reach a decision on Sunday.

^{_{Featured Image: Photo Credit: CNN}}

Rumnique Nannar

Author

Rumnique Nannar is a new journalist with a passion for all things pop culture, film, and art. Rumnique was born in London, with a predilection for devouring English chocolate with her Vogue, ANOKHI, and Glamour magazines in tow. She is currently in her Journalism Masters at UBC. Connect ...

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Greece’s Eurozone Crisis: What You Need To Know

by Rumnique Nannar

Whether you’ve seen the dramatic headlines or the crushing photos of Greeks lining up at their ATMs, it’s hard to ignore the Greece-Eurozone Crisis without scratching your head as to what it all means.

Rumnique Nannar

COMMENTS

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