In June 2015, Greece became the first developed country to default on a payment to the International Monetary Fund since its advent in 1944. Additionally, Greece has been ostracized by the European Monetary Union for a number of reasons, mostly surrounding its irresponsible borrowing from banks such as the European Central Bank and the IMF. However, the narrow focus on current loans and subsequent contempt ignores much of Greece’s history. There is a political divide between Greece and Western European states, due to the extreme amount of polarization found in Greece.
Although Greece’s fiscal policy is plagued by mismanagement and needs serious reforms, current austerity measures only exacerbate the recession. In the future, once Greece’s economy is bolstered, taxes must actually be collected and a fair amount of spending should be cut, but it is too early for austerity cuts. This political divide is especially apparent because Greece is held to the same standards as countries like France and Germany, but the countries all have vastly different backgrounds.
Greece also differs politically from its western European counterparts. It has seen political polarization that is more radical than only the rise of the far right, which is prevalent in a majority of European countries. Not only has the neo-Nazi Golden Dawn party become much more popular (it now holds 3 out of 21 seats in the European parliament which is unprecedented for a Greek party that is so conservative), but the far-left party, Syriza, gained a majority in the January 2015 elections and has been in power ever since.
Syriza was elected on a platform of anti-austerity and debt negotiation, the most important issues to the struggling populace. Alexis Tsipras, the prime minister, is vehemently opposed to the bailout conditions imposed by the Troika, which includes the Eurogroup, the ECB, and the IMF. Diametrically opposing viewpoints between Germany and Greece on economic policy contributed to the rift.
In comparison to Greece, the Eurozone is dominated by German ideals, especially austerity, due to Germany’s economic hegemony. Angela Merkel is the leader of the Christian Democratic Party, the center-right party favoring austerity. During the beginning of the Global Financial Crisis, Nicolas Sarkozy was the leader of the center-right UMP (now Republicain) party, and the partnership between France and Germany aired on the side of neoliberal economic practices. Germany practices austerity, but France generally has high government spending and taxes, with a great deal of expenditure on social programs and pensions. Although the Parti Socialiste is currently in power in France, due to Francois Hollande’s electoral victory, France has not been vocal in its opposition to austerity practices perpetuated by Germany. This has resulted in austerity becoming the norm for the Eurozone countries.
Greece and Syriza do not fit into this mold, because of these fundamental economic disagreements. The EU emphasizes conformity, and some of its founding principles effectively force countries to impose austerity measures. The Stability and Growth pact minimizes public deficit (under 3%) and the Debt-to-GDP ratio (60% of GDP), while mandating GDP growth (two contradicting ideals). Greece is currently unable to follow all of these criteria, which is cited by the leaders of the EU during negotiations. Therefore, it is presented as the sole EU country that is unable to function without oversight.
This has affected the tone of the bailout negotiations that occurred this past summer, as well as the agreement that was reached. In the future, Greece will most likely have to continue negotiating with its creditors in order to keep their economy functioning. The current cycle of bailouts, however, is not sustainable. A more permanent agreement must be reached for the good of the EU and Greece.