3.5 Greece – The Sisyphean task

3.5 Greece – The Sisyphean task

Sisyphus is a sly one, a real smooth operator. A wrong-doer before the Lord. Through his cunningness, he deceives death time and again by deviously blocking access to Hades and chaining the god of death, Thanatos. Even when he dies, Sisyphus manages to return to life by asking his wife not to bury him. So Thanatos releases him once more into life. But the punishment for Sisyphus is terrible: he has to roll a heavy boulder up the mountain for all eternity, which rolls back into the valley shortly before the summit. A truly Sisyphean task. And then the legend becomes a parable: the Greeks, who cheated their way into the euro, then craftily escaped their economic death by various rescue parachutes, now have to complete their Sisyphean tasks and reform their country.

Greece has been a member of the EU for 37 years. It was the first country in southern Europe, ahead of Spain and Portugal, to hold democratic elections again in 1974 after years of military dictatorship. As a reward, so to speak, the country was admitted to the EU in 1981. At that time, however, Greece already had considerable economic problems. The market was over-regulated, there was and there still is a shadow economy and tax evasion was rife. The eighties are seen as something of a lost decade in Greece: high public deficit, regular devaluations of the Greek drachma, high inflation, clientelism and nationalisation of companies. When the Maastricht EU Treaty was signed in 1992 the country was already on the verge of an economic collapse. With the signing of the Maastricht Treaty, the then Greek government launched reforms. Again as a reward, Greece was accepted into the eurozone and fulfilled the criteria at least nominally.

Foto: Die Akropolis in Athen

Later it became apparent that the figures had been manipulated. Low interest rates after joining the euro initially led to a Greek economic boom, driven by consumer spending in areas such as retail, construction, the food industry and tourism. Greece's economy grew by almost 4% annually. However, the debt level at around 100% and the budget deficit at over 3% remained high. As a result, Greece was the eurozone's most economically vulnerable country at the start of the 2008 financial crisis. Two years later, the financial situation was completely derailed. All that remained to prevent bankruptcy was foreign aid from the EU and the International Monetary Fund (IMF). At the same time, it marked a historic.drift away from the principle of direct responsibility enshrined in the EU Treaties. The so-called non-assistance clause prohibits both the EU and individual members from financially supporting another EU Member State.

The first rescue package in 2010 provided for a loan of EUR 120 billion for far-reaching structural reforms. And as a condition, the European Central Bank, the IMF and the EU Commission, known as the Troika, would supervise Greece's budget consolidation. Despite supervision, however, only part of the promised reforms were implemented. The result of the budget consolidation led to an unprecedented recession. Greece's gross domestic product shrank by a quarter within five years and unemployment spiralled to 28%. The financial assistance had to be increased in 2012 with a second aid package and under the condition of further austerity measures. The result was massive resistance from the population, demonstrations and the collapse of the established political system.

Since 2015, the  radical left-wing party, Syriza, has ruled with Alexis Tsipras at the helm. In the first months of his time in power, Tsipras entered into long and hard negotiations with the EU on further financial aid. The sometimes unprofessional conduct of negotiations and the uncertainty of Greek citizens and companies about the outcome led to an enormous outflow of money from Greek banks and finally to the introduction of capital controls, to prevent further haemorrhaging. A third rescue programme for a further three years was then finally signed.

Foto: Griechische Drachme, die Währung Griechenlands vor der Einführung des Euro

In 2018, Greece was officially released from the rescue programme. The Greek economy is slowly recovering thanks to massive support from the EU. Nevertheless, public debt remains extremely high and is even higher today than it was in 2010. Moreover, the country's demographic situation has worsened drastically due to the migration of young people. It remains questionable whether Greece will be able to converge with the rest of the eurozone in the long term or whether it will be forced to leave the eurozone once and for all during the next financial crisis.


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