Greece’s deadline for reducing its debt is rapidly approaching. The government is scrambling for money, raising taxes, decreasing spending and even sending up a fund where citizens can donate “for the good of their country.” As Greek citizens are protesting against austerity reforms that lower governmental spending at the expense of social programs, the European Union must decide how to support Greece before its debt sinks the entire global economy.
The EU demanded that Greece lower its debt to eight percent of its GDP (from the current 12 percent) by mid-March if it wants to continue receiving support from the EU. With the deadline looming ever closer, Greece’s parliament has been passing measures to increase taxes while simultaneously slashing governmental spending. Usually governments raise taxes to pay for an increase in governmental programs or lower taxes to compensate for a decrease in social welfare programs. But with the triple whammy of higher taxes, lowering of public service employees’ wages and fewer social programs, Greek citizens are taking to the streets in violent protests. Most recently at the time of this writing, a huge portion of the labor movement of Greece clashed with police in violent riots.
Many in Greece are rightly angry that they are being asked to shoulder the debts that the wealthier speculators and government officials incurred. Government officials have allegedly pocketed a huge portion of the national debt. One source suggests that over 30 percent of national tax revenues have been unaccounted for because they allegedly go into the pockets of governmental officials.
It seems like a problem without a solution. The government must find a way to pay off a huge portion of its debts in a short period of time. The EU is applying pressure while refusing to offer financial support. Citizens are frustrated that their economy and standards of living are declining while the government is withdrawing support. Many are refusing to pay for the corruption of governmental officials. Yet without the people’s support, the government will not be able to meet the coming deadline: and it may not be able to meet the deadline even with the people’s support.
The people are going to have to temporarily bear the brunt of their government’s actions or else the EU is going to have to provide more solid support. Using arguments that sound remarkably similar to those in opposition to Lehman Brothers’ bailout a few years ago, many of the wealthier governments in the EU are vehemently opposed to bailing out Greece. They argue that Greece’s impending financial crisis is of its own doing and that an EU bailout will spur requests for bailouts from Portugal, Spain, Italy and possibly Ireland as well. However, like in the Lehman Brothers instance, a refusal to provide some kind of assistance could mean the collapse of the European economy, resulting in a second global financial crisis.
Current reports suggest that French President Nicolas Sarkozy will support Greece before letting its economy fail, but nobody has said what measures will be taken. Some more creative solutions that have been suggested to decrease Greece’s debt involve selling the Aegian Islands, demanding reparations from Germany for its work in crippling Greece’s economy in World War II and selling bonds to international speculators.
This problem is going to require cooperation on an international level. Citizens, governmental officials and the EU must work together to reduce financial speculation against Greece’s failure and to provide a sustainable solution that will not cripple Greek citizens. Greece needs less rioting, less pressure from the EU, less corruption and more willingness on everyone’s part to cooperate through the duration of the impending crisis.
