Greece’s Economic Crises | Background
- UK referendum on European Union (EU) membership
- Refugee crisis
- Increasingly desperate European Central Bank (ECB).
- Greece, which is caught in a spat between Germany and the International Monetary Fund (IMF) over debt relief as it more bailout money.
- Dutch rejection of a treaty between the EU and Ukraine
Greece’s Economic Crises | Origin of the Issue
Greece—whose economic crisis already threatened to destroy the irrevocable nature of euro membership
Greece’s Economic Crises |Consequences :
- Direct Political Consequnces
- British decision to quit may prompt other countries to hold ballots on their own membership
- Marine Le Pen has already promised referendums as part of her campaign strategy for the 2017 French presidential elections
- Direct Economic Consequences
- Investors are now charging Portugal 3.3 percentage points more for 10-year money than they demand from Germany, a spread that’s well above its six-month average of 2.2 points.
- Italy’s risk premium rose to 1.3 points last week, up from December’s low of 0.9 points, while Spain is at 1.4 points, up from 1.2 points a month ago.
- Overlapping Consequences
- As Greece’s debt repayment deadlines approach, EU officials may be busy fighting fires kindled by Britain’s 23 June referendum on EU membership.
- With Prime Minister David Cameron embroiled in the wake of Panama Papers, government popularity is likely to take a hit. That can only help the anti-EU campaign.
- EU may find itself trying to hand money over to its weakest and most begrudging member Greece just when one of Europe’s most important participants called it quits( Brexit vote ).
- The IMF, which says Greece can’t turn itself around without debt relief, may be unable to reconcile its differences with Germany.
What does the Opinion Poll Say?
The European Commission’s regular survey of attitudes to the EU, known as the eurobarometer, has already taken a turn for the worse, with the most recent poll showing rising discontent.
Europe’s leaders may find themselves trying to stop their sandcastle from crumbling.
Greece, Germany and IMF
- Itwas the Germans who insisted on the IMF’s involvement in the Greek bailouts because it did not trust the political will of the other creditors to do whatever was necessary to force Greece into compliance.
- That process did not work here and the relationship between Germany and Greece deteriorated to such an extent that the IMF had to turn on Germany because what it was demanding of the Greeks was not only inappropriate but was destroying the country and counterproductive.
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