Despite unprecedented austerity measures, Greece’s debt has grown relentlessly, raising questions about the wisdom of the Greek government’s decision to follow advice from abroad and hammer the country with debts it can never possibly repay.
The revelation signals that the shockingly harsh austerity measures imposed on the Greek people have failed, serving only to send the economy into an unmanageable contraction.
It is especially worrying given that EU debt inspectors are currently in Greece deciding on whether to release more bailout funds for the country.
Greece’s government has said that unless it gets that money, it will not be able to pay its bills for this month, putting the embattled country on the verge of default.
To be precise, it is the €450 billion question – the total that Greece owes as of today.
“That could never be paid – let’s be serious,” exclaims economist Kiriakos Tobras.
“You think that Greece could ever pay €450 billion of government debt? You need to be an idiot to believe something like that,” he concludes.
The Greek government is running out of options. They can continue to try and implement their program of strict austerity measures, but that will likely lead to more of the violent clashes between police and protestors witnessed in recent weeks and months. Or instead, they can choose to default.
The Eurozone leaders have insisted that default is not an option: they are concerned that were Greece to do so, it could spark a financial meltdown in the whole Eurozone.
But there is now a growing recognition that behind closed doors, other options are being considered.
“A Greek default is definitely on the cards, it has been on the cards now for a year and a half, because when you have a debt overhang of the exorbitant size that we have here in Greece, it is impossible to imagine that austerity can be a means by which you can reduce it – so the default was always going to happen,” reveals Yiannis Varoufakis, a professor at the University of Athens.
As default speculation rumbles on, it has become clear that there are fundamental flaws in the Eurozone’s operation.
“I think Europe’s citizens have a right to know what the causes are,” Professor Varoufakis insists. “At the moment, they are being deflected from the real causes and they are being asked to blame little Greece. Little Greece, however idiotic it may have proved in the past, is and never was capable of spearheading a global financial crisis.”
So just who is to blame?
Economist Kiriakos Tobras believes that “what we are experiencing in Greece today it is a financial occupation – it is a new kind of war. It is an international occupation of the international financial crime syndicate.”
For the past 18 months, the Greek government has gone on a relentless drive to cut wages, raise taxes, and reduce pensions. In return, it has received billions of euro in bailout funds. Now, as they await the next 8-billion-euro cash injection, many are left wondering if it has all been worth it.
“Let me give you another figure. The debt was 119% of GDP when this began, now it’s 150% and the IMF report says next year it’s set to rise to 189%. So in just two years, Athens has sacrificed its own people and got only stagnation of the economy,” George Katrounglas, Lawyer and Professor of Constitutional Law told RT.
“Not only are they not reducing the debt – the debt is increasing at an alarming speed.”
With protests and strike action now an almost-daily occurrence, the Greek government faces a huge crisis of confidence amongst its electorate. Financially in the red and politically in the dark, Greece’s population are losing their patience.
If Greece does default, the future of the Eurozone would look uncertain indeed.
But many people there feel that for Greece not to do that is to risk the country sinking deeper towards financial and economic ruin.
European Parliament member Paul Nuttall from the UK Independence Party says the Greek people are now suffering from a bad political decision taken in Brussels 10 years ago.
“The problem that you have at the moment is that the people in Greece are suffering because of an ideological decision, not taken in Athens, but taken in Brussels, and it was taken 10 years ago,” he told RT. “They should never have been allowed to get into the euro in the first place. They broke so many rules – their own rules – to get Greece in because this was all politics. It was not about economics.”
According to Nuttall, Greece now has no other option but to default and leave the euro.
“Greece will have to default,” he said. “What we are being told is that a discussion is taking place in Brussels at the moment, where Greece will be allowed to default by 75 percent. In the end there really is no option – Greece will have to come out of the euro, will have to devalue its own currency, will have to be able to set its own interest rate, a competitive exchange rate. It is the only way the Greeks can get their economy moving. They cannot get their economy moving while they are trapped within the prison of the euro. ”