Examining the Causes and Consequences of the Greek Debt Crisis
As part of GMF’s Congressional Salon Series, the Congressional Affairs team hosted Dr. Anna Visvizi, an assistant professor at the American College of Greece in Athens, for a discussion on the current debt crisis in Greece and the looming potential of the country defaulting on their loans. Lunch was held on Thursday, June 25th on Capitol Hill and hour before the Senate banking committee held their Greek debt crisis hearing. Participants included a senior staff from the House and Senate. Also leading the discussion was Peter Sparding, a transatlantic fellow at GMF.
Conversation focused on whether or not Greece will be forced to leave the Eurozone if it defaults on its IMF loan repayment on June 30th. The Greek government, led by Prime Minister Tsipras, is arguing for less austerity imposed by its lender countries and institutions and is pushing for some level of debt forgiveness. Greece’s lenders, on the other hand, want to see a strong level of commitment to structural reform. The potential loss of some of the social benefits that Greeks have come to expect and rely on is a contentious issue for the population, exemplified now through protests in Athens, some aimed at putting pressure on Tsipras not to give in to demands from financial institutions and the EU. There are a variety of aspects that must be taken into consideration as the debate continues such as the key actors involved: Prime Minister Tsipras, Chancellor Merkel, and German Finance Minister Schaeuble, who all have different motivations and policy approaches. Another issue is one of European and global security, with the emerging threats of ISIS and Russia, the European migration crisis, and neighbor Turkey’s role as a transit state. A potential exit of Greece from the Eurozone would add another level of complication to work being done on these other issues.
The group questioned all of the different scenarios that could come from an agreement or lack of one. It was evident amongst the group that really anything could happen, and without a crystal ball to predict the future, it is anyone’s guess what the next few days will yield. The group discussed the geopolitical implications for NATO defense and for the rest of the Balkan Peninsula. Another issue that was of interest to the group was the precedent that would be set by the outcome of the current crisis.