Is Greece Really on the Verge of Another Financial Crisis?

Strategic Culture



Just about every adult on earth has seen this show before. Greece faces a debt repayment that it cannot meet: for this performance, €86 billion due in July. It needs fresh bailout funds from the European Union and/or the International Monetary Fund because borrowing directly on global capital markets comes at too high a cost—10 percent to replace the maturing bonds. Germany, leading the EU, states that before Greece receives a single euro it must first commit to more severe budget policies. The IMF points out that Greece cannot possibly live up to Germany’s demands, and even if it did, the country would not be able to repay its outstanding debt burden, which at last count stood at 181 percent of Greece’s gross domestic product. The IMF goes on to hint that Greece may have to leave the eurozone. Throughout this familiar point and counterpoint, few focus on Greece’s need for the fundamental economic reforms that offer the country its only hope of using its own resources to meet its obligations.



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