Up a creek. A summary of Greek crisis

Greek crisis

Prehistory of Greek crisis

It's a well-known fact that 90% of Greek budget is reliant on the service sector, and therefore Greece was deeply affected by the financial crisis in 2008. As a result, Greece had to ask the EU for financial aid. On 23d April 2010, the euro rate tumbled following the worldwide collapse of securities. At the same time, Greek bonds were rated "junk" by the Standard & Poor’s agency.

The European Commission, IMF and ECB lent Greece almost 250 billion euro under condition that the country would implement harsh austerity measures, cut down on wages and pensions, and carry out structural reforms. These harsh conditions resulted in a national strike. Greece was not able to elect a new president in 2014 and the Parliament was dissolved. Finally, the electoral victory in 2015 was won by the Coalition of the Radical Left that violently opposed to austerity measures.

Tensions are growing

The current Greek debt amounts to over 315 billion euro. Having analysed the situation, the creditors promised to extend the program of financial aid in exchange for harsher conditions and reforms, such as a bigger cut in wages and pensions. Greece responded to the new conditions by deciding to hold a referendum for voting on whether or not the country should agree on new credit conditions.

Another factor which inflames the situation is Europe's refusal to extend financial aid till July 5th, the referendum date. This flat refusal reflects all the gravity of the situation and creditors' attitude to Greece. The financial aid program was to be suspended on the night of July 1-2.


Greece defaulted on 01.07.2015 as the debt was not repaid. All banks suspended operations and daily ATM cash withdrawal limits were introduced in order to "protect the financial system of Greece".

However, this situation won't lead to an immediate Greek exit from the EU. That scenario is only possible if the majority of Greek population votes against austerity measures. The majority voting for political reforms would mean a defeat of the ruling party. The very fact of holding a referendum was condemned by 18 European countries.