Greece in crisis - A German view

Of course, by now almost everyone has heard about the Greek financial crisis. But what exactly is going on?

Well, you have to unterstand that this did not happen over night. Already before the introduction of the Euro, Greece was a problem child. Having very high debts, the country thought the Euro might promise salvation. Therefore, in order to be one of the first states to get the new currency, it arranged complicated, so called ’swaps’, financial transactions which postponed the actual money-lending into the future, while Greece was already able to use the money without making new debts at the time being. This surely was only a temporary solution. But by partly deleting its debts that way, in a manner almost being illegal, they made it into the Euro-family and enjoyed the profits of the Euro and the trust of the other EU-states.

If all the Greek people would pay their taxes properly, it might have never come this far. But in Greece, tax evasion is normal, and ’fakelaki’ (meaning corruption), is on the daily schedule if you want to get something quicker or in a better quality. Therefore, the Greek state has trouble paying its debts, as there is no money coming from the people.

Moreover, Greece borrowed a huge amount of money from other EU-states, who trustfully thought that being in the EU meant financial stability. Which was not the case, as it turned out. Greece had passed on wrong numbers on their debts and economy (their debt increased to the proud number of 300 billion euro) to the European Union. And now, the Greek crisis is threatening to destroy the Euro, and maybe even the EU, pulling down the other states together with Greece.

There were many suggestions from everywhere on what to do with our troubled EU-member, from financial aid over a rise of inflation on purpose ( to reduce the value of those debts) to dividing the Euro-zone into two parts, the financially stronger and the financially weaker one. In the end, it was neither the inflation nor the division version. The European states decided to give Greece financial aid, ignoring the no-bailout-clause set by the EU, and to lend even more money to troubled Greece, but with lower interests. And Greece itself? It now is constantly watched by the European Union and will introduce an enormous rise in taxes.

So lets hope and watch how this turns out. But right now, there seems to be a ray of sun at the horizon again, and it might be possible there will be a happy end after all, or at least a situation better than the current. Until then, it will be hard work for Greece.

Sabine Hoppe (10/2) and Robert Kunzmann (10/1)