On Monday, after weeks of tense negotiations, one national referendum, and days of long lines at nearly empty Greek ATMs, European leaders finally emerged with a deal that would provide 86 billion euros in bailout funds, keep the country in the eurozone, and avoid total economic collapse. As they work out the details of passing and approving the budget cuts, tax increases, and loan terms that Greeks will have to accept in exchange for financial help, there are a few important things to know.
How did we get here?
Many countries in Europe have struggled to recover from the global economic meltdown of 2009, so while nations like Germany have thrived, Greece, Italy, Spain, and others have dealt with widespread unemployment, waves of foreclosures, and increasing poverty among both the young and old. Greece has had it particularly bad, and the budget and public benefits cuts of austerity have only made things worse; the unemployment rate for Greeks under age 30 is stuck around 50%, and a recent study linked the harsh economic policies to an increase in suicide rates. In January, Greeks elected a new prime minister, Alexis Tsipras, from a left-wing political party called Syriza. Tsipras campaigned against austerity, and promised to put an end to the policies that have left millions of Greeks, many of them elderly, in poverty. He has been in talks with European leaders and global financial institutions for the past five months, but until now, Tsipras has avoided accepting any deals that would increase austerity. Why are things so bad now?
Greece had a 1.6 billion euro loan payment due to the International Monetary Fund (IMF) at the end of June, and the country had no way to pay it. When negotiations for a financial bailout stalled, the European Central Bank suggested it would stop providing assistance to Greek banks, which have been closed since June 29, and are dangerously close to running out of money. The country’s ATMs have had a daily withdrawal limit of 60 euros since the banks closed, and many people have been unable to access their savings for more than two weeks. As one Greek woman told us last week, this isn’t necessarily a huge problem for people who can rely on debit or credit cards, but older people on fixed incomes have been struggling without access to their pensions. What is the new deal?
After a 17-hour marathon of negotiations, leaders announced Monday that there is a new deal, and that talks over loan terms will begin once Greece approves the agreement. Greece will have to sell off some 50 billion euros of its assets to put in a fund dedicated to paying down the country's debt, according to The New York Times. Greece will also have to submit to monitoring by the IMF, and make more cuts to pensions while increasing taxes. And, even though many experts have said that Greece has an unsustainable amount of debt that it cannot repay, the deal won't reduce that total. "It’s going to hurt," Mark Weisbrot, co-director of the Center for Economic and Policy Research told us. "Almost everyone agrees that it's going to hurt a lot of people in Greece. It's going to hurt even more because the terms of the agreement won’t allow for an economic recovery, something the European authorities haven’t allowed for the past six years." What now?
The deal is not going to be popular among Greeks, who voted last Sunday against a proposal that would have imposed more austerity measures on them, but still wasn't as tough as this one. Greece's parliament must now approve the terms of the new deal, and while they may do it, at least one Greek political leader is already calling for new elections to punish Tsipras for betraying his principles. Angela, a 32-year-old small business owner in Athens, told us via email that she is disappointed things have gotten this bad. Also, she thinks leaders both in Greece, and the rest of Europe, share the blame for the uncertainty she and so many people feel now. "The most negative thing for me living in this society, is that austerity, taxes, and such, have taken up all our energy," she said. "People do not have professional aspirations, and if they do, they move abroad to make them happen. They do not pay attention to aesthetics to the protection of the environment, and there is little space for young people to create something of their own."
Many countries in Europe have struggled to recover from the global economic meltdown of 2009, so while nations like Germany have thrived, Greece, Italy, Spain, and others have dealt with widespread unemployment, waves of foreclosures, and increasing poverty among both the young and old. Greece has had it particularly bad, and the budget and public benefits cuts of austerity have only made things worse; the unemployment rate for Greeks under age 30 is stuck around 50%, and a recent study linked the harsh economic policies to an increase in suicide rates. In January, Greeks elected a new prime minister, Alexis Tsipras, from a left-wing political party called Syriza. Tsipras campaigned against austerity, and promised to put an end to the policies that have left millions of Greeks, many of them elderly, in poverty. He has been in talks with European leaders and global financial institutions for the past five months, but until now, Tsipras has avoided accepting any deals that would increase austerity. Why are things so bad now?
Greece had a 1.6 billion euro loan payment due to the International Monetary Fund (IMF) at the end of June, and the country had no way to pay it. When negotiations for a financial bailout stalled, the European Central Bank suggested it would stop providing assistance to Greek banks, which have been closed since June 29, and are dangerously close to running out of money. The country’s ATMs have had a daily withdrawal limit of 60 euros since the banks closed, and many people have been unable to access their savings for more than two weeks. As one Greek woman told us last week, this isn’t necessarily a huge problem for people who can rely on debit or credit cards, but older people on fixed incomes have been struggling without access to their pensions. What is the new deal?
After a 17-hour marathon of negotiations, leaders announced Monday that there is a new deal, and that talks over loan terms will begin once Greece approves the agreement. Greece will have to sell off some 50 billion euros of its assets to put in a fund dedicated to paying down the country's debt, according to The New York Times. Greece will also have to submit to monitoring by the IMF, and make more cuts to pensions while increasing taxes. And, even though many experts have said that Greece has an unsustainable amount of debt that it cannot repay, the deal won't reduce that total. "It’s going to hurt," Mark Weisbrot, co-director of the Center for Economic and Policy Research told us. "Almost everyone agrees that it's going to hurt a lot of people in Greece. It's going to hurt even more because the terms of the agreement won’t allow for an economic recovery, something the European authorities haven’t allowed for the past six years." What now?
The deal is not going to be popular among Greeks, who voted last Sunday against a proposal that would have imposed more austerity measures on them, but still wasn't as tough as this one. Greece's parliament must now approve the terms of the new deal, and while they may do it, at least one Greek political leader is already calling for new elections to punish Tsipras for betraying his principles. Angela, a 32-year-old small business owner in Athens, told us via email that she is disappointed things have gotten this bad. Also, she thinks leaders both in Greece, and the rest of Europe, share the blame for the uncertainty she and so many people feel now. "The most negative thing for me living in this society, is that austerity, taxes, and such, have taken up all our energy," she said. "People do not have professional aspirations, and if they do, they move abroad to make them happen. They do not pay attention to aesthetics to the protection of the environment, and there is little space for young people to create something of their own."