Recently, the far-left Syriza party declared victory in the Greek presidential election with Alexis Tsipras’s triumph. Ever since, they have attempted to keep their campaign promises, no matter how surprisingly, which is a generous and noble way to honour the electors’ trust, but when these promises contain stubborn negotiations with the leaders of the European Union, an aggressive approach to the EU and Greece’s common fiscal problems, and the pursuit of more government spending to increase the well-being of poor citizens, it is highly debatable whether these policies are necessarily efficient.
Everyone is talking about Greece’s blunt approach – the unreasonable and unacceptable acts of the state. However according to IR researchers, the acts of a state are never irrational, rather it just makes less counter-productive and more beneficial choices.
In this case, Tsipras is facing a tremendous amount of debt, to be precise 175% of the country’s annual GDP, which was mostly created by the bail-out credits of several lenders and investors, also involving the European Central Bank. That is why the Greek government is asking for re-negotiations over their debt-crisis and that is why the EU is outraged by their demands.
The reason all of Europe is talking about this now is that the existing bail-out package, which was intended to put an end to the Greek economic crisis, is about to expire at the end of the month (28th of February). This means that if negotiations aren’t settled peacefully, leading up to a compromised solution, then the Greek economy could face a possible exit from the Eurozone. This, without a doubt, would mean disaster for Greece and a huge loss of prestige for the EU. That is the other reason why the EU is trying so relentlessly to convince Greece to ratify a new bailout programme. However, the Greek economy’s problem originated not only from their debt but also from the Euro crisis. The apathy of workers, wide-spread tax evasion, the lack of opposition to corruption, and cozy relationships with the business elite are all just as responsible for Greece’s woes. On the other hand, the new government is trying to address all of these issues, but any significant change is still a long way off.
Talks are currently being held on the immediate write-down of the Greek debt, and even though the present conditions are very generous, any new conditions could be even more generous. Tsipras’ demands are understandable, yet highly questionable, and seemingly infeasible, but the stakes are too high for failure.
Originally published in Közgazdász, Hungary’s oldest university newspaper.