Overview of Greek-EU Relations
Greece’s relationship with the European Union has been rocky from the start.
Greece Joins the EU
Greece won the right to EU membership in 1981, during the height of the Cold War. Greece joined the EU for a variety of reasons: modernization of the Greek economy, negotiating power to leverage over Turkey and integration with the values and development of the rest of the European community.
“Greece also sought to loosen its strong post-war dependence upon the United States of America,” according to the Hellenic Republic – Ministry of Foreign Affairs.
Greece was the tenth member state to join the European Economic Community, which would later develop and be renamed the European Union in 1992.
Greece and the Euro
Tension increased between Greece and other EU members when the euro was launched on Jan. 1, 1999 by 11 out of 15 member states. Greece failed to meet the financial requirements and had a budgetary deficit that was too high to join the new currency. However, on Jan. 1, 2002, Greece dropped the drachma and adopted the euro. Yet, unresolved tensions between Greece and other major EU member states continued. Particularly in France and Germany, older politicians held deep-seated regret for allowing Greece to join the EU. Fears about Greece’s economic instability leading to a collapse of the euro were held long before Greece’s infamous bailouts.
These fears were compounded when, in January 2004, the European Commission revealed that Greek officials falsified the budget paperwork that allowed the country to join the euro. Later that year, Greece hosted the Summer Olympics in Athens. The games cost the Greek state billions and significantly increased the overall budget deficit. Several rocky years followed, then the 2007 Great Recession in the United States triggered a global banking crisis and worsened Greece’s inability to manage debts.
Greece won the right to EU membership in 1981, during the height of the Cold War. Greece joined the EU for a variety of reasons: modernization of the Greek economy, negotiating power to leverage over Turkey and integration with the values and development of the rest of the European community.
“Greece also sought to loosen its strong post-war dependence upon the United States of America,” according to the Hellenic Republic – Ministry of Foreign Affairs.
Greece was the tenth member state to join the European Economic Community, which would later develop and be renamed the European Union in 1992.
Greece and the Euro
Tension increased between Greece and other EU members when the euro was launched on Jan. 1, 1999 by 11 out of 15 member states. Greece failed to meet the financial requirements and had a budgetary deficit that was too high to join the new currency. However, on Jan. 1, 2002, Greece dropped the drachma and adopted the euro. Yet, unresolved tensions between Greece and other major EU member states continued. Particularly in France and Germany, older politicians held deep-seated regret for allowing Greece to join the EU. Fears about Greece’s economic instability leading to a collapse of the euro were held long before Greece’s infamous bailouts.
These fears were compounded when, in January 2004, the European Commission revealed that Greek officials falsified the budget paperwork that allowed the country to join the euro. Later that year, Greece hosted the Summer Olympics in Athens. The games cost the Greek state billions and significantly increased the overall budget deficit. Several rocky years followed, then the 2007 Great Recession in the United States triggered a global banking crisis and worsened Greece’s inability to manage debts.
First Bailout
In early 2010, the Greek government announces strict austerity measures that were immediately met with massive protests and strikes across Greece.
A few months later, the International Monetary Fund (IMF) and the EU agreed to provide Greece with a loan valued at $146 billion. The first bailout was to be paid out over three years. As a condition of the loan, the Greek prime minister agreed to enforce even stricter austerity measures. Public outcry and protests broke out once more after the measures were announced.
In June 2011, one year after the bailout was announced, a general strike was held for 24 hours in Greece. Tens of thousands marched on Greece’s parliament to oppose governmental efforts to impose new austerity measures. However, by October 2011, Greece agreed to further austerity measures in a deal that provided Greece with significant debt write-offs.
Second Bailout and Expiration
By February 2012, violent protests broke out in Athens as Greek finance ministers and the parliament approved a second IMF and EU bailout, worth $172 billion. By the fall, the Greek parliament had approved more extensive austerity measures related to the second bailout. The decision was massively unpopular as the conditions of the bailout included: layoffs of tens of thousands of public servants, wage cuts, tax reforms and increases, pension cuts and budget cuts.
On June 30, 2015 the second bailout expired when Greece missed the payment to the IMF, making Greece the first developed economy to default on the fund. As a result, Greece imposed new austerity measures in July 2015. The Greek government approved the measures after Greek citizens vocally protested in rejection of the strict terms.
Election of Tsipras and the Third Bailout
In January 2015, Greece elected Alexis Tsipras as the prime minister. Tsipras had led the leftist Syriza party since 2009. During the election cycle he campaigned on a platform of anti-austerity measures and anti-privatization, such as the sale of Piraeus. After his and his party’s success, supporters of Tsipras took to the streets to denounce the EU powers that had pressured the nation through austerity measures as part of two severe bailout programs.
Yet, in August of 2015, a third Greek bailout was approved despite the IMF’s refusal to contribute after Greece’s previous default. To avoid Greece’s bankruptcy, $95 billion would be distributed through 2018. The money would be distributed over the course of three years and is set to expire on August 31, 2018.
In direct opposition to Greek voters, austerity measures implemented as part of the third bailout included: tax reforms, cuts to public spending, reformation of labor laws and the privatization of state held assets. As a result of the harsh criticism and pressure from strikes and demonstrations protesting the third bailout, Prime Minister Tsipras resigned from office and called a snap election. He was re-elected in September of 2015 and remains Greece’s prime minister through 2017.
In early 2010, the Greek government announces strict austerity measures that were immediately met with massive protests and strikes across Greece.
A few months later, the International Monetary Fund (IMF) and the EU agreed to provide Greece with a loan valued at $146 billion. The first bailout was to be paid out over three years. As a condition of the loan, the Greek prime minister agreed to enforce even stricter austerity measures. Public outcry and protests broke out once more after the measures were announced.
In June 2011, one year after the bailout was announced, a general strike was held for 24 hours in Greece. Tens of thousands marched on Greece’s parliament to oppose governmental efforts to impose new austerity measures. However, by October 2011, Greece agreed to further austerity measures in a deal that provided Greece with significant debt write-offs.
Second Bailout and Expiration
By February 2012, violent protests broke out in Athens as Greek finance ministers and the parliament approved a second IMF and EU bailout, worth $172 billion. By the fall, the Greek parliament had approved more extensive austerity measures related to the second bailout. The decision was massively unpopular as the conditions of the bailout included: layoffs of tens of thousands of public servants, wage cuts, tax reforms and increases, pension cuts and budget cuts.
On June 30, 2015 the second bailout expired when Greece missed the payment to the IMF, making Greece the first developed economy to default on the fund. As a result, Greece imposed new austerity measures in July 2015. The Greek government approved the measures after Greek citizens vocally protested in rejection of the strict terms.
Election of Tsipras and the Third Bailout
In January 2015, Greece elected Alexis Tsipras as the prime minister. Tsipras had led the leftist Syriza party since 2009. During the election cycle he campaigned on a platform of anti-austerity measures and anti-privatization, such as the sale of Piraeus. After his and his party’s success, supporters of Tsipras took to the streets to denounce the EU powers that had pressured the nation through austerity measures as part of two severe bailout programs.
Yet, in August of 2015, a third Greek bailout was approved despite the IMF’s refusal to contribute after Greece’s previous default. To avoid Greece’s bankruptcy, $95 billion would be distributed through 2018. The money would be distributed over the course of three years and is set to expire on August 31, 2018.
In direct opposition to Greek voters, austerity measures implemented as part of the third bailout included: tax reforms, cuts to public spending, reformation of labor laws and the privatization of state held assets. As a result of the harsh criticism and pressure from strikes and demonstrations protesting the third bailout, Prime Minister Tsipras resigned from office and called a snap election. He was re-elected in September of 2015 and remains Greece’s prime minister through 2017.
French Support of Greece
Many of the austerity measures implemented in an effort to decrease Greece’s spending have previously come directly from Germany. However, discussions of debt relief stalled in 2017 ahead of the September German elections. The result of the elections was that, as of December 2017, Germany still does not have a government. Differently, the spring elections of France’s President Emmanuel Macron have lead to France expressing solidarity with Greece. The French president has said he would "lead the fight" in discussions of Greece’s debt relief because "there's no chance of returning to a stable economy and society in the eurozone with [Greece’s] current level of debt." During his first state visit in Greece in September 2017, President Macron spoke about his vision for a united EU. In particular, he calls European countries to stand together against the United States and China. In recent years, investors have been put off from Greece due to perceptions of high risks and low returns. Political instability and hostile public opinion displayed through the deep seated Greek tradition of public protests has also made investors weary of spending large amounts of time and money on projects without guarantees the deals will not fall through at the last minute. |
“Greece was sometimes forced to choose non-European investments because European investors weren’t there any more. I’m not happy with this situation,” said President Macron as he reaffirmed France’s continued support of Greece. “I want Europeans, as much as the whole world, to come and invest in Greece. We were here, we are here, we will be here.”
President Macron’s pleas for European investors is backed by critics of China, who fear state-backed investments firms taking control of strategic portions of EU member-states, such as the Greek port of Piraeus. Splitting from the German tradition of strict austerity measures in Greece, President Macron expressed the need for additional support for economically weaker EU member-states in order to bring out his vision of a united EU. France has a history of backing Greece during tough times, including during the 2015 bailout in which the IMF and other EU leaders nearly forced Greece out of the eurozone, which would have further devastated the country.
President Macron also called for an end to the strict austerity measures and enforcement of Greek spending cut, tax increases and privatization of state held assets. He asked that the IMF cease making the austerity demands that were so fiercely protested by Greek citizens. Furthermore, President Macron stated his belief that Europe must work together to protect growth within the EU and expressed French support heading into discussions about Greece’s debt alleviation leading into the 2018 expiration of the third bailout program. He also spoke of France’s willingness and interest in investing in Greece’s economy. On his state visit he was accompanied by dozens of French entrepreneurs.
France has become involved in the privatization of the port in Thessaloniki, a northern city and the second largest in Greece. China has also expressed interest in investing in the port. French investors are also interested in working to develop Greek sources of renewable energy as well as oil drilling in the Aegean. The latter of which is significant, as Russia has also expressed interest in building a pipeline to reach the rich gas deposits in the sea scattered with Greek islands. With significant weariness in Europe over Chinese investments and increased division within the EU following Brexit and turmoil in Spain, the new French president is seeking to stabilize Greece in an attempt to unite the EU.
President Macron’s pleas for European investors is backed by critics of China, who fear state-backed investments firms taking control of strategic portions of EU member-states, such as the Greek port of Piraeus. Splitting from the German tradition of strict austerity measures in Greece, President Macron expressed the need for additional support for economically weaker EU member-states in order to bring out his vision of a united EU. France has a history of backing Greece during tough times, including during the 2015 bailout in which the IMF and other EU leaders nearly forced Greece out of the eurozone, which would have further devastated the country.
President Macron also called for an end to the strict austerity measures and enforcement of Greek spending cut, tax increases and privatization of state held assets. He asked that the IMF cease making the austerity demands that were so fiercely protested by Greek citizens. Furthermore, President Macron stated his belief that Europe must work together to protect growth within the EU and expressed French support heading into discussions about Greece’s debt alleviation leading into the 2018 expiration of the third bailout program. He also spoke of France’s willingness and interest in investing in Greece’s economy. On his state visit he was accompanied by dozens of French entrepreneurs.
France has become involved in the privatization of the port in Thessaloniki, a northern city and the second largest in Greece. China has also expressed interest in investing in the port. French investors are also interested in working to develop Greek sources of renewable energy as well as oil drilling in the Aegean. The latter of which is significant, as Russia has also expressed interest in building a pipeline to reach the rich gas deposits in the sea scattered with Greek islands. With significant weariness in Europe over Chinese investments and increased division within the EU following Brexit and turmoil in Spain, the new French president is seeking to stabilize Greece in an attempt to unite the EU.