EU officials have praised Greece as it emerges from the biggest bailout in economic history. But is it a cause for celebration for the Greek people? DW put that question to EU Economy Commissioner Pierre Moscovici.
Image: DW/E. Mears
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Deutsche Welle: The European Commission says this is a new chapter for Greece but it seems like for regular people in Greece it's more of the same – high unemployment, high taxes, bad pensions. Would you agree?
Pierre Moscovici: No, I wouldn't. I think that we are really opening a new chapter. The situation in Greece has already improved a lot, including unemployment, which has diminished from 27 percent to less than 20 percent. I know that is still high – much too high. But I think now the solid structures that we have built in Greece make this country capable of once again attracting investors to be competitive and to create a lot of jobs, and that's what I expect. Now the people in Greece will see that the efforts they've been making will bear fruit. Let's not be mistaken. It's not because there was austerity that there is a crisis in Greece. Rather, it was because of a terrible crisis that we needed to have more solid structures for economy and society in Greece.
The Greek debt crisis: A brief history
For years, Greece has struggled under crushing debt. From referendums on EU and IMF bailout terms to the rise of the anti-austerity left, DW explores key moments in the debt crisis and how Athens averted a eurozone exit.
Image: picture-alliance/AP/P. Giannakouris
Greek crisis takes form
On the heels of a global financial crisis, Greece's then-prime minister, George Papandreou, revealed in 2009 that the budget deficit was over 12 percent, double what it was previously thought. It was later revised to 15 percent, far exceeding the eurozone's 3-percent limit. The revelation prompted credit rating agencies to downgrade Greece's status, making it hard for Athens to get financial help.
Image: Getty Images/AFP/A. Messinis
Austerity sparks unrest
In a bid to help Athens out, the EU and IMF agreed to bailout Greece in 2010. The program required austerity measures to cut the budget deficit, a move that didn't sit well with many Greeks. In response, anti-austerity protesters organized nationwide strikes and demonstrations to protest the measures and, at times, clashed with police. Mass protests took off in 2011 and continued for years.
Image: picture alliance/AP/E. Morenatti
Rise of the fringe
Resentful of growing unemployment and poverty, a majority of Greeks in 2012 voted for fringe parties that opposed the bailout and the austerity measures that came with it. The first election resulted in no clear winner and set the stage for another vote. After the second election, the center-right New Democracy was tasked with forming a new government. The party was committed to the bailout.
Image: picture alliance/Zumapress/A. Vafeiadakis
Crash course
In 2015, Greeks handed the left-wing Syriza party an anti-austerity mandate in snap elections, putting Athens on a crash course with Brussels. In June, Prime Minister Alexis Tsipras controversially announced a referendum on EU bailout terms. On June 30, Greece became the first developed economy in the world to default on an IMF bailout. Athens imposed capital controls to stop capital flight.
Image: picture-alliance/AP/D. Ochoa de Olza
Turning point
The bailout referendum resulted in a rejection of EU terms, with 61 percent voting against a new rescue program. But that didn't stop Tsipris' government from agreeing to new terms with Brussels after Greece's then-Finance Minister Yanis Varoufakis stepped down. It allowed Greece to avert an exit from the eurozone and paved the way for a new bailout program amounting to €86 million ($98 million).
Image: picture-alliance/abaca/A. Michailidis
Road to recovery
As part of the 2015 bailout program, Greece adopted economic reforms, including cutting public spending and privatizing state assets. Two years later, the IMF urged Brussels to ease its bailout program terms and provide extensive debt relief, describing Greece's debt as unsustainable. In order to help Greece meets its bailout terms, Tsipras agreed to extend tax and pension reforms.
Image: picture-alliance/dpa/CTK/P. Svancara
End of an era?
In August 2018, Greece officially exited its bailout program, with EU officials calling it the "beginning of a new chapter." EU Commissioner Pierre Moscovici said Greeks "may not feel that their situation has yet improved much," but the EU would continue "to work with you and for you." However, with high unemployment and rampant poverty, some observers have cast doubt on the bailout's success.
Image: picture-alliance/AP/P. Giannakouris
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But you've hinted in the past that maybe there was too much austerity. Is that the biggest mistake that the EU made? Something that should not be repeated, let's say, for Italy?
I think the biggest mistake is that we underestimated the depth of the crisis. We thought that the walls were solid when they were really very fragile. And yes, at some moments, we were too tough on austerity. But we finally found the right balance in the long term.
Too long a term perhaps?
We could have maybe found a better balance between solidarity and effort, but all in all I'm convinced that we made the right decisions and that it was the right track for Greece to reform, and for us to agree on a program totaling some €273 billion ($314 billion) – a program that proves we were on the side of the Greek people.
Some people say Italy is going to be the next Greece. Do you feel like the new Italian government is up to the task of preventing what happened in Greece from happening in Italy?
The situation is, of course, very different. Italy is a founding member of Europe. It's also been in the eurozone from the start.
That doesn't make Italy immune to such problems.
Italy is the third-largest country in the eurozone, and has the third-largest GDP in the eurozone. It's a very creative economy and the debt is mainly in the pocket of the Italian people. But we still need to be very careful about the level of public debt, which is around 130 percent. This has to be monitored and controlled. And this is why we'll have to have a serious talk about the Italian government's draft budget plan by October, and I'm ready to do that. That's a huge date coming up there.
But let me repeat the question. Do you think that the current Italian government is up to the task of preventing a catastrophe like the one we saw in Greece?
As with all Italian governments, they will find a way. They will muddle through, and the proof will be in the budget. I cannot judge based on programs or words. I will only judge based on the facts – facts and indexes and budgets.
