The Greek Financial Crisis: A Failing State? Essay

851 Words 4 Pages
The Greek financial crisis is currently occupying a large proportion of our everyday news, this essay will examine the nature of the ‘crisis’, what is at stake for the actors involved, and why the financial calamity is significant to the study of international relations.
Greece’s extreme debt problem can be linked to the global financial crisis (GFC) that has tormented the world from late-2007 (Murse, 2011) . The statistics tell all that needs to be told; in 2009 Greece had a budget deficit of about 12.9% of GDP, while their overall debt was an incredible 113.4% of GDP (Applebaum, 2010). The reason Greece was hit so hard by the GFC can be put down to an unusually old fashioned legal system, a difficult, sometimes laughable bureaucracy and
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Another major actor, the population of Greece, has been seriously affected. The Greek government has sharply raised taxes on fuel, tobacco and alcoholic beverages. The retirement age has also been raised two years and tough new tax evasion laws have been put in place (CNN, 2010).
Most important of all, is whether or not the main actor, Greece, will be able to recover from the GFC that has afflicted it so profoundly. The question has to be raised of when or if it will become a failed state, as well as the problem of when it becomes too late and too expensive (Donadio, 2012). Of when money can no longer fix what has become a gaping hole in the euro zone. The larger economies such as France and Germany are beginning to pay the price as they continue to prop Greece up while receiving little in return, at least in the short-term (Donadio, 2012). The International Monetary Fund has also played a part in relief for Greece, as well as the bilateral loans on offer from euro zone countries. The IMF is providing technical assistance for a package that will only be used as a last gasp effort (CNN, 2010). If Greece is to default, it could mean a dramatic drop in the value of the euro and would cause a spike in the price of imports for euro currency countries, as well as a rapid decline in the price of EU bank bonds, resulting

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