Greece Bailout Tensions

Today, I wanted to bring to your attention the recent developments in Greece with regards to the bailout situation. According to a Reuters report, in Al Jazeera “Greek borrowing costs spiked and bank shares plummeted on Thursday after the European Central Bank (ECB) abruptly pulled the plug on its funding for the country’s financial sector, in what Athens labeled an act of coercion.

The ECB decision to cancel its acceptance of Greek bonds in return for funding shifts the burden onto Athens’ central bank to finance its lenders and marks a further setback for the government’s attempt to negotiate a new debt deal with its eurozone peers.”

The idea by some has been to have the Greek government adhere to conditions with regards to the bailouts. However, according to a Greek government official, there is a feeling that Greece is being “blackmailed” to accept these terms. 

The stock market in Greece has been greatly affected, with “The Athens stock exchange plunged 22.6 percent at opening before recovering somewhat.” In addition, borrowing rates are almost at 20 percent.

With regards to this situation, “Greek Prime Minister Alexis Tsipras and his finance minister, Yanis Varoufakis, have spent this week touring EU capitals hoping to build support for a debt renegotiation and an easing of austerity measures under the country’s bailout program that both say they have no interest in extending beyond the end of February” (Al Jazeera, 2015).

It will be interesting if the leftist government in Greece will continue to stick to their positions, or if they will accept the current conditions so that the needed resources will be provided. It will be difficult for them since they ran against the austerity measures that are still in place. In international relations, it is also important to look at domestic politics, and how the Greek citizens would respond to the new government accepting current EU conditions on the loans.