The media surely wouldn’t have you believe it, but there are other news stories going on that don’t involved a flag. In fact, there’s a very important one with economic implications on an international scale. Greece has been struggling economically ever since the worldwide economy took a nose dive after the housing bubble burst in the late-2000’s. With a national unemployment rate of almost 27 percent and a quickly increasing level of debt, it is clear that Greece is headed on a path for national bankruptcy. In order to attempt to curtail such an event, the European Union decided to provide Greece with a bailout plan that came with a few stipulations, including cutting pension plans and raising taxes. However, the Greek government, in a stunning vote, rejected the plan, debating that the plan was far too strict and would destroy the remnants of the country’s economy regardless. The EU leaders plan to meet again soon to discuss a final offer to Greece before it is simply too late to redeem the broken country.
One might wonder why the EU would care at all about the fate of Greece, whose fate seems to be predetermined by their own inability to resolve their economic issues. It’s all about the euro. Greece is currently a member of the EU, which means their official currency is the euro; however, if Greece goes under, they will likely be removed from the EU and therefore will have to revert to using their own currency. This would subsequently make Greece an extremely poor country, and its citizens would certainly suffer many painful years if Greece is even ever to recover. Even if one were to ignore the humanitarian issues of releasing Greece from the EU, many democratic countries are concerned that, due to Greece’s leftist political strategies, they might revert to an even more socialist form of government, which could potentially create a rift in the EU if other countries try to follow their lead.
So why not just bail them out then, right? Well, keeping Greece in the EU also has huge political and economic implications. The most obvious, and perhaps the most impactful, would be the devaluation of the euro that would result from bailing out Greece. Without a doubt, by keeping Greece as a member of the European Union, the perception of financial risk of the group as a whole would increase, thereby decreasing the value of their currency. In addition, if the EU allowed one member to continually break the rules and then essentially reward them for doing so, what would stop other members from doing the same thing?
It seems inevitable that the outcome of this situation will have a meaningful and potentially lasting impact on world politics and the global economy. However, a couple questions still remain. Ultimately, will Greece become a more economically responsible nation and show that a responsible bailout plan can be an effective method of encouraging change; or, will their ways remain unchanged and reveal a politically-weak European Union with the inability to enforce rules even amongst its own members? It seems that only time will tell.
