After voting ‘no’ to more austerity measures issued by its creditors, Greece is now at the mercy of the European Union. Greece failed yet again to meet another deadline for paying back some of their massive debt. While the Greek people asked for a three year bailout plan, its Eurozone creditors demanded that Greece put in place more austerity measures such as increased taxes and cuts in pensions. Prime Minister Alexis Tsipras moved the decision to a vote and the Greek citizens answered resoundingly ‘No.’’
As the EU now must make decisions, other European countries are talking openly about kicking Greece out of the Eurozone. Jean-Claude Juncker, the European Commission President stated that Europe already has a “Grexit scenario prepared in detail.” Greece’s economy is on the brink of collapse as the stock market has come to a halt and banks are running out of money as people rush to take out what money they have left.
Greece’s Prime Minister traveled to Strasbourg, Germany on Wednesday in a final attempt to stay in the Euro. This came after Angela Merkel, Germany’s Chancellor, announced that she was “not especially optimistic” about coming to a conclusion with Greece. This didn’t stop Prime Minister Tsipras, as staying in the Euro is his greatest priority. After all, if Greece is kicked out of the euro, they are truly on their own, although there are rumors China’s new Asian Infrastructure Investment Bank could be interested in lending them money.
If Greece really wants to stay put, they must come up with a convincing strategy for their economy by 8:30pm this Friday. To be convincing, Greece’s proposal will most certainly have to include some of the austerity measures detailed by the creditors.
If not accepted, Greece will likely be slowly removed from the Euro. First, the ECB will simply stop giving Greek banks Euros. This will force the country to issue IOU’s and this will eventually lead to a parallel currency that will replace the euro within Greece.
Greece’s 5-year struggle with debt and corruption have let to a point that no country in the EU would have expected. The Eurozone was created to unite countries as one and to prevent isolation. It seems as though the economic tension between Greece and its loaners has proved to be too taxing on their relationships. As talks move closer and closer to kicking Greece out of the Eurozone, many wait in anticipation as Europe wanders into uncharted territory.