Greece’s Financial Crisis: Implications for the Eurozone, the EU and the Transatlantic Economic Relationship     Print
Tuesday, 23 February 2010


On February 23, 2010, The European Institute held a special breakfast meeting of its Transatlantic Roundtable on Financial and Monetary Affairs with His Excellency Vassilis Kaskarelis, Ambassador of Greece to the United States, who spoke about the implications of Greece’s financial crisis.

Ambassador Kaskarelis explained that serious structural problems have existed in Greece for 7 years and that for most of 2009, no action was taken to correct these problems due to the upcoming elections.  As a result, he argued that the new government elected in October 2009 faces the herculean task of solving Greece’s longstanding financial woes.  Ambassador Kaskarelis said that he is optimistic for Greece’s future because this is the first time that the EU is enforcing specific economic measures in Greece and he believes that Greece has hit rock bottom, which means that people will soon start buying and investing in Greece again.

The Ambassador remarked that while the current crisis needs guidance from Brussels, domestic concerns must also be taken into consideration.  He argued that if the Greek people do not approve of the measures implemented by external actors, the government will lose the next election and the reform process will be stalled or possibly halted.  Reform will take time, the Ambassador emphasized, and he advocated for selling these reform measures to the public the right way in order to avoid a social crisis.

Finally, Ambassador Kaskarelis turned to Europe and the impact on the Eurozone.  He argued that the situation in Greece is not unlike financial crises other EU countries have faced; Greece is just the first country to allow the crisis to go this far.  The Ambassador argued that measures could have been imposed on Greece last year by the EU if the process to do so had been clearer and less complicated.  He stated that the problems in Greece affect the whole of the EU, not just the Eurozone and that the EU is testing how much they can react to this situation.  Ambassador Kaskarelis believes that the EU is reluctant to loan money to Greece because they fear what will happen if another Eurozone country faces a similar problem.  He concluded by saying that decisions have to be made and it is up to Europe because Greece has already made their decisions.