By Amanda Nash, Contributing Writer
Amid fears of an eventual destabilization of the Eurozone, Greece received the first installment of its third bailout last week, set to receive a total of $95.6 billion.
The bailout did not come without stipulations, including the resignation of Prime Minister Alexis Tsipras. Tsipras’s agreement to other conditions, such as a high tax increase and spending cuts, have put him at odds with the principles of his leftist Syriza party. With the coming re-election on September 20, Tsipras waits to see if Greek citizens will support his decision to comply with Eurozone demands and remain with the Eurozone through re-election. “The popular mandate I received on January 25 has run its course. Now, the sovereign people of #Greece must weigh in,” Tsipras tweeted last Thursday.
The Syriza party has grown larger in recent years as struggling citizens receive little help from the government. Instead of providing aid, funds from previous bailouts have gone back to French and German banks to pay off loans. Meanwhile, banks are closing, grocery stores aren’t being re-stocked due to issues with international payments, and the Greek unemployment rate is at 25 percent.
Since Tsipras’ resignation, a section of the Syriza party has already broken away. This group is fighting for the removal of austerities and a complete exit from the Eurozone. A “Grexit,” as supporters call it, would re-establish the drachma as Greece’s currency.
Syriza rebels are not alone in believing the bailout methods are fundamentally flawed.
The International Monetary Fund (IMF) refused to grant any financial support to the package. The IMF, committed to helping countries reform economics, has contributed a total of $257 billion over the past six years to assist Greece in paying its loans. However, Christine Lagarde, the managing director of the IMF, told CNN that the organization is removing its financial support until Greece receives “significant debt relief” from its debtors in the form of grace periods, longer payment schedules, or lower interest rates.
It is unlikely that a “Grexit” or even a Greek default will destroy the European Union. Greece, with a wealth comparable to Alabama, comprises only 2 percent of the Eurozone. The largest affect an American is likely to experience is an increase in olive oil prices, as transportation cost have hindered the third largest olive oil provider in the world from getting its product out of the country. While such practical changes may seem quite minor, the unknown of the future has left many theorists antsy about the effects this small country could have on the big world.
The main concern among theorist is the value of the euro and the dollar. While a recent decrease in the value of the euro promises Americans a cheaper vacation through Europe, this decrease also affects the amount of money received from American exports, devaluing our sales.
On the other hand, Greece is not the only Eurozone country struggling with its debts. Spain, Portugal, Ireland and Cyprus are likewise in a fragile state. Some experts say a continuing downturn in Greece could drag other nations along with it, destabilizing the European Union and the euro.