1912/1913: First Balkan War/Second Balkan War
1914-1918: WWI
1920: Invasion of Turkey and defeat - Repatriation of Greeks
1914-1923: 1.5 million Greeks died
1929-early 40s: World Great Depression
1939-1945: WWII
1946-1949: End of Greek Civil War-Restoration of the monarchy
1952: Greece becomes a parliamentary democracy.
Early 50s-early 60s: Period of relative stability
1965-1967: Political instability- Military coup
1973/1974: Abolition of monarchy
From 1990: Stability and an economic growth above that of the EU

Overview of Greece as a Modern Country

In retrospect, observers blame the crisis on three generations of Papandreou prime ministers: Georgios, Andreas and George.

Georgios Papandreou founded the Democratic Liberal Party in 1935. Focused on modernization, he reformed education. Andreas took over in the 60s and founded the first socialist government. To improve the standard of living, he doubled salaries and created (mainly governmental) jobs in the 80s. Greeks welcomed a better life, but, as reported recently by the New York Times, “...the money just went into the bureaucracy, not the people.” In fact, by 1993, Greece was already in financial trouble.

Today, George, born and educated in the United States, and a liberal leader, is faced with the reality of an inefficient government rooted in past inaction and paralyzed by corruption. But, globalisation brought a significant difference to the challenges of the past as Greece has become an inter-connected economic risk. If Greece fails, other entities will fall.


Greece Tourism in the Midst of Unionist Strike

For years, Greece was perceived as an idyllic holiday destination, envied for its people’s seemingly stress-free way of life. Today, the tourist season is perturbed by a second week of strikes by some 3,000 taxi drivers who are protesting the deregulation of the taxi business. Conversely, the federation of seamen decided to support tourism and postpone its own strike. As austerity measures get implemented, they will likely result in further Unions’ protests. As a consequence, travelers might bypass the Hellenic skies.

The Other Side of the Bailout Coin

Although the International Monetary Fund and the European Union granted a second bailout, Greece’s default is said to remain unavoidable, as are its repercussions on the European economy, and financial markets. Already, stock exchanges worldwide closed lower, additionally burdened by the United States’ own crisis. As a result, even if the Euro maintains its lead with the dollar, the Swiss Franc is returning as a safe haven currency, while gold keeps going up. More worrisome is the line-up of Spain, Italy, and Portugual as states on the verge of default.

Greece Corruption Problem in Numbers

The situation highlights extraordinary numbers. The Greek press reported a statement by Finance Minister Venizelos regarding tax evasion being owed by a very small number of people:

900,000 people owe 41.1 billion Euros.
5% owe 85 percent of the outstanding amount.
14,700 individuals/companies/organizations owe 37 billion.
All considered 10,000 individuals will be investigated.

Consequently, riots are understandably fuelled by those who have already paid their dues. Whereas investigations will help recoup some of the outstanding tax revenue, in the meantime, and with the sale of state assets in the works, “Venizelos said Greece had already taken the toughest measures needed to steer the economy back to fiscal health.” This was reported last week. As seen above, each week is another story.

Sources

BBC News: Greece Timeline
Ekhateremini.com (Greek partner of the International Herald Tribune): Hired guns thought to catch tax thieves. July 18th, 2011. Seamen retract call for strike. July 27th, 2011.
Foreign & Commonwealth Office: History of Greece.
Le Monde.fr. Les Bourses en baisse, influencées par les dettes grecque et américaine. July 25th, 2011.
The Canadian Press. “Greek finance minister says debt deal is ‘attainable,’2012 primary surplus on target.” July 19th, 2011. Striking drivers.... against licensing reforms. July 26th.
The New York Times: Family differences, global issues. Landon Thomas Jr. July 12th, 2011.

How Do You Quit the European Union?

First, give two years’ notice.

By Brian Palmer|Posted Wednesday, Nov. 2, 2011, at 6:23 PM ET
Greek President Karolos Papoulias. Greek President Karolos Papoulias

Photo by Thaer Ganaim/PPO via Getty Images.

Greek Prime Minister George Papandreou is under fire for his decision to put a proposed $178-billion European bailout package to a referendum. Several prominent economists think Greece should simply drop the euro and return to its old currency, the drachma, in a move that would likely require a withdrawal from the European Union. How would a country go about quitting the E.U.?

First, the Prime Minister would send a letter of intent to the European Council. From there, the council bigwigs—the heads of each member state, plus a couple of E.U. executives—would have a lot of negotiating to do, since the details of how a withdrawal might work were left vague in the 2009 Treaty of Lisbon. They would consider, for example, whether the free trade and travel that exists within the European Union would still apply to citizens of a dropout state. The arrangement could be akin to the status of Switzerland, which doesn’t belong to the E.U. but enjoys many of the reciprocal benefits. The European Central Bank would also have to figure out how to refund the Greek contribution to its reserve capital—a total of 146 million euros. At the end of all this negotiating, a majority of council members would have to agree to the final settlement. (Greece wouldn’t get a vote.) If the negotiations failed, Greece could simply walk away from the E.U. two years after its initial notification, whether the other members liked it or not, and let the lawyers sort out the details.
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It may be possible for the Greeks to withdraw from the euro but stay in the E.U., although the Treaty on the Functioning of the European Union (PDF) does not provide for this outcome. In fact, Article 140 of the treaty discusses members “irrevocably” replacing their old money with the euro. Some observers suggest that Greece might drop out of the E.U. temporarily, re-establish the drachma, and then rejoin the union (provided the rest of Europe would take them back).

If Greece did withdraw, it would seek to ease its debt burden by switching all of its obligations from euros to drachma. Then the Greeks could devalue their own currency, which would in turn limit their debts. This would create a new round of legal wrangling, however, as lenders fought to keep their payments denominated in stable and strong euros.

There’s very little precedent to resolve this potential dispute over currencies. Countries have changed over in the past, in accordance with the contract law principal of lex monetae. When Ecuador dropped the sucre in 2000, for example, it was able to change over its debts to U.S. dollars, their new currency. The Greece situation would be different, however, because, unlike the sucre, the euro would still exist. And the legal battle wouldn’t be limited to Greek sovereign debt. Every business in Greece that is a party to contracts with other eurozone members would also want to convert their obligations to drachma. Unless all of this were negotiated as part of a withdrawal from the E.U., the resulting situation would be incredibly messy.

"We're a breath away from the drachma and disaster,"

12 May 2012 Last updated at 13:19 ET



EU central bankers ponder Greece euro exit

[IMG]http://news.bbcimg.co.uk/media/images/60195000/jpg/_60195564_014724829-1.jpg[/IMG]
Alexis Tsipras (foreground), leader of Greece's biggest anti-bailout party Syriza, leaves talks with Pasok leader Evangelos Venizelos (left) in Athens, 11 May The anti-bailout party led by Alexis Tsipras (right) came second in the polls

Greece crisis

How would Greece leave the euro?
Greece's Radical Left
Viewpoint: No election re-run
Q&A: Greek debt crisis

Europe central bankers have been openly expressing views on the possibility of Greece leaving the eurozone as its leaders struggle to form a government.

Germany's top banker said it was up to the Greeks to decide, but if they did not keep to their bailout commitments, they would receive no new aid.

His counterpart in the Irish Republic said a Greek exit would be damaging but not necessarily fatal to the euro.

Greece is to make a final attempt at forming a government on Sunday.

Analysis
Ben Thompson Business reporter

After last week's elections in France and Greece, two things began to change in the eurozone. First was the talk that "spending" could replace "austerity" as a way out of the crisis. That's perhaps more aspirational than practical but it pleased the voters.

Second was the growing confidence amongst eurozone ministers that Greece could - and maybe should - quit the euro. Some speculate it's a PR exercise to manage expectations - slowly re-introducing the notion that the 17 Euro nations could soon be 16. Others suggest it's a long overdue move, that would have eased the problems much sooner.

So who's right? If Greece decides to exit the euro and default, it gives the country more freedom to rebalance its economy. More pain for creditors, but a new start for Greece. But if the country simply quits the euro and resurrects the drachma, while still trying to pay off its debts, an inevitable slump in the value of the drachma would make those debts even more unaffordable.

Much will be determined in the coming week, not least by the response of the financial markets. For now, they appear to have factored a Greek exit into their numbers. They ended last week higher. But, markets don't like surprises. And that's exactly what they could get over the next few days.

President Karolos Papoulias is to meet party leaders after they failed to deliver a coalition through their own negotiations.

Greek voters punished mainstream parties which backed the bailout at last Sunday's parliamentary election.

If no new government is formed, a new election will have to be held, and opinion polls suggest Syriza - a leftist, anti-bailout party - will benefit most.

Syriza firmly rejects the terms of the most recent EU-IMF bailout, which requires tough austerity measures in return for loans worth 130bn euros ($170bn; £105bn).

'Manageable'

On Saturday, German central bank chief Jens Weidmann said: "If Athens doesn't keep its word, it will be a democratic choice.

"The consequence will be that the basis for fresh aid will disappear."

Without financial aid, there is the possibility that Greece will default.

"We're a breath away from the drachma and disaster," liberal Greek daily Kathimerini warned on Saturday, referring to the country's old currency.

Per Jansson, deputy head of Sweden's central bank, was quoted by Bloomberg as saying on Friday that central bankers across Europe had begun discussing the possibility of a Greek exit from the eurozone and how to handle the consequences.

“Start Quote

Technically, [a Greek exit] can be managed”

Patrick Honohan Irish central bank chief

"I would be very careful in speculating that it would be a painless process without complications," he said in Stockholm.

Irish central bank chief Patrick Honohan told a conference in the Estonian capital Tallinn on Saturday: "It [a euro exit] is not imagined in the legislation, in the treaties, but things can happen that are not imagined in the treaties."

"Technically, it can be managed," he added.

"It would be a knock to the confidence for the euro area as a whole. So it would add to the complexity of the operation until things settle down again. It is not necessarily fatal, but it is not attractive."

Speaking at the same conference, EU Economic and Monetary Commissioner Olli Rehn was quoted by Bloomberg as saying Europe was "certainly more resilient" to a possible Greek exit than it had been two years ago when it would have been "massively under-prepared".

"I still believe that Greece can stay in the euro and find the way to make sure that it respects its commitments," he said, adding Greece would suffer more than Europe if it left the euro.

A spokesman for Syriza, John Bournos, told BBC News his party wanted Greece to remain within the eurozone but it rejected the "super-austerity" measures imposed on Greeks by German Chancellor Angela Merkel.

"Greek people have been suffering in order to pay off speculative interest rates and make the private banking systems of Greece and Europe richer," he told the PM programme.

"What we will offer is the future existence of the eurozone... They are not willing, and they will not dare, to kick Greece out of the eurozone."

Final bid

After Greece's three biggest parties - the centre-right New Democracy, far-left bloc Syriza and socialist Pasok - each failed to form a government, President Papoulias called them to a meeting on Sunday.

He will also hold talks with fringe parties including Golden Dawn, an extreme right-wing, anti-immigration group.

Analysts say the president's bid is unlikely to succeed because the parties are so divided over the bailout.

Syriza leader Alexis Tsipras said on Friday he could not join any coalition that intended to implement the bailout deal.

"The bailout austerity has already been denounced by the Greek people with its vote, and no government has the right to enforce it," he said.

Analysts say Syriza could be hoping for another election after one opinion poll put them in first position in any new ballot, albeit without an overall majority.

Greece leaving could herald a new era of demorcratic green socialism in Europe.

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Greece leaving could herald a new era of demorcratic green socialism in Europe.

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Gavin Hewitt Europe editor


[IMG]http://news.bbcimg.co.uk/media/images/60217000/jpg/_60217097_merkelafp.jpg[/IMG]
Chancellor Merkel with aides in Bundestag, 10 May 12 The latest twists in Greece's meltdown are a headache for Ms Merkel


Europe is lost in a maze, unable to find an exit.

Voters have changed all calculations. The people have spoken and in increasing numbers are expressing impatience with austerity.

Francois Hollande's victory in France has sent tremors across Europe. He has challenged the German script for managing the crisis. Austerity first, in his view, is failing.

It is likely that his campaign message contributed to the success of anti-austerity parties in Greece. If voters in France were resisting further spending cuts why should voters in Greece not do the same?

Chancellor Angela Merkel looks increasingly isolated. Even voters in North-Rhine Westphalia, the most heavily-populated German state, rejected her party in favour of the Social Democrats (SPD), who promised to go easy on cutting debt.

Here's the bind: Europe chose to tackle its debt crisis not just by cutting deficits but by adopting a pact that limits spending in the future. The Germans see it as essential discipline for the survival of the single currency; others see it as a dangerous straitjacket.

What had not been envisaged was how swiftly economies would decline. By the end of 2012 the Greek economy will have shrunk by 20% in five years. Italy is mired in recession. Spain will see its economy decline by 1.8% this year and could well remain in recession next year. Almost certainly it won't reach its target for cutting its deficit.

France will struggle too.

The renowned economist Joseph Stiglitz called Europe's debt strategy "suicidal".

If austerity is leading Europe into deep recession - some are saying it is reminiscent of the 1930s - then what is to be done?[And we all know what happened then ]

For borrowing more to stimulate the economies would only deepen the debt crisis.

Hence the search for a growth strategy - but structural reforms take time to deliver and Europe does not have time.

Which brings us back to Greece. Anti-austerity parties believe that Greece is slowly being strangled economically. They want the terms of their bailout deal renegotiated.

They also do not believe that the EU or Germany will allow them to exit the euro, with all its "incalculable consequences".
Crunch point

The official line in Brussels and Berlin is that there will be no renegotiation. But there are different messages out there. Some are saying that a Greek exit can be "managed" and that the risk of contagion has been reduced.

The game of bluff, however, is drawing to a close. The "show me" moment approaches.

Will the EU - under pressure from voters - bend and offer the Greeks an easier deal?

Or will Germany insist that promises made by governments must be kept?

Will Europe change course and accept that it is cutting spending too quickly and embark on a massive infrastructure-building programme?

For the truth is that Europe no longer has a convincing policy. Its current strategy is being openly challenged. The continent is drifting dangerously whilst there are daily protests.

There can rarely have been a more important meeting than that between the newly elected French President, Francois Hollande, and the German Chancellor tomorrow. Can they compromise or, at this critical juncture, will they form up on different sides?