It is like watching a whole new ball game, with rules only a few people know. There are different teams in play at different moments, or relegated to the sidelines: the governments of the EU member states individually or as a whole, the heads of state or government of the eurozone, the Euro Group, the Council of the European Union (Economic and Financial Affairs, ECOFIN), the European Commission, the European Parliament (EP), the European Central Bank (ECB) and the International Monetary Fund (IMF).
There are also several balls in play at the same time: the €110 billion (including IMF) support package for Greece, Greek austerity and reform measures, the €60 billion European financial stabilisation mechanism, the €440 billion Special Purpose Vehicle, additional IMF participation, fiscal and economic reform promises from Spain and Portugal, generalised calls for greater fiscal prudence, proposals for stricter economic governance and ECB interventions in secondary sovereign bond markets.
The different turns have been headline news in Europe and globally, but can the non-expert public even begin to grasp the unfolding events?
Here is an attempt to limit the selection to a few helpful summaries for bewildered fellow-citizens. In this blog post we start the orientation with the Greek economy and continue with the bailout of Greece and the Greek reform and austerity measures.
Greek debt crisis
Wikipedia offers the background article Economy of Greece, with a section on the 2010 debt crisis (latest update 17 May 2010).
On the €110 billion bailout of 2 May 2010, Reuters has a Factbox: Terms of euro zone emergency loans to Greece (3 May 2010), with key points of the agreement of eurozone finance ministers on the €80 billion bilateral loans to Greece, each member according to its share of the ECB capital key, as well as €30 billion IMF participation. If the eurozone lenders get their money back, they will make a profit on the loans bearing interest (about 5 per cent).
Greek reform and austerity measures
The eurozone loan promises are conditional on Greek reform and austerity measures. IHS Global Insight offered a summary in Greek Parliament Approves Crucial Austerity Package as Global Markets Reel (7 May 2010): expenditure cuts, pension reform, tax reform and labour market reform.