The paper "Debt Crisis in Greece" is a great example of a business case study. Following the financial crisis of 2008 which imp0loded the wall street, Greece became the focus of the debt crisis in Europe. While global financial markets were still reeling, the government of Greece announced in 2009 that its treasury had been underestimating its deficit figures. This led to scrutiny in the determination of the soundness of the finances of the country. By the end of 2010, Greece was excluded from borrowing in financial markets and this threatened the possibility of bankruptcy in the country and the eruption of a new financial crisis (Arghyrou & Tsoukalas 2011, p.
180). The European Union through the International Monetary Fund (IMF) and the European Central Bank (ECB) provided about 240 billion euros as the first two international bailouts for Greece. These institutions provided bailouts with conditions that resulted in deep budget cuts and an increase in taxation among other business conditions. Despite the bailouts, Greece is still experiencing a financial crisis (Mourlon-Druol 2012, p. 1). This paper will evaluate whether the EU should continue bailing out Greece from its current financial crisis.
In addition, the paper will also assess whether Greece should change its current domestic economic policies in response to the demands of the EU. The role of the EU in bailing out Greece from its current financial crisis One of the prevailing discussions in European politics today is the economic challenges that the Eurozone faces. Despite the strength of the euro, Greece has requested for multiple bailouts from the European Union considering the sluggish economic growth that the country has been experiencing since the 2008 global financial crisis (Arghyrou & Tsoukalas 2011, p.
182). The European Union has a moral, economic, and political responsibility to continue bailing out Greece for its current economic crisis. This is because at the beginning the EU was created as a political project targeting the promotion of economic growth, unity of member states within Europe and the existence of peace and democratic institutions among the member states. While ensuring economic growth among member states, part of the role of the European Union is to protect the euro in the fluctuating market and ensure it is strong enough to guarantee progress among the member states (Arghyrou & Tsoukalas 2011, p.
182). Prior to the financial crisis in Greece, the EU considered the euro as a symbol of success. However, failure by the EU to secure counties in the peripherals such as Greece form the possibility of bankruptcy revealed the weakness of the EU in ensuring economic development among member states (Hix & Hø yland 2011, p. 253). The Greece debt crisis presents a challenge and an opportunity for the EU to prove its relevance as a unifying body in Europe.
This is because failure to help Greece through bailouts would be an indication of the inability of the EU to promote cohesion, democracy, and economic growth among member states (Mourlon-Druol 2012, p. 1). The rest of the European member states have a responsibility of continuing the bailout program for Greece. This is to be done with the objective of preventing contagion and the prevention of moral hazards through austerity measures. Such bailouts would protect the interest and investments of the creditors and the debtors of the European Union Member states (Caporaso 2012, p.
24). Being the debtor, Greece is disadvantaged economically and this explains why Germany through its austerity measures offered to help bail out Greece (Manolopoulos 2011, p. 154). These bailouts were however channelled through the domestic and political constraints affecting the country. The objective of these measures was to prevent the possibility of the occurrence of a moral hazard by insisting on budget reductions and the restructuring of Greece fiscal policies (Pagano 2013, p. 2). For countries such as France, the decision to grant bailouts to Greece was based on the desire of minimizing contagion of the crisis into other European countries and minimizing losses to its investors operating in Greece.
A unified move by the rest of the EU member states would guarantee the government in Greece of financial support, which would also lead to the development of, polices aimed at streamlining the fiscal state of the country and safeguarding the interest of other investors within Europe (Pidd 2011, p. 1).
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