The European Debt Crisis. The Greek Case

This book, written by the former prime minister of Greece, Costas Simitis, is an updated translation from the Greek original published in 2012 and ‘traces the development of the debt crisis in the Eurozone from the moment it manifested itself in Greece to June 2013’ (viii). Hence the book does not cover the recent rise to power of Syriza, but does discuss its first electoral successes. Its 32 chapters are grouped into six parts and move chronologically and in detail through the political and economic developments of the Greek debt crisis in the context of European politics.

The titles of the chapters are catchy, such as ‘Was Greece Ready for the Euro?’ or ‘The Elections of 6 May: Euro or Drachma?’ However, it is hard to search for and find any specific information. Economic and political analyses of various problems are spread throughout the book that contextualises the chronologically discussed events in Greek and European political arenas. Although these analyses together could provide a theoretical framework, they are not integrated as such until the final two chapters. Therefore, the book reads more like a collection of essays rather than a comprehensive scholarly work, which fits the profile of a politician with an academic background.

The first part addresses the emergence of the Greek debt crisis between 2004 and 2009; the second part discusses the failure of the first memorandum between the Troika (European Commission, European Central Bank and International Monetary Fund) and Greece in the period May 2010 to May 2011; part three deals with the discussion on debt restructuring between June and October 2011; part four discusses the adoption of the second memorandum. The fifth part addresses the formation of a new coalition government in Greece in the summer of 2012 as well as the limited improvements following the second memorandum; and the final part is comprised of two chapters that conclude the discussion on the Greek crisis and its dimensions in European Union (EU) politics respectively.

Part one is enlightened by Simitis’ time as prime minister from 1996 to 2004, and thus the author defends the economic achievements of his government to qualify for the euro. Simitis explains how it was possible for Greece to so quickly be pulled into a debt crisis by 2009, which he assigns to the lost elections of 2004. Simitis’ Panhellenic Socialist Movement (Pasok) lost the elections to the conservative party, the New Democracy. Simitis accuses the New Democracy government of ‘criminal indifference’ to the need for continuing efforts to bring down the Greek public debt level. The change of government ‘signified the beginning of a period when adherence to EU restrictions, macroeconomic rules and obligations and due diligence was relegated to mere window dressing’ (16). Simitis is, however, almost equally displeased with the Pasok government led by George Papandreou. Papandreou, who had served as minister of foreign affairs under Simitis, took office in October 2009 and failed to make an end to the course of New Democracy. According to Simitis, he continued the electioneering that his predecessors had started, by making unattainable electoral promises and blaming the EU for unpopular policies.

The following parts of the book discuss chronologically the developments of the Greek debt crisis and the policy responses from the EU. Issues such as the possibility of a Greek ‘haircut’, Eurobonds, a return to the drachma, the European Financial Stability Facility (EFSF), the European Stability Mechanism (ESM), and of course the memoranda are discussed in detail. Simitis presents himself as an expert of EU politics finding his way through the EU institutions, summits, and policies as well as an analyst of the Greek electoral debates in relation to the economic crisis.

What makes the book worthwhile is the author’s expertise in policy-making surrounding the European Monetary Union (EMU). Simitis presents a view on the Greek debt crisis that is commonly held by international commentators. He argues that Greece is part of a larger European problem, that the creation of the EMU demands further alignment of fiscal policies and transfer of funds from core countries (northern Europe) of the EU to the periphery (southern Europe) in order to facilitate further convergence. Furthermore, Simitis explains the inability of the mentioned Troika to come up with more permanent solutions to the Greek debt crisis under political pressure from the different European member states. The European Council refused to provide debt relief in fear of losses for private banks that could potentially destabilise their own respective economies further than the global financial crisis already had. These are commonly held insights, but the focus on ‘the Greek case’ does make the policy-making and the relation between the EU institutions and national governments more tangible. As the book progresses, Simitis eventually showcases his vision for a more balanced EU framework.

Simitis was a third-way social democrat during the 1990s, however in this book he first and foremost presents himself as a European minded politician, as is evident from the scarceness of ideologically coloured statements. He understands the limits of EU policy-makers; however he has enough political insight to criticise the EU technocrats. The first memorandum, which the Troika and Greece signed on 7 May 2010, was ‘a medicine with dangerous side effects’ according to Simitis (53). It imposed austerity without lightening the burden of public debt, thereby aggravating the crisis in Greece as well as in the EU. The crisis spread to Portugal, Ireland, Spain, and Italy, only emphasising the need for a European solution. Simitis argues that ‘despite the idiosyncratic qualities of the Greek problem, it did not constitute an isolated case’ (73). Rather, it resulted from the more basic shortcomings of the EMU.

The first chapter of the final part of the book concludes the analysis of the Greek crisis, the second that of the European crisis. He synthesises his argument as: ‘Greece triggered the crisis in the Eurozone, but was not the cause of it. […] The cause is inherent in the fact that the Eurozone is a full monetary union but an imperfect economic and fiscal union […]; the mature economies of the European North differ significantly from the less mature economies of the South’ (322). In the final chapter, Simitis shows his true colours. He denounces the constrictive technocratic vision of conservative Europeans who have dominated the European Council and Commission since the referenda in 2005, when France and the Netherlands rejected the adoption of the European constitution.

With this book, Simitis joins the call for ‘escaping forwards’, which means that the crisis should be used to advance ‘economic governance’ and ‘political union’ in the EU (338). The book is a consistent analysis of the Greek debt crisis and presents a progressive European perspective. A perspective that all too often seems to be lost amid the Euroscepticism and resulting conservatism surrounding the EU these days.