Search Results

By April 2010, Greece was teetering on the brink of bankruptcy. The largest sovereign default in history now loomed as early as May 19, when a massive €8.9 billion bond payment was due. Since Greece's principal lenders were a handful of systemically important French and German banks, each “dangerously overexposed to peripheral countries,” the prospect of a Greek payment suspension and subsequent contagion across the periphery unleashing a crippling continental banking crisis looked particularly unattractive to the French and German governments. This chapter shows how the high concentration of Greece's debt among a number of big banks in the core countries eventually moved the creditor states and the European Central Bank to join forces with the IMF and intervene aggressively on foreign bondholders' behalf, disbursing a series of record-breaking international bailout loans under strict policy conditionality to keep Greece solvent and servicing its external debts.

In March 2012, Greece opened a tender for a voluntary bond exchange in which its private bondholders could swap their securities for a variety of redenominated debt instruments. This chapter discusses the lead-up to and outcome of this debt restructuring, showing how the debt swap was specifically designed to spare the biggest private bondholders—EU banks—while leaving Greek taxpayers and pensioners to foot the bill for the subsequent hit taken by their own banks and pension funds. It shows how the debt restructuring of 2012 led to a radical shift in Greece's debt profile and creditor composition: from bonds held by private EU banks to official-sector loans from the EU member states and the IMF. By the end of private sector involvement, both the adjustment costs for the crisis and the risk of a future default had been fully socialized.

This chapter considers the short-lived standoff between Syriza and the Troika in the first half of 2015. It asks: why did the Syriza-led government not simply suspend payments and pursue an aggressive debt restructuring, as Argentina had in the wake of its own anti-austerity revolt in December 2001? The standoff presents a unique test of the structural power hypothesis because it concerns a case in which the stated preferences of foreign lenders visibly clashed with the stated preferences of the debtor country. The chapter argues that the ultimate reasons for Greece's continued compliance in 2015 must be sought in a combination of two factors: first, the extremely hostile response and overwhelming structural power of the country's foreign lenders; and second, the internal divisions within the Syriza government, which gradually led to a reassertion of the third enforcement mechanism of internalized debtor discipline following its partial and temporary breakdown after Syriza's ascent to government.

In this chapter, the IMF, World Bank, and Congress entered the revived stage of the relationship among them. The revival was triggered externally by the international dimensions of the 2008 financial crisis. Internal change in the legislature came from the election of democratic President Barack Obama, ending the earlier period of divided government. The chapter argues that through congressional advocacy efforts, the IMF received an increase in its New Arrangements to Borrow, following an informal agreement to modify some conditionality and transparency practices. The World Bank achieved the authorization and appropriation for the fifteenth replenishment of the International Development Association, with provisions over the use of the labor indicator in the Doing Business report. The role of the IMF in the Eurozone bailouts associated with the Greek and Irish crises is not conclusive in 2011. However, the era of divided government that facilitated a certain degree of support for the Bretton Woods institutions ended with the close of the 111th Congress. The length and character of the revival faces the obstacle of the collapse of the traditional constituencies of support for the IMF and World Bank in the international banking communities in the long term.

This chapter considers the factors behind Greece's compliance in the first years of the crisis. It shows that in the first two years of the crisis, the “establishment triangle” revolving around the political class, private bankers, and the financial technocrats at the Bank of Greece, far from being weakened by the government's precarious fiscal position or the financial fragility of the Greek banks, actually managed to solidify its stronghold on financial policymaking through its capacity to fulfill a bridging role to foreign lenders and keep providing their fiscally distressed national government with much-needed short-term credit lines. The third enforcement mechanism, in short, was relatively effective. But while this helped internalize debtor discipline into the Greek state apparatus, it did not succeed in returning the country to solvency.

This chapter considers the Greek debt crisis that began in late 2009, specifically the remarkable degree of debtor compliance in the Greek case in light of the country's long-standing reputation as a “debt-intolerant serial defaulter” that spent nearly half of its history since independence in a state of default. The chapter analyzes the Greek crisis through the lens of the three enforcement mechanisms of debtor discipline identified in the Mexican and Argentine cases in the preceding chapters. While much of the debate on Greece's policy response has centered on the question of the country's Eurozone membership, the chapter digs a little deeper to uncover many of the same power dynamics that had been at play in the Global South in the 1980s and 1990s.

Before the Greek debt crisis began in 2009, few were aware of the scale of patronage politics in contemporary Greece, and the ways it has for a long time affected the country’s policy-making. This chapter presents the first in-depth empirical analysis of Greece as a model case of ‘patronage democracy’ in the European context. It shows that the scope and reach of patronage in Greece have been the highest in Europe, and points to several state-related mechanisms that have facilitated such a growth. Although patronage is clearly evident at both the top and the bottom end of public administration, its functions have been different: control in the former case, reward in the latter one. Patronage is, moreover, shown not to have been the result of political parties acting as unitary actors but rather of individual political entrepreneurs thriving inside parties and using state-related resources for individual political gains.

This chapter describes the regulatory framework in Greece at the time of the crisis and the way it has evolved since. It then reviews the theoretical and empirical literature relating to labor market regulation as a way to understand how the institutions in Greece may have affected the performance of the economy. Finally, it offers an alternative vision of a deregulated labor market supported by a robust system of welfare and social insurance, which achieves better protection and is more conducive to entrepreneurship.

This chapter looks at the effects of the crisis-induced legal and economic developments on the Member States, most notably in relation to their fiscal, economic, and social policy. It consists of three main parts. The first section of this chapter will analyse the substance and scope of the new EU economic rules. The second section of this chapter will look at the important changes that the EU legislation adopted during the crisis has brought about in EU economic surveillance. It will be argued that the new EU economic rules have redistributive effects in European societies and encroach on very sensitive areas of national policy, which underscores the need for a democratically legitimate EMU architecture. The third section of this chapter will look at the implementation of EU economic rules and assess the rigorousness of EU and independent national fiscal oversight. The principal default line is between lender states and borrower states. First, we will examine the bearing of the crisis-induced economic developments on Germany, as well as the EU economic guidance addressed to it in the context of the European Semester. Second, we will examine the bailout terms agreed with Greece in the context of the three rescue packages. It will be shown that these terms mandate far-reaching economic and social policy reforms, from which grave social repercussions have flown. In addition, it will be argued that there was very rigorous EU and independent national assessment of the progress Greece was making in relation to its economic adjustment programme.

This chapter examines the effects of the economic and financial crisis on the governance of the euro area. It discusses the two main episodes of the crisis: the events after 2007, when Europe faced a liquidity crisis detonated by tensions in the US sub-prime mortgage market; and the period after the Greek sovereign debt crisis which eventually widened to the entire Eurozone. The crises revealed deficiencies in crisis prevention, crisis management, and crisis resolution, and demonstrated the need to rethink European economic governance. The euro area suffers from the fact the ‘the euro is not only a currency without a state but even without political governance’. Monetary union will require some form of fiscal, and thereby, political union characterized by less fiscal sovereignty and more fiscal solidarity among Eurozone countries.

Against the background of claims by some that “cooking is dead,” this final chapter considers how Kalymnians define cooking and not cooking; how issues of skill, risk, and embodiment play into these definitions; and what the implications are of changing gender relations for the future of Kalymnian cooking. It provides updates on some of the key people in the book. Nina visits her birthplace in the United States after a forty-one-year absence. Katerina remodels her kitchen. Greece struggles with political and financial crisis, while people adjust their cooking practices.

After briefly considering the scholarly contributions of the book, this chapter considers the future of the United States as an international lender of last resort (ILLR). Increasingly, scholars and observers suggest that the United States is growing unwilling or unable to act as a global financial stabilizer. I argue that these declinists are incorrect. Due to the dominance of the dollar as the world’s top currency, I argue that US ILLR capabilities will continue for decades to come. The US response to the European debt crisis in 2010–2012 underscores this point. Finally, I discuss some policy implications of the book. In particular, I consider major International Monetary Fund (IMF) reforms designed to improve the institution’s responsiveness and augment its lendable resources. These reforms are designed to improve the IMF’s ILLR capabilities. Nonetheless, I conclude that IMF reform remains inadequate. The United States will continue acting as an ILLR when international financial crises threaten US economic and financial interests.