Greece Withdrawl From Eurozone / Grexit

Submission 33,607

Overview

Greece Withdrawal From the Eurozone, colloquially known as Grexit (short for "Greek Exit"), refers to the potential withdrawal of Greece from the European Union's currency zone mainly as a result of the country's financial crisis and unmanageable public debt that first came to light in late 2009.

Background

The Greek government's sovereign debt crisis began in late 2009, becoming the first of four nations to be affected by the European debt crisis in the turmoil of the Great Recession, which was heavily compounded by the Greek economy's structural weaknesses and over a decade of public overspending and fiscal mismanagement. In April 2010, as the country's debt continued to pile up and investors' concerns escalated, the Greek government requested and received an European Union-International Monetary Fund (IMF) bailout loan of €45 billion to avoid defaulting on its public debt.

However, following the Greek government's implementation of fiscally austere policies aimed at reduction of spending, the Greeks' public opinion and perception of its membership in the Eurozone quickly became divided into two opposing camps and prompted debates on both national and European-wide scales. On February 6th, 2012, the term "Grexit" was introduced by Citigroup's chief analysts Willem H. Buiter and Ebrahim Rahbari in a report titled "Rising Risks of Greek Euro Area Exit."

Notable Developments

Post-Election Speculations

On January 27th, 2015, the debate was renewed following the formation of a new government under the leadership of Alexis Tsipras of the new Syriza ("Coalition of the Radical Left") coalition party, with several government officials and economists arguing that a default on public debt is inevitable for Greece and any additional monetary aid from the European Union would only worsen the situation in the long term. On February 20th, Eurogroup, the assembly of Eurozone finance ministers, agreed to extend the duration of Greece's bailout for an additional four months.

News Media Coverage

During this time, speculations of Grexit became extensively discussed across the rest of E.U. member states in the region, particularly among the news media in Germany, France and Italy, Greece's three biggest creditors, providing a pivotal boost to the rise of the term "Grexit."

IMF Debt Arrearment

What ensued in the months after the bailout extension were a series of negotiation attempts between the Greek government and the Eurogroup to work out a mutually agreeable plan for economic reforms in the country, albeit without any fruition as the Eurogroup ultimately refused to further extend the bailout. As a result of the deadlock and the Greek government's subsequent failure to meet the IMF's June 30th deadline for repayment of €1.5 billion (approximately $1.7 billion USD),

Greek Bailout Referendum

On June 27th, Greek prime minister Alexis Tsipras proposed a referendum to decide whether Greece should accept or reject the extended bailout conditions proposed by the EU and IMF. That same day, with the IMF repayment deadline only days away, the Greek government announced a temporary nationwide shutdown of banks, including limitations on ATM withdrawals to €60 per day for each account, as well as the closure of the Athens stock exchange (ATHEX) for a week. The next day, the referendum was ratified by Parliament and the President to be held on July 5th.

Sakis Rouvas' Referendum Video

On July 2nd, 2015, popular Greek singer and entertainer Sakis Rouvas, published a video on his YouTube and Facebook accounts called "Εμείς ΝΑΙ είμαστε η Ευρώπη!" ("YES we are Europe") ^[10]^[11], pleading the greek population for a "Yes" vote on the greek bailout referendum:

The video has gone viral, causing a great deal of controversy on social media, spawing several response videos, including a popular one from greek actor Kostis Kallivretakis, who starred together with Sakis Rouvas in the 2007 movie "Alter Ego":

Referendum Turnout

The July 5th referendum resulted in the rejection of the European proposal by a majority vote of (61%) "NO" (shown below), signaling further complications in the still-ongoing negotiation with the creditors. As a result of this development, the Greek prime minister Alexis Tsipras is expected to address an emergency summit of eurozone leaders on July 7th. Meanwhile, the nationwide closure of banks were extended to July 8th, with the European Central Bank (ECB) continuing its emergency cash support to the country that is reportedly near depletion of its funds.

2015 Bailout Agreement

On July 10th, 2015, Greece and the Eurogroup of finance ministers reached an agreement on a third European bailout loan of $96 billion, in exchange for Greek government's implementation of austere economic measures and reforms under close supervision by its creditor states, including heavy pension cuts, higher taxes and sales of government assets, not to mention seizures of €50 billion euros of Greek public assets to be placed in an independent, privatized trust based in Luxembourg.

#ThisIsACoup

On July 12th, as the details of European demands for economic reforms began to unravel from the summit, many Greek sympathizers took their dissent against the austerity measures on Twitter and directly to European financial ministers, as all of the officials involved in the process ran actively maintained accounts, with German financial minister Wolfgang Schäuble at the forefront of the social media backlash. Among the critics of the bailout demands was Spanish professor Sandro Maccarrone^[18], who coined the hashtag #ThisIsACoup in a tweet alluding to the #NotACoup, a hashtag which trended during the 2013 Egyptian protests.

"The Eurogroup proposal is an undercover state coup against the Greek people."

In the following hours, #ThisIsACoup caught on amongst Spain's Indignado movement and the leftist coalition party with a stronghold in Barcelona, where the hashtag quickly went viral after it was retweeted in a tweet by Barcelona's mayor Ada Colau. From there, #ThisIsACoup^[19] grew into a worldwide trending hashtag as the discussion expanded beyond the Eurozone. According to Topsy, the hashtag was mentioned in more than 415,000 times within the first 24 hours.