GREECE CRISIS

1. Whats the latest?

Greece and its European creditors announced an agreement in
Brussels on Monday that aims to resolve the countrys debt
crisis and keep it in the eurozone, but that will require further
budgetary belt-tightening that Prime Minister Alexis
Tsipras could have trouble selling back in Athens.
The International Monetary Fund threatened to withdraw
support for Greeces bailout on Tuesday unless European leaders
agree to substantial debt relief.
The Greek Parliament has scheduled a vote for Wednesday night
on whether to approve central elements of the deal.

2. What happens next?

One open question is whether the deal gives enough confidence to
theEuropean Central Bank to let it continue channeling sorely
needed emergency funding to Greek banks.
As part of Greeces commitments, Chancellor Angela Merkel of
Germany said, a fund will be created to use the proceeds from
selling off assets owned by the Greek government to help pay
down the countrys debt. That fund would be to the tune of 50
billion, she said.
Greece will also be required to seek assistance from
the International Monetary Fund and to agree to let the
organization continue to monitor the countrys adherence to its
bailout commitments.
The Greek Parliament will also be required to approve the terms
of the agreement without delay, according to
the document released on Monday morning. The agreement will
call for Greece to raise taxes in some cases and pare pension
benefits.
Despite the agreement, Greek banks are expected to remain
closed this week. To reopen, the banks would need more
emergency loans from the European Central Bank.

3. How does the crisis affect the global financial

system?
In the European Union, most real decision-making power,
particularly on matters involving politically delicate things like
money and migrants, rests with 28 national governments, each
one beholden to its voters and taxpayers. This tension has grown
only more acute since the January 1999 introduction of the euro,
which now binds 19 nations into a single currency zone watched
over by the European Central Bank but leaves budget and tax
policy in the hands of each country, an arrangement that some
economists believe was doomed from the start.
Since Greeces debt crisis began in 2010, most international banks
and foreign investors have sold their Greek bonds and other
holdings, so they are no longer vulnerable to what happens in
Greece. (Some private investors who subsequently plowed back
into Greek bonds, betting on a comeback, regret that decision.)
And in the meantime, the other crisis countries in the eurozone,
like Portugal, Ireland and Spain, have taken steps to overhaul
their economies and are much less vulnerable to market
contagion than they were a few years ago.
Debt in the European Union
Gross government debt as a percentage of gross domestic
product plotted through the fourth quarter of 2014.

Source: Eurostat

4. What if Greece left the eurozone?

At the height of the debt crisis a few years ago, many experts
worried that Greeces problems would spill over to the rest of the
world. If Greece defaulted on its debt and exited the eurozone,
they argued, it might create global financial shocks bigger than
the collapse of Lehman Brothers did.
Now, however, some people believe that if Greece were to leave
the currency union, in what is known as a Grexit, it wouldnt be
such a catastrophe. Europe has put up safeguards to limit the socalled financial contagion, in an effort to keep the problems from
spreading to other countries. Greece, just a tiny part of the
eurozone economy, could regain financial autonomy by leaving,
these people contend and the eurozone would actually be better
off without a country that seems to constantly need its neighbors
support.
Greeces G.D.P. and Unemployment Rates in Europe
First quarter 2015 average; *Britain is the three-month average
through February.

Source: Eurostat

Others say thats too simplistic a view. Despite the frustration of

endless negotiations, European political leaders see a united
Europe as an imperative. At the same time, they still havent fixed
some of the biggest shortcomings of the eurozones structure by
creating a more federal-style system of transferring money as
needed among members the way the United States does among
its various states.
Exiting the euro currency union and the European Union would
also involve a legal minefield that no country has yet ventured to

cross. There are also no provisions for departure, voluntary or

forced, from the euro currency union.

5.
PLAY VIDEO 3:52

A 2013 video on how Greeks were turning to dirty and

environmentally damaging solutions for heat after the
government raised taxes on heating oil by 450
percent.CreditVideo by Nikolia Apostolou on Publish
DateFebruary 03, 2013

How did Greece get to this point?

Greece became the epicenter of Europes debt crisis after Wall
Street imploded in 2008. With global financial markets still
reeling, Greece announced in October 2009 that it had been
understating its deficit figures for years, raising alarms about the
soundness of Greek finances.
Suddenly, Greece was shut out from borrowing in the financial
markets. By the spring of 2010, it was veering toward bankruptcy,
which threatened to set off a new financial crisis.
To avert calamity, the so-called troika the International
Monetary Fund, the European Central Bank and the European
Commission issued the first of two international bailouts for
Greece, which would eventually total more than 240 billion euros,
or about $264 billion at todays exchange rates.
The bailouts came with conditions. Lenders imposed harsh
austerity terms, requiring deep budget cuts and steep tax
increases. They also required Greece to overhaul its economy by
streamlining the government, ending tax evasion and making
Greece an easier place to do business.

6. Photo

A father and daughter at a demonstration in Athens in late

June.CreditEirini Vourloumis for The New York Times

If Greece has received billions in bailouts, why

is there still a crisis?
The money was supposed to buy Greece time to stabilize its
finances and quell market fears that the euro union itself could
break up. While it has helped, Greeces economic problems
havent gone away. The economy has shrunk by a quarter in five
years, and unemployment is above 25 percent.
The bailout money mainly goes toward paying off Greeces
international loans, rather than making its way into the economy.
And the government still has a staggering debt load that it cannot
begin to pay down unless a recovery takes hold.
Many economists, and many Greeks, blame the austerity
measures for much of the countrys continuing problems. The
leftist Syriza party rode to power this year promising to
renegotiate the bailout; Mr. Tsipras said that austerity had
created a humanitarian crisis in Greece.
But the countrys exasperated creditors, especially Germany,
blame Athens for failing to conduct the economic overhauls
required under its bailout agreement. They dont want to change
the rules for Greece.
Greeces Creditors