Exit and Anguish: The End of Greece's Bailout

Exit and Anguish: The End of Greece's Bailout

Over the past eight years, crisis-wracked Greece has received around $360 billion from other European countries and the IMF in a bid to stave off economic collapse. In exchange, the country promised to drastically cut spending, in particular by slashing pensions and public-sector salaries.


Well, as of yesterday, Greece has received its final loan payment from its European creditors, meaning that its nearly decade-long “bailout” is complete. But there are a number of reasons why Greeks aren’t smashing plates just yet—after all, the economy is still 25 percent smaller than when the crisis began, and household incomes have plummeted by more than 30 percent during that time.

Here to explain a few more key caveats is fellow Signalista Leon Levy, just back from a visit to his Balkan motherland:

First, Greece’s gargantuan debts haven’t disappeared. In fact, this year Greece’s debt burden will top out at nearly 190 percent of GDP. The hope, among optimists, is that this will fall to 150 percent of GDP by 2023. Overall, Greece will be saddled with the bailout debts until well beyond the middle of this century.

Second, although growth is expected to hit 2 percent this year, the governing Syriza party has done little to inspire investor confidence beyond the bare minimum required by the bailouts. In fact, the government, still fearful of a bank run by disillusioned Greeks, continues to restrict ATM withdrawals for its own citizens. It’s hard to muster foreign confidence in an economy under conditions like these.

Lastly, as Greece looks to move ahead, it faces a critical challenge: over the last ten years, more than half a million Greeks, among them many of the country’s best-educated people, have fled in search of better opportunities abroad. Given the precarious situation at home, most of them are unlikely to return. That means fewer innovative businesses that can help repair Greece’s economy, a smaller tax take for the Greek state, and a longer-run demographic crunch in which there are too many elderly Greeks and not enough young workers to fund the pension system.

So yes, Greece successfully exiting the bailout phase of its economic recovery is better than the alternative—Greece going back hat-in-hand to request another financial lifeline—but it’s more a stepping stone than a milestone. Greece’s odyssey from financial wreckage to return is far from over.

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Iran has vowed to avenge Sunday's attack on its Natanz nuclear facility. Tehran blames Israel, which — as in the past — has neither confirmed nor denied it was responsible. And all this happens just days after indirect talks on US plans to rejoin the 2015 Iran nuclear deal resumed in Vienna. What the Iranians do now will determine the immediate future of those negotiations, a Biden administration priority.

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Ian Bremmer shares his perspective on global politics this week on World In 60: J&J vaccine woes, Blinken warns China, Fukushima water and a large rabbit.

How will the pause of Johnson & Johnson vaccine affect the overall pandemic fight in the United States?

Yeah. Right at it, right? Well, we heard that the FDA has suspended vaccines from J&J because of blood clots. They found six in seven million cases. It's kind of like the suspension of AstraZeneca in Europe. It's likely only going to last for a few days. It's a very small percentage of the total number of vaccines that are being jabbed right now into the arms of Americans. It's not going to really slow America's ability to get everyone vaccinated, but it is going to create more vaccine hesitancy. People at the margins will say, "Is this safe? They said it was fine. Now they're saying it's not okay." I understand why there's enormous caution on the part of the FDA, but I wish, wish, wish the communications had been a little softer around all of this. Also will be a problem in terms of export, as J&J is going to be a piece of that. And again, others around the world will say, "Well, if I don't get Moderna, if I don't get Pfizer, I'm not sure I want to take it at all." So all of this is negative news, though I would still say the United States this year is looking really, really good among major economies in dealing with pandemic.

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In recent weeks, both Pfizer and Moderna have announced early phases of vaccine trials in children, and Johnson & Johnson also plans to start soon. If you know a kid who wants to learn about vaccines, how they work, why we need them, this story is just what the doctor ordered.

Watch the episode: Vaccine nationalism could prolong the pandemic

Ian Bremmer's Quick Take:

Hi everybody. Ian Bremmer here. Welcome to your week and I've got your Quick Take and thought I would talk a little bit about where we are with Iran. One of the Biden administration's promises upon election was to get the Americans back into the JCPOA, the Iranian nuclear deal. As of last week, negotiations are formally restarted, and pretty quickly, in Vienna, they're not direct. The Americans and Iranians are both there, but they're being intermediated by the Europeans because they're not yet ready to show that they can talk directly to each other. That's Iran being cautious in the run-up to their presidential election coming this summer. But the movement is there. So far the talk has largely been about sequencing the Iranian government, saying that all of the sanctions need to be removed before they're willing to go back into the deal, because the Americans after all, unilaterally withdrew from a deal that the Iranians were indeed adhering to, and the inspections did confirm that.

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Ukraine is once again in a tough spot.

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Andean aftermath: Two big weekend elections in South America produced two stunning results. In Ecuador's presidential runoff, the center-right former banker Guillermo Lasso upset early frontrunner Andrés Arauz, a leftist handpicked by former president Rafael Correa. Lasso will take power amid the social and economic devastation of the pandemic and will have to reckon with the rising political power of Ecuador's indigenous population: the Pachakutik party, which focuses on environmental issues and indigenous rights, is now the second-largest party in parliament. Meanwhile, in a big surprise next door in Perú, far-left union leader Pedro Castillo tallied up the most votes in the first round of that country's highly fragmented presidential election. As of Monday evening it's not clear whom he'll face in the June runoff, but three figures are in the running as votes are counted: prominent neoliberal economist Hernando De Soto, rightwing businessman Rafael López Aliaga, and conservative Keiko Fujimori, daughter of the country's imprisoned former strongman. Meanwhile, in the congressional ballot, at least 10 parties reached the threshold to win seats, but there is no clear majority or obvious coalition in sight.

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