EU fears Greek crisis is dragging euro down

TEHRAN, July 12 (MNA) -- Greece is a country with a very fragile and complex economic structure which is very weak in terms of productivity.

The economy is mainly based on tourism and shipping, and the productivity rate in other areas, such as the industrial and agricultural sectors, is very low.

Greece’s economic problems have always led to social unrest in recent years.

Greece has been regarded as one of the poorest countries in the European Union since its accession to the eurozone in 2001. In fact, by joining the eurozone, Greece agreed to a series of commitments that improved the country’s infrastructure but caused more economic problems.

The actions taken in line with these commitments led to major problems, such as unemployment and inflation, and the government was forced to receive a series of financial assistance loans from the World Bank, the International Monetary Fund, the EU, and the United States.

Now, the accumulation of more than 350 billion euros of debt has actually crippled the country with a second crisis, prompting a series of new austerity measures, which has caused great consternation among Greek citizens.

To achieve a short-term solution, the EU has offered Greece a new financial rescue package worth about 120 billion euros, but economists say this move will not alleviate the massive pressure on the Greek government and people.

On the one hand, the EU is helping member states deal with the crisis in order to prevent it from spreading to other countries, but on the other hand, it is imposing many commitments on them to downsize their governments, reduce the number of government institutions, and increase taxes.

This can lead to more social unrest in Greece because it has direct consequences on the daily lives of citizens. The people are experiencing unemployment and inflation while the per capita income is steadily declining.

However, it appears that in the current situation, Greece has no alternative to implementing austerity measures, which may help reduce Greece’s fiscal problems in the long run. This compulsory situation is so serious that the Greek prime minister has said he is ready to resign if another group or party can be found that is prepared to implement the plan.

The creation of the euro currency has been the most important achievement of the EU, in terms of financial and monetary cooperation, since its establishment. Thus, whenever a member state cannot meet its commitments, the status of the euro becomes a matter of great concern for other EU members.

The EU is concerned that as a result of the crisis in Greece, the euro’s position as one of the world’s major currencies will be diminished. This concern goes both ways. Greece does not want to be expelled from the eurozone, and the EU does not want other countries to be affected by the crisis.

The situation will be slightly eased by the new austerity plan in the short term, but this depends on the performance of the Greek government. In fact, the government should promptly take belt-tightening measures in order to reduce its debt. Otherwise, the problems will continue, resulting in more social unrest, which could damage the relationship between the Greek government and the EU.


(By Mehdi Mohtashami, formerly served as Iran’s ambassador to Greece)