TL_Greece_Debt_Crisis_Eurozone
Timeline

Greece's Debt

1974 – 2018

Since the creation of the European Union in 1992 and the subsequent launch of the euro, Greece’s economic relationship with the rest of Europe has been a turbulent one. Greece’s chronic fiscal mismanagement and resulting debt crisis has repeatedly threatened the stability of the eurozone—and the country’s troubles are far from over.

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Greek Democracy Restored

The ruling military junta, which seized power from Greece’s democratically elected government in 1967, collapses. The Turkish invasion of northern Cyprus three days prior has undermined the Greek government and created divisions in the military establishment. The military calls on exiled former Prime Minister Constantine Karamanlis to return to Greece and lead the transition back to democratic rule.

Greek Prime Minister Constantine Karamanlis affirms Greece's full membership of the European Economic Community at a signing ceremony in Athens. James P. Blair/Getty
Greek Prime Minister Constantine Karamanlis affirms Greece's full membership of the European Economic Community at a signing ceremony in Athens. (James P. Blair/Getty Images)
Greece Joins the European Economic Community

Under the leadership of center-right Prime Minister Constantine Karamanlis, Greece becomes the tenth member of the European Economic Community. The ECC, established by the 1957 Treaty of Rome as a free trade area known as the Common Market, is the forerunner to the European Union.

European leaders from Portugal, Germany, France, and the Netherlands celebrate with champagne after the signing of the Draft Treaty on European Union. Jerry Lampan/Reuters
European leaders from Portugal, Germany, France, and the Netherlands celebrate with champagne after the signing of the Draft Treaty on European Union. (Jerry Lampan/Reuters)
European Union Established

The twelve member states of the European Economic Community sign the Treaty of Maastricht, which establishes the EU. In addition to a shared foreign policy and judicial cooperation, the treaty also launches the Economic and Monetary Union (EMU), paving the way for the introduction of the euro. The EMU lays out fiscal convergence criteria for EU countries that plan to adopt the single currency.

Thousands of people crowd around a huge euro symbol in Frankfurt's banking district on January 1, 1999, in celebration of the launch of the common currency. Axel Seidemann/AP
Thousands of people crowd around a huge euro symbol in Frankfurt's banking district on January 1, 1999, in celebration of the launch of the common currency. (Axel Seidemann/AP Images)
Euro Currency Launched

The euro is introduced as an accounting currency in eleven EU countries. (Euro banknotes and coins begin circulating three years later.) Greece, however, is unable to adopt the euro because it fails to meet the fiscal criteria—inflation below 1.5 percent, a budget deficit below 3 percent, and a debt-to-GDP ratio below 60 percent—outlined by Maastricht.

An EU flag flutters in front of the monument of Parthenon on Acropolis hill in Athens. John Kolesidis/Reuters
An EU flag flutters in front of the monument of Parthenon on Acropolis hill in Athens. (John Kolesidis/Reuters)
Greece Joins the Eurozone

Greece belatedly adopts the euro currency. However, the country misrepresents its finances to join the eurozone, with a budget deficit well over 3 percent and a debt level above 100 percent of GDP. It is subsequently made public that U.S. investment bank Goldman Sachs helped Greece conceal part of its debt in 2001 through complex credit-swap transactions.

Greece hosts the 2004 summer Olympic Games, which costs the state in <a href="http://news.bbc.co.uk/2/hi/business/4007429.stm" title="BBC" target="_blank">excess of 9 billion euros ($11.6 billion)</a>. The resultant public borrowing contributes to a rising deficit (6.1 percent) and debt-to-GDP ratio (110.6 percent) for 2004. Greece’s unsustainable finances prompt the European Commission to place the country <a href="http://www.businessweek.com/printer/articles/65098-how-the-2004-olympics-triggered-greeces
An athlete dives during a training session in the Olympic aquatic center in Athens ahead of the start of the 2004 Olympic Games. (Marcelo Del Pozo/Reuters)
Greece Hosts Olympic Games

Greece hosts the 2004 summer Olympic Games, which costs the state in excess of 9 billion euros ($11.6 billion). The resultant public borrowing contributes to a rising deficit (6.1 percent) and debt-to-GDP ratio (110.6 percent) for 2004. Greece’s unsustainable finances prompt the European Commission to place the country under fiscal monitoring in 2005.

Riot police respond to protests against the privatization of the Port of Piraeus in January 2008, set to be auctioned off to raise funds for the struggling Greek state.  Petros Giannakouris/AP
Riot police respond to protests against the privatization of the Port of Piraeus in January 2008, set to be auctioned off to raise funds for the struggling Greek state. (Petros Giannakouris/AP Images)
Onset of Global Financial Crisis

The U.S. subprime mortgage market collapses after the housing bubble burst the year prior. The U.S. crisis ultimately triggers a global banking crisis and credit crunch that lasts through 2009, felling global financial behemoth Lehman Brothers and prompting government bailouts of banks in the United States and Europe. As borrowing costs rise and financing dries up, Greece is unable to service its mounting debt.

Leader of the Greek Socialist party (Pasok) George Papandreou delivers a speech to supporters in Athens on October 4, 2009 after winning a comfortable governing majority.  Yiorgos Karahalis/Reuters
Leader of the Greek Socialist party (Pasok) George Papandreou delivers a speech to supporters in Athens on October 4, 2009, after winning a comfortable governing majority. (Yiorgos Karahalis/Reuters)
Papandreou's Revelation

Pasok (Socialist) leader George Papandreou wins national elections, becoming prime minister. Within weeks, Papandreou reveals that Greece’s budget deficit will exceed 12 percent of GDP, nearly double the original estimates. The figure is later revised upward to 15.4 percent. Greece’s borrowing costs spike as credit-rating agencies downgrade the country’s sovereign debt to junk status in early 2010.

Greek riot policemen rest in front of graffiti written on the wall of a bank in Athens during violent demonstrations over austerity measures demanded by the May 2, 2010, EU-IMF bailout.  Yiorgos Karahalis/Reuters
Greek riot policemen rest in front of graffiti written on the wall of a bank in Athens during violent demonstrations over austerity measures demanded by the May 2, 2010, EU-IMF bailout. (Yiorgos Karahalis/Reuters)
First Bailout for Greece

To avoid default, the International Monetary Fund and EU agree to provide Greece with 110 billion euros ($146 billion) in loans over three years. Germany provides the largest sum, about 22 billion euros, of the EU’s 80 billion euro portion. In exchange, Prime Minister Papandreou commits to austerity measures, including 30 billion euros in spending cuts and tax increases.

Greek markets rally, and Greece sees its borrowing costs fall after the announcement of the European Union's 750 billion euro rescue package.  Thanassis Stavrakis/AP
Greek markets rally, and Greece sees its borrowing costs fall after the announcement of the European Union's 750 billion euro rescue package. (Thanassis Stavrakis/AP Images)
ECB Bond Buying and 750 Billion Euro Rescue Package

The European Central Bank (ECB) launches its unprecedented Securities Market Program. The program allows the ECB to purchase government bonds of struggling sovereigns, like Greece, on the secondary market in order to boost market confidence and prevent further sovereign debt contagion throughout the eurozone. Finance ministers also agree on rescue measures worth 750 billion euros, or nearly $1 trillion, for struggling eurozone economies.

Prime Minister Lucas Papademos, leader of Greece's emergency unity government, walks through the gardens of the presidential palace after a meeting in Athens in November 2011. Yannis Behrakis/Reuters
Prime Minister Lucas Papademos, leader of Greece's emergency unity government, walks through the gardens of the presidential palace after a meeting in Athens in November 2011. (Yannis Behrakis/Reuters)
Papandreou Proposes Referendum on Bailout

Amid public anger over austerity, Prime Minister Papandreou calls for a national referendum on a second bailout agreement under negotiation. However, Papandreou calls off the referendum after the center-right opposition agrees to back the revamped EU-IMF deal. Papandreou is forced to step down, and economist Lucas Papademos is appointed to head a unity government tasked with implementing further austerity and structural reforms.

Protesters chant slogans as they march through the center of Athens on February 22, 2012, in opposition to a new bailout deal that expands austerity measures.  Kostas Tsironis/AP
Protesters chant slogans as they march through the center of Athens on February 22, 2012, in opposition to a new bailout deal that expands austerity measures. (Kostas Tsironis/AP Images)
EU Agrees to New Greek Bailout

Finance ministers approve a second EU-IMF bailout for Greece, worth 130 billion euros ($172 billion). The deal includes a 53.5 percent debt write-down—or “haircut"—for private Greek bondholders. In exchange, Greece must reduce its debt-to-GDP ratio from 160 percent to 120.5 percent by 2020. Greece and its private creditors complete the debt restructuring on March 9, the largest such restructuring in history.

European Union leaders attend a summit in Brussels on March 2, 2012, where twenty-five heads of state sign a “fiscal compact" debt rules for the eurozone. Francois Lenoir/Reuters
European Union leaders attend a summit in Brussels on March 2, 2012, where twenty-five heads of state sign a “fiscal compact" debt rules for the eurozone. (Francois Lenoir/Reuters)
EU Adopts Fiscal Compact

In a step toward European fiscal integration, twenty-five EU member states—all but the UK and the Czech Republic—sign a Fiscal Compact treaty mandating stricter budget discipline throughout the union. The agreement includes a balanced budget rule requiring governments to keep deficits below 0.5 percent of GDP and an undefined “automatic correction mechanism" for countries that miss the target.

Leader of the conservative New Democracy party Antonis Samaras waves to supporters during a pre-election rally in Athens on June 15, 2012.  John Kolesidis/Reuters
Leader of the conservative New Democracy party Antonis Samaras waves to supporters during a pre-election rally in Athens on June 15, 2012. (John Kolesidis/Reuters)
An Emerging Fringe

In a rebuke of the mainstream New Democracy (conservative) and Pasok (socialist) parties, a majority of Greeks vote for fringe parties opposed to the EU-IMF bailout program and further austerity. New elections are called for June, in which the center-right triumphs with 30 percent of the vote, allowing Antonis Samaras to form a coalition. Samaras signals Greece’s continued commitment to the bailout plan.

European Central Bank President Mario Draghi speaks during a press conference in Frankfurt on September 6, 2012, announcing the bank's new bond-buying program. Alex Domanski/Reuters
European Central Bank President Mario Draghi speaks during a press conference in Frankfurt on September 6, 2012, announcing the bank's new bond-buying program. (Alex Domanski/Reuters)
ECB Unveils Unlimited Bond-Buying Plan

ECB President Mario Draghi announces an open-ended program to buy the government bonds of struggling eurozone states on the secondary market. The policy shift, coming weeks after Draghi’s vow to “do whatever it takes to preserve the euro," is aimed at calming volatile markets, and the ECB’s strong show of commitment succeeds in bringing down borrowing costs for indebted periphery countries.

Protestors gather in front of the Greek parliament in November 2012 during a strike by the major Greek unions in opposition to further austerity measures. Yannis Behrakis/Reuters
Protesters gather in front of the Greek parliament in November 2012 during a strike by the major Greek unions in opposition to further austerity measures. (Yannis Behrakis/Reuters)
Eurozone Revises Greek Bailout

Eurozone finance ministers and the IMF agree to a revised aid deal for Greece, including lower interest rates on Greek bailout loans and a debt-buyback program. The new plan allows Greece to cut its debt-to-GDP ratio to 124 percent by 2020, rather than 120 percent, while committing it to bringing its debt levels “substantially below" 110 percent by 2022.

Municipal public school guard Yiorgos Avramidis and a colleague, who lost their jobs due to government budget cuts, sit in front of a police line guarding the Greek parliament on July 17, 2013. Yannis Behrakis/Reuters
Municipal public school guard Yiorgos Avramidis and a colleague, who lost their jobs due to government budget cuts, sit in front of a police line guarding the Greek parliament on July 17, 2013. (Yannis Behrakis/Reuters)
Greek Parliament Approves Austerity Measures

Greece’s Parliament approves unpopular new austerity measures, agreed to as a condition of the ongoing EU-IMF bailout. The legislation include layoffs of some twenty-five thousand public servants, as well as wage cuts, tax reforms, and other budget cuts. The approval opens the way for a new tranche of bailout funds worth nearly 7 billion euros ($9 billion), while labor unions call a general strike in protest.

Greece Returns to International Bond Market

Greece returns to international financial markets with its first issue of Eurobonds in four years. Despite an early morning bomb blast, the government raises 3 billion euros in five year bonds, with an initial yield of under 5 percent—a low rate seen as a mark of a return to economic normalcy. In another sign of renewed investor confidence, the offer raises 1 billion euros more than expected.

ECB Announces Quantitative Easing

Faced with deflation and economic stagnation in the eurozone, the ECB announces a 1.1 trillion euro (more than $1.2 trillion) program of quantitative easing (QE) to spur inflation and growth. Under the program, the ECB will purchase 60 billion euros in financial assets, including sovereign government bonds, each month. Under ECB rules, however, Greek bonds are not eligible.

Syriza Wins Snap Elections

The left-wing, anti-austerity Syriza party wins a resounding victory in snap elections, breaking more than forty years of two-party rule. Incoming Prime Minister Alexis Tsipras says he will push for a renegotiation of bailout terms, debt cancellation, and renewed public sector spending—setting up a showdown with international creditors that threatens Greek default and potential exit from the monetary union.

Greek Bailout Expires

The Greek government misses its 1.6 billion euro ($1.7 billion) payment to the IMF when its bailout expires on June 30, making it the first developed country to effectively default to the Fund. Negotiations between the Syriza leadership and its official creditors fell apart days before, when Prime Minister Tsipras proposed a referendum on the EU proposals. To stem capital flight, Tsipras had previously announced emergency capital controls, limiting bank withdrawals to 60 euros ($67) per day and calling a bank holiday after the ECB capped its support.

Prime Minister Alexis Tsipras exhorts the Greek parliament to approve a sweeping package of austerity measures in a speech ahead of the vote on July 16, 2015. Alkis Konstantinidis/Reuters
Prime Minister Alexis Tsipras exhorts the Greek parliament to approve a sweeping package of austerity measures in a speech ahead of the vote on July 16, 2015. (Alkis Konstantinidis/Reuters)
Greek Parliament Supports New Deal

Prime Minister Tsipras bends to European creditors and presses parliament to approve new austerity measures, despite a July 5 referendum in which Greeks overwhelmingly rejected these terms. The agreement comes after a weekend of talks in which a Greek eurozone exit was only narrowly averted and opens the way to a possible third bailout program worth up to 86 billion euros ($94 billion). The ECB resumes some support for Greek banks, but the compromise splits the ruling Syriza party and sets the stage for new elections in the coming months.

Eurogroup President Jeroen Dijsselbloem and Greek Finance Minister Euclid Tsakalotos negotiate a third bailout. Francois Lenoir/Reuters
Eurogroup President Jeroen Dijsselbloem and Greek Finance Minister Euclid Tsakalotos negotiate a third bailout. (Francois Lenoir/Reuters)
Third Bailout Approved

The Greek parliament adopts a suite of economic reforms as part of a new rescue package from the EU, the country’s third since 2010. In exchange for the 86 billion euro bailout, which is to be distributed through 2018, EU creditors require Greece to implement tax reforms, cut public spending, privatize state assets, and reform labor laws, among other measures. While the IMF participated in the previous bailouts, the organization refuses to contribute additional funds until the creditors provide Greece “significant debt relief.”

Trade unionists demonstrate in opposition to the EU’s mandated budget cuts and labor reforms in Athens. Alkis Konstantinidis/Reuters
Trade unionists demonstrate in opposition to the EU’s mandated budget cuts and labor reforms in Athens. (Alkis Konstantinidis/Reuters)
Greece’s Creditors Tussle Over Debt Relief

Tensions over Greece’s third bailout grow as the IMF warns that the country’s debt is unsustainable and that budget cuts EU creditors demand of Athens will hamper Greece’s ability to grow. To forestall a crisis that could put the 86 billion euro program in jeopardy, EU representatives agree to more lenient budget targets, but they decline to consider any debt relief. Meanwhile, Prime Minister Tsipras agrees to implement deeper tax and pension reforms even as he faces domestic pressure over a weakening economy and rising poverty.

Closed shops in Athens
Closed shops in central Athens in August 2018, covered in protest graffiti against the country’s EU creditors. (Ayhan Mehmet/Getty Images)
Greece Exits Final Bailout Program

Greece receives its final loan from European creditors, completing a bailout program begun in 2015, the country’s third since 2010. In total, Greece now owes the EU and IMF roughly 290 billion euros ($330 billion), part of a public debt that has climbed to 180 percent of GDP. To finance this debt, Athens commits to running a budget surplus through 2060, accepts continued EU financial supervision, and imposes additional austerity measures. EU officials hail the bailout as a success, pointing to Greece’s return to growth. Unemployment, too, has fallen, though, at 20 percent, it remains the EU’s highest. The IMF, however, maintains that the Greek economy, which has shrunk by 25 percent since the beginning of the crisis, will likely require further debt relief.

Timeline
Greece's Debt