Populism: The reason Greece is still in a deep economic crisis The Economist

Since the end of 2009, we saw Greece, Portugal, Spain, Ireland and Cyprus sinking in debts and serious financial issues with the threat of bankruptcy and a possible euro zone exit.  A bailout mechanism was formed by the EU-IMF to financially support those countries until they will be able to stabilize their economies and return to the markets. That was the case for Portugal in 2014, Ireland in 2013, Spain in 2014 and Cyprus in 2016, but Greece? Greece at the moment is on its third bailout program, the Government neither is the EU-IMF able to confirm yet when Greece will be able to sustain itself and stabilize its economy in order to return to the market. The reason Greece has resulted to a very complicated situation does not rely only on the financial mess of the Greek economy, but on the Greek society as well who chose populism over rationalism.

It must be noted that it has not always been so dark about Greece’s future during the crisis; there was a point when during the crisis under the previous government of Centre-Right New Democracy when the country was under the second bailout program, the outlook for the Greek economy improved. Greece experienced positive economic growth, the return of economic growth, along with the now existing underlying structural budget surplus of the general government, build the basis for the debt-to-GDP ratio to start a significant decline in the coming years ahead, which will help ensure that Greece will be labeled "debt sustainable" and fully regain complete access to private lending markets in 2015. It seemed like Greece would finally follow the path of ending the crisis, however, a political crisis followed between government and opposition. Premature snap parliamentary elections in January 2015, the Populist Leftist party SYRIZA which promised the end of bailout programs, the end of the TROIKA ( EC, ECB, IMF) which would eventually follow with the end of austerity measures. The new SYRIZA government refusing to accept the terms of its current bailout agreement created political uncertainty and the thrift caused a renewed increasingly growing liquidity crisis both for the Greek government and Greek financial system, the country now facing a threat of sovereign default and potential exit from the euro zone.

At this stage the end of the crisis was it its peak, both financially and politically. This unnecessary thrift with the TROIKA ended the high possibilities of Greece exiting the crisis soon. The SYRIZA government using Populism as a mechanism promised the Greek people policies that were impossible to be implemented, a quick end to the crisis without further sacrifices, the question is did SYRIZA understand it or did their populist approach also carry them away? SYRIZA was elected to be aggressive and to create the thrift with the TROIKA, giving false impression to the people that this approach would end the crisis. So even if the SYRIZA party knew the aggressive policy would not be successful, their extensive populist approach before the elections trapped them to go on as far as possible, which led to the referendum and Greece in a one step position before exiting the eurozone.

It could be said that if the country did not face the rapid change of government and policy, Greece would also be in the list of countries who exited the bailout mechanism, stood to its own feet to exit the financial crisis. However, Populism prevailed which ended a promising future for Greece exiting the financial crisis.