Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

There are only a few days left in our critical Mid-Year Campaign and we truly might not make it without your help.
Please join us. If you rely on independent media, support Common Dreams today. This is crunch time. We need you now.

Join the small group of generous readers who donate, keeping Common Dreams free for millions of people each year. Without your help, we won’t survive.

German Chancellor Angela Merkel and German Finance Minister Wolfgang Schäuble. (Photo: DPA)

Germany Profits from Greeks' Hardships

César Chelala

As Greeks suffer in multiple ways the effects of the economic crisis their country is going through, Germany has profited handsomely from the Greek crisis. This is a conclusion of research carried out by the Halle Institute for Economic Research (IWH). The study shows that the Greek debt crisis resulted in a reduction in German bund rates of about 300 basis points (BP). This led to interest savings of more than EUR 100 billion (equivalent to more than 3 percent of gross domestic product (GDP) during the period 2010 to 2015.
 
According to the study, Germany would still benefit if Greece defaults on all its debt. The savings would still be substantial if Greece does pay or pays at least in part. This is the result of investors’ increased demand for German bonds because of the greater safety they provide. Many investors would lend money to the German government at extremely low rates rather than risk losses on higher return enterprises.
 
Greece missed two key payments to the International Monetary Fund (IMF) in June and July, and the terms for a third bailout need to be reached by August 20. On that date, Greece next debt repayment to the European Central Bank is due. Although Greek officials were optimistic about the results of the negotiations, German officials were more cautious. Steffen Seibert, Chancellor Angela Merkel’s spokesman, said that “thoroughness comes before speed”.

 
Greece asked for its first bailout in 2010, and Germany provided the funds for the following five years either directly or through the IMF or the European Stability Mechanism.
 
While German officials want Greece to implement credible pension reforms and privatization plans, the Athens government is desperately trying to find funds to recapitalize the country’s ailing banks. However, any deal will have to be ratified by Germans MPs, many of whom oppose further concessions to the Syriza government.
Unlike other European countries, the German economy is still expected to grow in 2015.
 
In the meantime, the bailout money Greece has received so far hasn’t made its way into the economy but rather it has gone to pay off the country’s international loans. The government cannot begin to pay down its enormous debt load unless a recovery takes hold. In practical terms, something has to give and the indications are that unless most of Greece’s debt is written off, we will see the same scenario repeated in a short time. 
 
So far, the Greeks have paid dearly for the country’s troubles (a mixture of its own leader’s corruption and inefficiency and international corruption and inefficiency). Unemployment figures are above 25 percent (25.4 percent in August of 2012 and probably much higher now) and there is a significant deterioration of social and health services.
 
A great number of small size enterprises have suffered the consequences of declining consumption, lack of liquidity and emergency taxes. It is estimated that more than 65,000 of them have closed since 2010, leading to the unemployment of thousands of people. A new generation of “neo-homeless” now exists, some of whom are people of high educational background who are unable to cope with the crisis.
 
It is not surprising that suicides have increased dramatically, while many psychiatric clinics have had to close down at the time when they are most needed. A similar situation has risen as a result of increasing number of HIV infected people, probably the result of increased drug addiction and use contaminated needles, while drug prevention centers continue to close down.
 
There is something incongruous where one of the richest countries in the world continues to profit from the miseries of a poor country like Greece. To pretend that Greece will be revived by a new influx of predatory loans is to pretend that a terminally sick patient will be cured by a blood transfusion.

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
César Chelala

César Chelala

Dr. César Chelala is an international public health consultant, co-winner of an Overseas Press Club of America award and two national journalism awards from Argentina.

Just a few days left in our crucial Mid-Year Campaign and we might not make it without your help.
Who funds our independent journalism? Readers like you who believe in our mission: To inform. To inspire. To ignite change for the common good. No corporate advertisers. No billionaire founder. Our non-partisan, nonprofit media model has only one source of revenue: The people who read and value this work and our mission. That's it.
And the model is simple: If everyone just gives whatever amount they can afford and think is reasonable—$3, $9, $29, or more—we can continue. If not enough do, we go dark.

All the small gifts add up to something otherwise impossible. Please join us today. Donate to Common Dreams. This is crunch time. We need you now.

Jan. 6 Panel Subpoenas Trump White House Counsel Pat Cipollone

Noting his refusal to cooperate beyond an informal April interview, the committee's chair said that "we are left with no choice."

Jessica Corbett ·


Sanders Pushes Back Against AIPAC Super PAC With Endorsements of Tlaib and Levin

"Once again, these extremists are pouring millions of dollars into a congressional race to try to ensure the Democratic Party advances the agenda of powerful corporations and the billionaire class."

Brett Wilkins ·


Missouri Hospital System Resumes Providing Plan B After 'Shameful' Ban

The health network had stopped offering emergency contraception over fears of violating the state's abortion law—a "dangerous" move that critics warned could become a national trend.

Jessica Corbett ·


'An Act of Conquest': Native Americans Condemn SCOTUS Tribal Sovereignty Ruling

"Every few paragraphs of the majority opinion has another line that dismissively and casually cuts apart tribal independence that Native ancestors gave their lives for," observed one Indigenous law professor.

Brett Wilkins ·


'Lunacy': Democrats Risk Running Out of Time to Confirm Federal Judges

"Democrats aren't filling open seats right now in federal district courts because, for unfathomable reasons, they are letting red state senators block nominees," said one critic.

Julia Conley ·

Common Dreams Logo