Is Greeve to blame for the crisis?

Is Greeve to blame for the crisis?

Foreign Affairs’ Brain Trust Weighs In

We at Foreign Affairs have recently published a number of pieces on the Greece economic crisis. Those articles sparked a heated debate, so we decided to ask a broad pool of experts to state whether they agree or disagree with the following statement and to rate their confidence level about that answer:

Greece bears the lion’s share of the responsibility for its debt crisis.



Full Responses:

CORNEL BAN is Assistant Professor of Political Science in the Frederick S. Pardee School of Global Studies at Boston University.
Disagree, Confidence level 8 
Without a doubt, successive Greek governments are responsible primarily for failing to put into place a tax collection service able to provide the country with adequate fiscal resources and to distribute the tax burden in equitable ways. Weak administrative capacity has certainly been one of the greatest failures of Greek democracy, and it will remain an area where urgent improvement is needed. However, the lion’s share of the responsibility for the debt crisis itself lies with the bad economics of the troika, the design flaws of the euro, and Germany’s failure to mobilize EU member states around bold pan-European countercyclical policies after 2010.

MARK BLYTH is Eastman Professor of Political Economy at Brown University.
Strongly Disagree, Confidence level 10        
How two percent of the eurozone, which after six years of contraction is now 1.7 percent of the eurozone, can generate such trouble by overspending a few percentage points of a GDP the size of a U.S. Defense Department contract overrun remains forever a mystery to me. The standard view has the Greeks as a nation of crooks who deserved what happened to them. Yet if they are all crooks, we have to explain why European (French and German mainly) banks fell over themselves between 1999 and 2007 to lend the Greeks huge amounts of money. After all, you can’t have overspending without overlending. Really, you can’t. Now, if the genius financiers of Europe that loaned the Greeks all that cash (a fraction of the bailouts, by the way) didn’t know that the recipients were crooks when they lent them the money, then their due diligence people should all be fired. If they knew they were lending to crooks and they still did it, then they should all be part of a RICO warrant. 

Forget venality or corruption for a moment. It’s impossible to understand what has happened to Greece, and why the latest proposal to lend a country that will never pay back its debt another 89 billion euros makes no sense whatsoever, without understanding how Greece in 2010 was the pressure point for a bank run through the bond markets of Europe. Bond yields were going up as the markets priced in contagion risk through the market as a whole and as the sustainability of the euro was questioned. Greece was the weakest link in a contagion run. The supposed overspending of two percent of the eurozone was a sideshow. Greece is simply not big enough to matter on its own, so it can’t be “its fault” no matter how venal the Greeks are or are not. 

Greece’s 2010 bailout was a bailout of its creditor banks, not the Greek state to any large extent, since Greece was running a primary surplus by early 2011. Further contractionary policies shrank GDP and bloated the debt stock to the extent that another bailout was needed in 2012 to keep the whole pretense afloat, which is also why bailout three is needed today. Not needed by Greece, that is, but needed by its now public sector creditors—the other member states. In closing, consider this: If Greece was corrupt to the core, why are investors still buying in Italy, which has exactly the same Transparency International score for corruption? Perhaps because the level of corruption and the level of lending come together only when someone other than the lender has to take responsibility.

CHARLES W. CALOMIRIS is Henry Kaufman Professor of Financial Institutions at Columbia University’s Graduate School of Business.
Strongly Agree, Confidence level 10  

OMAR G. ENCARNACIÓN is Professor of Political Studies at Bard College.
Agree, Confidence level 7      
When looking at Greece, it helps to view things in comparative perspective. Although other southern European economies are enduring significant economic turmoil—think of Spain and Portugal, and even Italy—they are managing considerably better than Greece, having made better policy choices and smarter use of European financial assistance. This is not to say, however, that the Greeks are entirely to blame for their predicament; it is only to acknowledge a significant degree of responsibility.

MARTIN FELDSTEIN is George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research.
Strongly Agree, Confidence level 9   
The original eurozone members are responsible for having accepted Greece as a member of the fixed exchange rate system.

JOSEPH E. GAGNON is Senior Fellow at the Peterson Institute for International Economics.
Neutral, Confidence level 7   
Perhaps more than 50 percent of the blame lies with current and past Greek governments, but the creditor banks and governments also bear lots of responsibility for making risky loans and imposing unrealistic conditions.

JAMES K. GALBRAITH is Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government at the Lyndon B. Johnson School of Public Affairs, University of Texas at Austin.
Strongly Disagree, Confidence level 10        
The lion’s share, according to Aesop, is the whole thing. So the statement is false on its face. Apart from that, Greek governments through 2010 had plenty of help from loan-pushing banks, aggressive arms merchants, Goldman Sachs, and the failure of the larger world to police the financial sector and prevent the global crisis. Not to mention the French presidential ambitions of Dominique Strauss-Kahn, who dragged the International Monetary Fund (IMF) into a program that it should never have joined. One could go on, but the least responsibility for all this lies with “Greece” the country or the citizens of that country.  

NICOLAS JABKO is Associate Professor of Political Science at Johns Hopkins University.      
Disagree, Confidence level 10           


STATHIS N. KALYVAS is Arnold Wolfers Professor of Political Science and Director of the Program on Order, Conflict, and Violence at Yale University.
Neutral, Confidence level 10 
Greece’s debt crisis was the result of reckless borrowing and excessive deficits. However, this level of borrowing (and the low interest rates that made it possible) resulted from the financial markets’ belief that Greece, a eurozone member, could not possibly default on its own debt—a belief that reflected the peculiar, “work-in-progress” architecture of the common European currency. In other words, without the euro, Greece could not have borrowed so much, but the euro in and of itself did not trigger this type of crisis in all of its members. Responsibility is shared, hence my neutral answer.

R. DANIEL KELEMEN is Professor of Political Science and Jean Monnet Chair in European Union Politics at Rutgers University.
Agree, Confidence level 8      
There is plenty of blame to go around. Both successive Greek governments and the governments of creditor countries behaved irresponsibly and contributed to the crisis.

STEPHEN KINSELLA is a Senior Lecturer in Economics at the University of Limerick.
Disagree, Confidence level 7   
Irresponsible Greek governments were loaned copious amounts by irresponsible international private lenders. The irresponsible private lenders were made whole by the Greek taxpayer via a series of extremely poorly designed programs. The transfer of wealth during the crisis has yet to be quantified. Greek taxpayers have been punished, and rightly so, for their electoral choices. The lenders have walked away, bonuses in hand, their balance sheets repaired after doing more than most to cause the crisis in the first place. Now that is moral hazard. Why wouldn’t they do it again?

LAURENCE J. KOTLIKOFF is a William Fairfield Warren Distinguished Professor at Boston University, Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, President of Economic Security Planning, and the Director of the Tax Analysis Center.
Neutral, Confidence level 10 
Please read my columns on Greece at to see what I think.

KAI-OLAF LANG is a Senior Fellow at the German Institute for International and Security Affairs.
Agree, Confidence level 8      
The origin of the Greek crisis is neither membership in the eurozone nor a reform strategy based on fiscal conservatism and debt reduction. The root cause for Greece’s debt problems is a combination of long-standing and severe dysfunctionality in the Greek state and the country’s leadership. A lack of solid administrative capacities, misguided public investment (Greece is NATO’s second spender on defense, after the United States), an ineffective tax system, an inflated public sector, and pervasive corruption are the precarious trademarks of the unsustainable “Greek model.”

The adoption of the euro brought the influx of cheap money, leading to artificial stimuli and overshadowing the need for structural reforms. Also, the EU and the eurozone are to blame for their carelessness in accepting Greece as a eurozone member—just as European and international banks can be criticized for their reckless lending. Although Greece’s participation in the euro area conserved or deepened many problems, however, it did not cause them.

After the crisis broke out, for some time, Greek society unwillingly tolerated an approach of budget consolidation and severe fiscal policies. But in opposition to other crisis-hit countries such as Ireland, Portugal, and Spain, people did not believe in a realistic prospect of economic recovery—which has certainly to do with the fact that the burden of sovereign debt, economic problems, and bad governance is much greater in Greece than elsewhere in the eurozone. The Greek parliamentary elections of January 2015 and the victory of Alexis Tsipras and the leftist Syriza, as well as the July 2015 referendum, showed two important things. First, the understandable rebellion of the Greek society against its own political class turned into a broader campaign against external adversaries, including the “institutions,” Germany or the IMF. Second, the heavy-handed, volatile, and ideologized “negotiating style” of the Greek government swept away the possibility of a pragmatic, trust-based introduction of more flexibility and social easing into the new rescue package.

MATTHIAS MATTHIJS is Assistant Professor of International Political Economy at Johns Hopkins University’s School of Advanced International Studies.
Disagree, Confidence level 9
Although Greece bears responsibility for excessive deficit spending during the boom period, the euro system (as well as financial investors in the north of Europe who chose to ignore the “no bailout” rule of the Maastricht Treaty) is equally to blame for artificially lowering the interest rates during the pre-crisis boom. Furthermore, Europe’s response to the crisis (too heavy a reliance on fiscal austerity and structural reforms) is largely responsible for making Greece’s debt problem dramatically worse since 2010.

KATHLEEN R. McNAMARA is a Professor at Georgetown University.
Neutral, Confidence level 10 
It takes two to create a debt crisis—the overly optimistic/greedy lender and the feckless borrower. The Greek political system has produced an unsustainable set of policies and practices, but the banks that profited off the magical thinking of the 2000s also are to blame.

ANAND MENON is Professor of European Politics and Foreign Affairs at King’s College, London.
Neutral, Confidence level 8   
The blame lies in many quarters: with the Greeks—for their failure to reform antiquated state structures, their failure to collect taxes, and for fiddling with the books prior to euro entry—and with other member states for the system they created, the bias in favor of surplus countries, and the austerity plans they imposed on the Greeks. No one comes out of this well.

SOPHIE MEUNIER is Research Scholar in the Woodrow Wilson School of Public and International Affairs at Princeton University and Co-Director of the European Union Program at Princeton.
Neutral, Confidence level 10  

HENNING MEYER is Editor of Social Europe and Research Associate of the Public Policy Group at the London School of Economics.
Disagree, Confidence level 7
Greece bears responsibility for initial overspending and structural issues, but what was termed a rescue has made things worse, and predictably so.

ANDREW MORAVCSIK is a Professor of Politics and International Affairs and Program Director of the European Union Program at Princeton University.
Neutral, Confidence level 5   
This is a very badly worded question. “Lion’s share” . . . what does that mean? And it is dichotomous. And one learns nothing about whether other governments, international organizations, private actors, bad luck, and random chance are responsible for the rest. When? At the start? Now? (Most people think the answers to those two questions are diametrically opposed.) Much of the debate is about whether it really is, fundamentally, a debt crisis at all—so are you supposed to prejudge that? One would have learned much more by asking: “What percentage of the responsibility for its debt crisis does Greece bear?” This was obviously put together by someone who does not know much about either elite polling or this particular issue.

LAYNA MOSLEY is a Professor in the Department of Political Science at the University of North Carolina at Chapel Hill.     
Neutral, Confidence level 7    

YASCHA MOUNK is a Lecturer in Harvard University’s Department of Government.
Disagree, Confidence level 7
Greece undoubtedly shares responsibility for the debt crisis. The political class is deeply corrupt. There are enormous roadblocks to economic growth, from unnecessary regulation to a dysfunctional bureaucracy. The Syriza government recognized some of this and promised to break with the privileges of powerful oligarchs and favored professions. But due to a mix of incompetence, ideology, and an apparent belief that blustering rhetoric vitiates the need for careful policy, it has done virtually nothing to solve Greece’s problems. 

Even so, Greece does not bear “the lion’s share of responsibility” because the influence of another actor has been just as disastrous: that of the European Union. Led by a resurgent and intransigent Germany, the EU has left Greece without a realistic hope for a better future. It has imposed not only much-needed structural reform but also a disastrous policy of austerity. Worse still, it has so far refused to provide Greece with the debt relief that would be necessary for the Greek economy to return to growth (or for the government to have any chance of paying back its debt). 

It has long been clear that the single currency zone will continue to cause crises as long as it lacks a coordinated economic policy. After dithering for years, the German leadership has now made clear its intention of imposing its preferred policies on the rest of the continent. At best, the euro is now a means of shifting power from national electorates to a pan-European technocracy; at worst, it is an inadvertent vehicle for German domination. Once European publics recognize this, the very survival of the European Union—including its most basic accomplishments, such as the freedom of movement for goods and people—will be at risk. And the lion’s share for that even greater crisis will lie with Berlin, not Athens.

HARRIS MYLONAS is Assistant Professor of Political Science and International Affairs at the Elliott School of International Affairs at George Washington University.
Agree, Confidence level 10    
Greece bears the lion’s share of the responsibility in the sense that it was the weakest link in the eurozone. Having said that, the way the international financial system operates, the weaknesses of the eurozone, and bad management of the crisis by both Greek and EU elites are also to blame.

ABRAHAM NEWMAN is Associate Professor of Government and International Affairs at Georgetown University. 
Disagree, Confidence level 9 

ALEXANDER PRIVITERA is Senior Fellow and Director of the Business and Economics Program at American Institute for Contemporary German Studies.
Agree, Confidence level 8      
Greece bears the responsibility for putting itself in such a situation, but its creditors exacerbated the situation by pursuing a policy of extreme austerity that is condemning the country to further hardship.

JOHN QUIGGIN is Professor and Australian Research Council Laureate Fellow at the University of Queensland.
Disagree, Confidence level 8
Greece bears an equal share, with the creditors, for running up the debt in the first place. The subsequent crisis is the product of troika mismanagement.

STEVEN RATTNER is former Counselor to the Secretary of the U.S. Treasury and former Lead Auto Adviser in the Barack Obama administration.
Strongly Agree, Confidence level 8   
Greece is only not responsible to the extent that an alcoholic is not responsible for drinking.

MARTIN A. SCHAIN is Professor of Politics at New York University.
Disagree, Confidence level 6 


VIVIEN A. SCHMIDT is Jean Monnet Professor of European Integration and Professor of International Relations in the Frederick S. Pardee School of Global Studies at Boston University and Director of BU’s Center for the Study of Europe.
Strongly Disagree, Confidence level 10        
EU leaders and institutions along with the IMF bear the lion’s share of responsibility for the current crisis, both economically and politically. In terms of the economics, they are to blame for failing to provide a workable solution to the initial Greek crisis in 2010. That rescue plan—with no debt restructuring and massive austerity—was disastrous for Greece’s economy. Despite what many claim, over the last five years, Greece actually did pursue austerity and structural reform.

That said, Greece does bear the lion’s share of responsibility for its initial debt problems and for its continuing structural problems. But it is very hard to reform when there are only sticks (austerity), no carrots (for example, investments for growth), and no growth. As for the politics, although Syriza did shoot itself in the foot in many ways, it is not clear that there would have been any other outcome. EU leaders had many reasons for pressing Syriza hard, including not allowing a far-left party to appear credible for national electoral reasons or to change rules that governments had applied or were still applying to their own citizens.  

DANIELA SCHWARZER is Non-Resident Senior Fellow at the German Institute for International and Security Affairs.
Neutral, Confidence level 9   
The scope of Greece’s debt crisis is, on the one hand, clearly the result of domestic mismanagement and a lack of reforms and administrative efficiency in Greece. On the other hand, Greece’s problems have been amplified by an insufficiently functioning euro area, which has led to the buildup of imbalances.

GEORGE TSEBELIS is Anatol Rapoport Collegiate Professor of Political Science at the University of Michigan.
Agree, Confidence level 10    
The EU has responsibility for insisting on a nonsustainable debt and not insisting on structural changes as much as on fiscal ones. But the reason that Greece is in debt is low productivity.

ANGEL UBIDE is Senior Fellow at the Peterson Institute for International Economics.
Strongly Agree, Confidence level 8   
Since the beginning, the Greek political system has failed to take ownership of the problem, culminating with Syriza’s disastrous strategy in 2015 that reversed the gains achieved until then.

ANDREAS UMLAND is Senior Research Fellow at the Institute for Euro-Atlantic Cooperation.
Agree, Confidence level 9      
Some policies imposed on Greece by the troika may have been suboptimal, and the EU/IMF’s help, once the crisis started, may have been too little too late. Yet the main responsibility for the debt crisis lies obviously with the Greek government and parliament. Greece has been receiving generous support from the EU since it joined. Its entries into the European Community in 1981 as well as inclusion into the eurozone 20 years later were both pushed through in violation of the respective accession procedures. To this degree, the other European states are co-responsible for Greece’s current malaise.

MARTIN WOLF is Chief Economics Commentator for the Financial Times.
Agree, Confidence level 10   
This is not the sort of question one should ever answer. But it is hard to argue against the proposition that the origin of the Greek debt crisis lay in decisions made by Greek governments over a long period, facilitated by irresponsible decisions by private creditors. The reason the crisis remains unresolved, however, more than five years after it first became evident, includes a series of mistakes made by the official sector, notably the other governments of the eurozone and the IMF.


Μεινετε Ενημερωμενοι

Εγγραφείτε στο Newsletter μας και μείνετε ενημερωμένοι για τις τελευταίες εξελίξεις του Δικτύου.

Social Media

Ακολουθήστε μας στα κοινωνικά μας κανάλια και ενημερωθείτε για τα τελευταία νέα του Δικτύου.

ΔΙΚΤΥΟ για τη Μεταρρύθμιση στην Ελλάδα και την Ευρώπη

Διεύθυνση: Αθανάσιου Διάκου 20, 11743, Αθήνα, Αττική
Τηλ: (+30) 2109247814