Only 10% of money sent by Europe went to the Greek population. And the rest?

Greece debt crisis: Where did the money go?

The biggest part of this money went to private creditors and to save the banks. Between 2010 and 2012, the rescue fund of 24 billion euros was used only in part to restart Greece and carry out the social reforms useful for the economy. However, most of the money ended up in banks.


Greece’s recent debt history, between 1999 and 2010.
Photo credit: Spitzl/Greece public debt 1999-2010.svg/June 26, 2011

Recently, Greece was forced to cut the minimum wage and reduce their pensions. The IMF, the ECB and the European Commission intervened when Athens admitted that they couldn’t return the 310 billion euros borrowed from the European banks.

In 2012 the Trojka proposed a second bailout of about 100 billion euros, which resulted in a reduction of 53% on the bonds’ value. Subsequently, other 48,2 billion euros were invested to save the Greek banks, weakened by the prolonged economic and financial crisis. In short, less than 10% was used to lift the economy and take out Greece from the crisis: the Greek society impoverished over time, and today it notably suffers from the consequences of risky government decisions. Today the Greek debt is 340 billion euros, and 265 billions must be returned to the Trojka. Greece experienced a transfer of debt: from the private to public sector. The result? A country that is terribly sinking, if it doesn’t focus on structural reforms and not negotiate its debt.

The Grexit scenario is feared also overseas

From Usa, Barack Obama warns: “The exit of Greece from the EU is a geopolitical mistake without historical precedent”. Jack Lew, United States Secretary of the Treasury, said that  increasing the Greek debt can only threaten the strength of Greece, and therefore it may choose to leave the Union. Lew told the Brookings Institution in Washington that “The Greek debt is unsustainable” and  “Europe must restructure it to make it feasible”. A revival of the Greek economy is now required: the withdrawal of the Greeks would favor the exit of other countries, and we would no longer talk only about Grexit.


National Bank of Greece Guarded
Photo credit: theglobalpanorama / Foter / CC BY-SA

Subsequently, we also have to take into account the financial bubble in China, which seems to be the greatest risk for the world economy. Today the Eurozone is threatened by two fires: the Asian Exchanges in vertical drop and Greece, which can change the center of gravity of Europe. China can be a real threat but not immediate for the US economy.

What to do with Greece? Save it or let it fall into the abyss? Russia would not remain a spectator for too long, and it may decide to skip Ukraine and go down in the Balkan Peninsula.

In this very tense situation, the IMF demanded to hurry: we must to save the Greek economy, otherwise it will be difficult to the whole of Europe. For this reason a recovery plan has been prepared with 12 billion euro in cuts and taxes. Meanwhile, the Greek banks remain closed. The President of the EU Council, Donald Tusk, told Alexis Tsipras: “We are working for concrete reforms. We must prevent domino effects. We can’t allow the Greek situation to infect the whole international economy”.

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Stefano Boscolo

Stefano Boscolo

Stefano Boscolo was born in Turin in July 1986. He graduated in Literature and with honours cum laude in Comparative Modern Culture at the University of Turin. He is the author of several publications and of a dissertation on "The image of Christ, Marian devotion and the meaning of salvation in the poetry of Karol Wojtyla". He is completing a master degree in Philology and Literature of Antiquity. He is auditor-student at the Theological Faculty of Northern Italy - Turin.