Ever since it joined the Eurozone, Greece has not been able to reduce its expenditure and likewise, the country has been unable to reform its economy and this has resulted in the financial crisis. This situation has been worsened by the global recession and according to Times & Sunday Times, the country’s debt by the year twenty ten had greatly exceeded beyond its gross domestic product and statistically, it is expected to exceed by 120% in the year twenty twelve. Greece will have to borrow to be able to clear the debts it owes other states but its credits have shot up and thus forcing the country to pay much more interest than the other countries in the Eurozone comparatively.
In addition, this fact has led to the country breaching the stability and growth pact which is one of Eurozone member states rules that stipulates that all the member states should keep their deficits below three percent (Times) However, it is expected that these deficits may drop this year because the government has reduced its expenditure and hiked the taxes in a bid to redeem its economy. Unfortunately, this financial crisis scared the Investors away; they have shifted their focus to other member states, thus threatening the government’s economic recovery strategies.
To solve its crisis, Greece may have no other choice than to request for funding from the IMF or the Euro central bank or the European Union, this according to Times & Sunday time would weaken the Euro. However, the fact that Greece is a member of the Eurozone, it enjoys a lot of benefits. For instance, the state enjoys external economic security and protection against foreign threats. Secondly, Greece is a full member of the European central bank and many other monetary institutions thus enhancing its support to its economic stability. Greece may be experienced a hard economic crisis but there is no provision for any member state to leave the union because according to the House of Lords-European Union Committee, this would create damaging precedence and would affect the markets. European Union would not cope with a member state falling back because of the economic implications, and Greece is a member, it has an advantage of that it would enjoy support from the union (House of Lords – European Union Committee: The Future of Economic Governance in the EU – HLP 124-II page 23). This is an incentive for all member states. For these reasons among others, Greece would not exit from the Eurozone. In addition, Greece would not opt to exit because of its creditors. In conclusion, Greece is suffering economic and financial crisis and this is impacting negatively on the Eurozone and also its political stability. The dilemma has been Greece has subjected the entire zone to danger and yet the European Union has no provision to push the country away because of economic implications. So, the only option would be to bail Greece out by financing the country. This way the Entire Eurozone would be safer.
