Introduction

Greece was the first of the countries in the EU periphery engulfed in the so-called sovereign debt crisis that followed the crisis in the financial and banking sectors. The sovereign debt crisis exposed the serious weaknesses of the politico-economic regime that shaped Greece's development after the end of the military dictatorship in 1974. It also revealed the unprecedented power of unaccountable international financial institutions, banks and agencies to shape the dynamics of government bond markets across the globe and, therefore, the trajectories of national and regional political economies. More fundamentally, the Greek crisis exposed the limits of EU solidarity, and accelerated changes in the future politico-economic governance of the EU: the institutional innovations pursued as a means for managing the sovereign debt crisis, especially within the Eurozone, undermine national economic sovereignty to an unprecedented degree and, thus, place under serious question the role of national democratic politics in the process of EU integration.

This chapter begins with a brief discussion of the background to the crisis and explores how multiple and mutually reinforcing causes created the ‘perfect storm’ conditions for its eruption. This is followed by a critical presentation of the key austerity and deregulatory measures adopted by the Greek government until the end of December 2011. Most of these measures were preconditions for the tranches of the ‘bailout’ loan agreed with the so-called ‘troika’ of lenders, the ad hoc body comprising representatives of the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF). A discussion of the impact of austerity measures on the economy, welfare and society more generally, as well as our final reflections, conclude the chapter. It is argued that the austerity measures and the deregulatory, promarket, policy reforms prescribed by the ECB/EC/IMF and pursued by consecutive Greek governments have culminated in an anti-social policy that has done nothing to alleviate the crisis. Instead, it has severely reduced socio-economic security, traumatised social cohesion and democratic governance, and sunk the Greek economy into the deepest and most prolonged recession in recent memory with detrimental effects for the state's finances and Greek society more generally.