Greece Bailout Expiration: No Hopes of Debt Reduction

By: Jonathan Burr

For about five years Greece has been struggling to rebuild its infrastructure and pay its bailout debts, and the bailout program that has been in place is about to expire at the end of this month. Liz Alderman reported in the New York Times that, on Sunday February 1, 2015, French officials publicly stated that they support Greek’s efforts to get the country moving in the right direction. However, with this support came a warning.  French officials said there would be no write down of Greece’s debt. Michel Sapin, the French finance minister made these statements during a visit from the new Greece finance minister, Yanis Varoufakis.

Varoufakis compared Greece’s reliance on funds from the international bailout package as a drug addiction.  To cure this addiction, Varoufakis indicated that Greece would not be seeking its installment payment of the bailout package.  The funds of the international bailout package come with numerous strict conditions of how the payments can be used and development steps moving forward.  It appears that Varoufakis no longer wants to accept the payments because of the conditions that must be adhered too.  According to Varoufakis, Greece is negotiating a new deal with creditors and plans to have it finalized by May.  He told the New York Times that Greece would offer a detailed proposal for reducing the debt burden in the near future.

President Obama reacted to what was occurring in Greece.  Obama stated, “Greece needed to tackle essential reforms, including improving tax collection.  In order for Greece to compete in the world markets, they had to initiate a series of changes.”

Jonathan Burr is a 3L at The Pennsylvania State University–The Dickinson School of Law, and a Senior Editor on the Journal of Law and International Affairs.

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Alderman, Liz, France Offers Support, but no Debt Relief, to Greece, NY Times (Feb. 1, 2015), available at http://www.nytimes.com/2015/02/02/business/international/france-offers-support-but-no-debt-relief-to-greece.html.