Despite the many challenges facing the EU today, there is no doubt that Europeans have a brighter future because of the steps they have taken toward integration. Removing national barriers and opening markets to free trade promotes a healthy economy and brings prosperity to those who compete well. Besides prosperity, EU citizens reap the benefits of human rights, democracy, and a healthy environment. The EU strives to bring its influence to the rest of the world through trade and investment, by providing humanitarian aid to many developing countries, and by maintaining diplomatic relations with over 130 other countries. It is a major economic, political and diplomatic force in the world today, with the ability to have a great impact on global affairs.
Greece has entered into EU in 1981. Its current estimated population is 11 million people. According to official information, an unemployment rate in Greece was about 15 % in January 2011, and that’s relatively high.
Thanks to its key geographic location, Greece links the east with the west, the Mediterranean with the Balkans, and serves as the ideal location for investments and trade.
We should mention its cultural, political and other influences on the whole world. Greece perceived as a pioneer among European civilizations, and its ancient outstanding representatives have influenced heavily politics, art, literature, philosophy, medicine, mathematics and astronomy. Democracy itself was created in Greece.
In regards to its economic climate, first of all, I should mention that Greater Athens area is a base for a half of all Greek industry and commerce.
Greece serves as the business hub for some of the biggest multinational companies. Business giants such as the AIG Group, the Coca-Cola Co., Diageo, Ernst & Young, Kodak, Siemens, Toyota, and UPS established in Greece their regional headquarters for the Central and Eastern Europe, the Mediterranean and/or the Middle East.
Among the most successful industries and sectors of Greece the following could be named: agriculture, shipping industry, construction, banking sector, food producing industry, renewable energy industry, and tourism.
The largest producer of extra virgin olive oil in the world, Greece’s landscape physiognomy and climatic conditions are also ideal for the cultivation of the vine. Other high-quality products that thrive in Greece include Greek honey, vegetables, and sweet-smelling fruits, etc.
European Union’s impact on Greek economy
Over the past decade, Greece borrowed heavily in international capital markets to fund government budget and current account deficits. The reliance on financing from international capital markets left Greece highly vulnerable to shifts in investor confidence. Investors became nervous in October 2009, when the newly elected Greek government revised the estimate of the government budget deficit for 2009 from 6.7% of gross domestic product (GDP) to 12.7% of GDP. In April 2010, Eurostat, the European Union (EU)’s statistical agency, estimated Greece’s deficit to be even higher, at 13.6% of GDP.
On April 23, 2010, the Greek government requested financial assistance from other European countries and the International Monetary Fund (IMF) to help cover its maturing debt obligations.
During the crisis, the Greek government has sold bonds in order to raise needed funds. Greece’s government has also unveiled, amidst domestic protests, austerity measures aimed at reducing the government deficit below 3% of GDP by 2012. It also appears likely that Greece will receive financial assistance from countries that use the euro as their national currency (the Eurozone) and the IMF in order to avoid defaulting on its debt. A common method for addressing budget and current account deficits, currency devaluation, is not possible for Greece as long as it uses the euro as its national currency. If the austerity measures and financial assistance from outside parties prove insufficient, Greece could be forced to default on, or restructure, its debt.
Greece’s crisis has numerous broader policy implications. There is concern that Greece’s crisis could spill over to other European countries in difficult economic positions, including Portugal, Ireland, Italy, and Spain.
Greece’s crisis has raised questions about imbalances within the Eurozone, which has a common monetary policy but diverse national fiscal policies. It has also come to light that complex financial instruments may have played a role in helping Greece accumulate and conceal its debt, which may have ramifications for debates in the United States and the EU over financial regulatory reform.
Greece is currently facing a classic sovereign debt crisis. Greece accumulated high levels of debt during the decade before the crisis, when capital markets were highly liquid. As the crisis has unfolded, and capital markets have become more illiquid, Greece may no longer be able to roll over its maturing debt obligations. Some analysts have discussed the possibility of a Greek default. To avoid such a default, however, the Greek government has introduced a variety of
austerity measures and, on April 23, 2010, requested financial assistance from the other 15 European Union member states that use the euro as their national currency and the International Monetary Fund.
Greece’s debt crisis has raised a host of questions about the merits of the euro and the prospects for future European integration, with some calling for more integration and others less. Some have also pointed to possible problems associated with a common monetary policy but diverse national fiscal policies. Finally, Greece’s debt crisis has implications for the United States. The United States and the EU have exceptionally strong economic ties, and a crisis in Greece that threatens to spill over to other Southern European countries could impact U.S. economic relations with the EU.