by Shelby Vcelka

Impunity Watch Desk Reporter, Europe

ATHENS, Greece–

On the eve of one of the most important referendums to date, tens of thousands of Greek citizens attended rallies in support for or against a measure that would allow Greece to stay in the Eurozone. Voters are being asked whether they support bailout terms from international creditors, and withdraw from the European Union, or if they would prefer to stay in the Eurozone and keep the euro as their currency. The referendum comes after five years of economic turmoil, and a default by the Greek government on their international loans on Tuesday night.

Greece first began to experience economic issues after the 2008 financial meltdown. In October 2009, Greece announced that their finances had been understated for years, leading European leaders to question the security of the Greek economy. As a result, Greece was locked out from borrowing in international markets. By spring 2010, Greece was veering sharply towards bankruptcy, which threatened to set off a new financial meltdown, and tank the European economy.

To avoid hurting the newly recovered economy, the International Monetary Fund, the European Central Bank, and the European Commission issued the first of two international bailouts to Greece in 2010. In total, the two bailouts amounted to $264 billion in today’s exchange rates.

However, the bailouts came with steep conditions. Greece was required to impose strict austerity measures, such as budget cuts and tax hikes. Other terms included making the government more efficient, closing loopholes for tax evasion, and making Greece a good place to conduct business.

The bailout was intended to give Greece more time to stabilize their economy, and to help the country pay off their international debts. While these loans have helped some, Greece’s problems have not lessened. The economy has shrunk a quarter since 2010, and unemployment is well above 25%.

Currently, the Greek banks are able to pay off international debts on paper, but lending is at a halt. They cannot finance the economy properly, since they are operating on foreign money. There is no money available for new loans, and customers have already used most of the money available in limited withdrawals.   As a result, banks have been closed for the week.

Sunday’s referendum will have profound political and economic consequences. The current Prime Minister of Greece, Alexi Tsipras, has encouraged voters to vote “No” on the referendum, believing that the imposed austerity measures had created a “humanitarian crisis” in Greece. To be effective, Mr. Tsipras will certainly need to act fast to stabilize a country on the edge of social and economic collapse. If Greece votes “Yes,” however, Mr. Tsipras’ government will likely breakdown, and a new coalition government will come into power with new elections.

For more information, please see–

BBC– Greek debt crisis: Tsipras and his Greek gamble— 01 July 2015

New York Times– Alexis Tsipras Budges on Greece’s Debt, but Meets a Cool Response— 01 July 2015

New York Times– Greece’s Debt Crisis Explained— 02 July 2015

New York Times–Greek Referendum on Offer That Is Off the Table Baffles Voters— 02 July 2015

The Guardian– A decade of overspending: how Greece plunged into economic crisis— 03 July 2015

The Independent– Greece debt crisis: What does a ‘yes’ or ‘no’ vote in the referendum really mean?— 03 July 2015

BBC–Greece debt crisis: Mass rival rallies over bailout vote— 04 July 2015