In Berlin’s eyes: stability wanted

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Series Details September 2015
Publication Date 18/09/2015
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The trauma of the July bailout

The events around the third rescue package for Greece this summer have left all parties involved bruised: An unexpected call for a referendum on the continuation of the rescue path and its clear rejection by the Greek electorate came as a shock to European creditors, derailing months of arduous negotiations. The subsequent expiration of the second bailout package, the introduction of capital controls, and the temporary closure of Greek banks put the Greek economy on the brink of collapse.

The euro area countries then struggled under immense time pressure to reach an agreement that would reconcile Greece’s urgent financial needs with the fears of the creditors. Germany’s hard line in the negotiations that included the threat of a temporary “Grexit” provoked anger and outrage among many commentators on both sides of the Atlantic. After several all-night meetings, the Greek government was forced to accept the draconian terms of the new three-year rescue package. The negotiation marathon has become a symbol of how difficult it is to implement bailout policies in the monetary union.

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Related Links
ISPI: Commentary: In Berlin's eyes: stability wanted [PDF]
ESO: Background information: Greek bailout: why it could work now

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