One has only to recall the scenes of anti-austerity rioting in Athens at the beginning of the decade to realise just how remarkable it is that Greece has clawed its way back from the precipice. The tidal wave of the financial crisis triggered by the collapse of the US sub-prime mortgage market in 2007 circled the globe. In Europe, several economies struggled but it was Greece, saddled with a legacy of profligate spending funded by high interest loans, that came closest to sinking. When Greece and a number of other countries began to lose access to the international loans market, the lifeblood of most modern economies, the entire European project teetered. The EU acted swiftly, committing $800 billion to bailout mechanisms that have subsequently lent money to eight member states.
Greece has now concluded its third European assistance package, which began in 2015. In total, the country has received nearly $233 billion from Europe, an unprecedented sum in modern times. Today its largest creditor is Europe, to which it owes more than $218 billion at a benignly low average rate of less than one per cent, with some repayments not due until 2060. In 2015, when Greeks voted the youthful Alexis Tsipras and his left-wing Syriza coalition into power, Greece seemed poised for collapse. When a national referendum rejected Europe's bailout terms, it seemed certain. But all credit must go to the government and, of course, the Greek people, who have swallowed the bitter pill of austerity. After eight painful years, the European Stability Mechanism can confidently declare that Greece is once again standing on its own feet. The economy is growing and unemployment, although still high at 19.5 per cent, has fallen steadily from a peak of 27.5 per cent in 2013 and there is even a budget and trade surplus.
Greece is not out of the woods – it must continue to modernise its economy, exercise prudence and regain the trust of investors – but it is on the right path. As for the EU, the Greek revival demonstrates the power of the European project, which is big enough to resist global market forces and must surely give pause to any nation considering leaving its protective embrace.