An Evaluation of the Austerity Strategy in the Eurozone: Was the First Greek Bailout Programme Bound to Fail?

Abstract

Five years after the Greek government, in 2010, sought and obtained financial assistance from fellow member states, the EU and the IMF, the sovereign debt crisis in the eurozone and the EU response to it have exacted a huge economic and social price and still pose challenges to economic stability in the area (IMF, 2013: ch. 1; IMK, OFCE et al., 2013). Starting with the Greek bailout, the approach taken by the EU and the IMF in tackling the sovereign debt crisis has been, in essence, to provide financial assistance to troubled governments in exchange for draconian fiscal and current account adjustment programmes. Although the origins and nature of fiscal problems in the bailed-out countries have differed (see e.g., Alcidi and Gros, 2011) and the adjustment programmes were negotiated on a national basis, all of them shared the same underlying philosophy (Armingeon and ? ??? ???, 2012).