Greece and the Recent Financial Crisis

The ongoing financial crisis has put the so-called EU cohesion countries (Greece, Portugal, Ireland, and Spain) ¹ at the center of a borrowing cost cyclone. Their ever-increasing borrowing costs and recourse to the Troika for financial support has meant that they have had to implement extensive fiscal consolidation measures. This chapter discusses the impact of the ongoing (2008–2012) financial crisis on Greek politics. It first provides a succinct overview of Greek politics before the commencement of the financial crisis, arguing that Greece enjoyed one of the most stable, popular, and widely legitimated democratic regimes of its modern history. Second, it discusses Greece’s response to the financial crisis, arguing that the latter constituted a critical juncture for the country’s politics and public policy (Collier and Collier 1991). Third, it examines the impact of the financial crisis on perceptions (Blyth 2002), arguing that the crisis has led to the rise of populism, extremism, violence, and nationalism. Fourth, it assesses the impact of the financial crisis on Greek politics, arguing that it led not only to a significant rise in protests, strikes, and public discontent—and also to the dramatic reconfiguration of the Greek political system, characterized by the rise of extreme antisystemic parties and the fall of mainstream ones. The chapter concludes by arguing that these political developments have further exacerbated the Greek crisis.