Plagued by corruption, ineffective leadership and a large national debt, Greece faces possible bankruptcy and withdrawal from the eurozone -- the group of European nations that use the euro, said John Psaropoulos, an independent journalist for NPR, PBS and Al-Jazeera, speaking on campus Oct. 18 about the Greek financial crisis.

"[Greece has] got an unsustainable debt burden of about 344 billion euros. It is technically bankrupt, because the last bond it sold on the open markets was March 2010 and that would carry the coupon to 6.5 percent interest, which is unsustainable," said Psaropoulos. "In terms of competitiveness, we [Greece] are doing worse and worse."

According to Psaropoulos, the World Economic Forum placed Greece 90th out of 142 countries in its global competitiveness index, down from 83rd the previous year. And the World Bank's business report ranked it 100th out of 183. Moreover, Greece's standard of living dropped 30 percent over the last decade.

To mitigate its debt, Greece looked toward the European Commission, the European Central Bank and the International Monetary Fund for assistance. In May 2010, Greece received its first bailout of 110 billion euros. But apparently this was not enough, Psaropoulos said, so the European Union (EU) agreed on a second bailout of 130 billion euros early this year.

"The bailout policy may be unrealistic because Greek debt is unsustainable. Austerity programs may not work," he said.

Former Prime Minister George Papandreou's solution was to propose a referendum to default from the euro, which was ultimately overturned.

"Unilateral default may be catastrophic. Reversion to the drachma will cause inflation and decrease its value by 60 percent," Psaropoulos said.

Greece's 344 billion euro debt will increase to more than 540 billion, he continued. "The debt may be forgiven, but Greece will be shut out from international markets."

He added: "Greece has suffered a complete breakdown in credibility with its EU partners because it has falsified its statistics so many times that it is the only one of the 17 eurozone members to have been under the Excessive Deficit Procedure (EDP)." The EDP allows creditors authorization and supervision over a country's spending decisions. Three of the four times it has been imposed was on Greece.

"Greece, politically, has suffered a loss of sovereignty," Psaropoulos said. "Politicians are making such fools of themselves that they were actually losing the authority to govern," he stated.

Conservatives and socialists, who have been alternating in power for the past four decades, were unwilling to compromise, and the country lacked a national project since the 2004 Olympics, Psaropoulos said. Additionally, the series of handouts and nationalizations started in 1981 under Andreas Papandreou, George Papandreou's father, contributed heavily to the debt.

"Greece started borrowing tens of billions of euros for social programs," Psaropoulos said. "The political value was very damaging. Once you've started making handouts, you're locked into that set of promises for many years."

In addition, he said, those who knew the right people acquired entitlements that were hugely costly. He added: "Don't you want to set up this society in a way that is fiscally affordable now so that they don't have to clean up this mess? Most people don't seem to be answering 'yes' to that question."

The talk was part of the fall speaker series "Greece and the euro" sponsored by the Cornell Institute for European Studies' Mediterranean Initiative, the Johnson School of Management and the Mario Einaudi Center for International Studies at Cornell. On Nov. 5 and Nov. 6, Mayor of Athens Giorgos Kaminis will speak on EU funding and problems facing Athens, respectively.

Jacques Diec '15 is a student writer intern for the Cornell Chronicle.