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Munro 1!

Imagine the nation's government has been shut down. Imagine a civil war breaks out

within the country. These are two examples of national crises that American citizens have faced.

Similar to these stressful crises, Greece is facing a dangerous debt which is leading to many

issues for its citizens as well as endangering its part in the European Union. Greece's debt is

credited to its transition to the use of the euro. In transition from the drachma to the euro, the

Greek economy needed to borrow money from the European Union, but Greece does not have

the money to pay it back. The debt crisis in Greece has a negative effect on the European Union

and the citizens of Greece because of the devaluation of property and currency, but can return to

financial stability if they alter taxes on sales and property, limit public spending and increase

public income.

Greek citizens are suffering from the debt crisis through the decreasing price of property.

Helena Smith from The Guardian writes that Greece's property slump is a perfect reflection of its

social and economic crash. Property values through the country have dropped nearly 50% since

the beginning of Greece's economic crisis (Smith). Greece's economic crash is leading to a

decrease in the housing and property market. Due to Greece's debt, all property prices are

plummeting dramatically, causing citizens themselves to lose money because of the devaluation

of their homes during this financial crisis. Before the citizens of Greece lose their financial

stability as well, the Greek government must stabilize their economy by raising their government

income to neutralize the country's debt. Once Greece obtains a greater income, it can use that

money to pay back the loans from the European Union. According to Nikos Konstandaras from

The New York Times, people are refusing their inheritance because of the financial burden their

inherited homes would bring due to the plummeting property values. People are fearing that they
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will be unable to sell their homes and that property taxes will drain their bank accounts

(Konstamdaras). Because of the decline in property value, Greek citizens are becoming poorer;

some are even unable to maintain ownership of their property due to the spiking real estate tax.

With Greek citizens themselves slipping into debt, the economy cannot expect to pay back its

loans if the citizens cannot pay their taxes. The Greek economy must lower the real estate taxes

to allow property owners to regain financial security. This way, the citizens of Greece will have

money to pay back the government to help repay the debt to the European Union.

Greece's debt is leading to the plunging value of the euro and negatively impacting the

European Union. Joseph Micallef from The Huffington Post writes that the European Union has

implemented several different support mechanisms like the European Stability Mechanism, the

European Financial Stability Fund, and other sources of money to provide loans to Greece and

other European countries in debt. The European Union is supporting half of the debt within the

Greek government (Micallef). Although this method of support seems to work now, it will only

be successful if Greece pays back the money which was loaned to them- which is money Greece

currently does not have. If Greece fails to repay this loan, it could lead to an even further

devaluation of the euro and the collapse of the European Union. To gain money to pay back their

loans, Greece must balance out taxes, limit spending on unnecessary expenses, and increase

revenue in areas such as tourism, where Greece receivers over a quarter of its money. Once the

country obtains money from doing these things, it will help stabilize Greece's economy. To

display the dramatic fall in value of currency, "in the last 12 months, the euro has dropped just

over 22 percent," (Menton). This devaluation of the currency has been leading to many financial

issues among not just people of Greece, but people from countries all over Europe. To avoid a
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collapse, Greece borrowed billions of euros from the European Union which are not being paid

back, causing the euro, commonly used through many European countries, to lose value. To

regain value of the currency, the Greek government must wisely reconstruct its tax collections to

properly acquire the money to pay back its loans. If Greece's government increases certain taxes

such as sales tax, it will slowly regain the money it needs to pay back its debt to the European


The Greek economy should increase its revenue to pay back its loans. According to

Kalyeena Makortoff's research for CNBC, the World Travel and Tourism Council says that

tourism accounts for almost 12 billion euros a year (Makortoff). Greece's tourism industry is

clearly a major contribution to Greece's revenue. By increasing museum, hotel, landmark, and

other tourism-related prices, Greece would increase its revenue. By increasing revenue from one

of its main sources, Greece would have money to pay back the loans from the European Union.

This method is particularly beneficial to the economy because the tourist revenue comes from

people of foreign countries, rather than Greek citizens. Tourism in Europe not only leads to an

increase in money, but an increase in jobs, "while unemployment still remains the highest in the

European Union at just over 22%, a quarter of a million new jobs were reportedly created over

82% of them or 210,000 in the tourism sector," (Pappas). With hundreds of thousands of new

jobs created by the tourist industry, not only is there an increase in revenue from outside of

Greece, but Greek citizens now have more job opportunities to earn income. With rising

employment rates, the Greek government can then raise taxes on Greek citizens with higher

income, bringing in more money to pay back the money Greece owes European Union. The

tourist industry raises employment rates and revenue throughout Greece.

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The debt crisis in Greece is leading to the government's lack of resources and inability to

deal with Syrian refugees. William Drozdiak from Brookings writes that since Greece is the first

point of entry for Syrians, thousands of refugees enter Greece each day to flee the civil war in

Syria, (Drozdiak). Greece, suffering from a major debt crisis and lacking resources, is currently

very incapable of dealing with incoming refugees. If Greece is focused on the flow of refugees

into the country, it will be unable to deal with the major debt crisis at hand. Dealing with the

refugees is also costing Greece money on shelter, food, and other necessities to provide the

Syrians when Greece already has its own crisis to fix. With a more stable economy, Greece

would be able to aid the thousands of refugees entering the country with financial and material

resources. Greece can help the Syrian refugees and provide support if the Greek economy first

focuses on the distribution of taxes and increase in revenue. After paying back the European

Union and freeing themselves from debt, then the Greeks can focus on helping the Syrian

refugees. Liz Alderman from The New York Times explains the unbearable conditions for

refugees in Greece, describing below freezing temperatures and unsecured shelters for refugees,

(Alderman). Without money to save itself, the Greek government simply does not have the

financial resources to help the refugees within its borders. Helping the Syrian refugees is costing

Greece money it does not have. By prioritizing its own financial needs, if the Greek government

focuses on distributing taxes, repaying loans, and balancing the economy, it will then have the

time and resources to aid the Syrian refugees.

Many people believe that a "Grexit", or Greece leaving the European Union will help

relieve debt, when in reality, it will do more damage to Greece. If Greece was to leave the

European Union:
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Greek corporations and banks will still owe debts denominated in euros, which

will become harder to pay as the drachma devalues, possibly leading to

bankruptcies. Meanwhile, if the government decides to reverse the spending cuts

it's made in recent years and run a deficit, it will likely have to finance it by

printing money, which could lead to severe inflation. (Weissmann)

If Greece were to exit the European Union, it would no longer use the euro, and would probably

return to the drachma. Switching currencies is difficult enough, but after the Greek government

would return to its old currency, Greece would still owe money to the European Union in euros.

Printing money would lead to a devaluation of currency, creating only more economic problems

for Greece. With replacing the euro, computers will have to be reprogrammed. Vending

machines will have to be modified. Payment machines will have to be serviced to prevent

motorists from being trapped in subterranean parking garages," (Weissmann). Exiting the

European Union would result in many issues for Greece, especially the many issues caused by

the use of a new currency. Switching back to the drachma causes more complications and only

puts Greece further into debt. Daily dependencies that one might not even notice would be

affected by this would need to be modified, such as vending machines, ATMs, cell phones, and

more. These necessary modifications could potentially lead to even more financial issues from

the beginning of Greece's new identity independent from the European Union.

The continuous debt in Greece is a problem that must end before Greece is unable to

recover from its damages. This Greek crisis has a negative effect on the European Union and the

citizens of Greece because of the devaluation of real estate and the euro, but the Greek economy

can recover by redistributing taxes and balancing incoming revenue. Greece must remain a part
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of the European Union and repay its loans in order to avoid collapse and regain financial

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Works Cited

Alderman, Liz. "Wintry Blast in Greece Imperils Refugees in Crowded Camps." The New York

Times. The New York Times, 11 Jan. 2017. Web. 15 Mar. 2017.

Drozdiak, William. "Greece's Frightening Inability to Deal with the Refugee Influx | Brookings

Institution." Brookings. Brookings, 29 July 2016. Web. 15 Mar. 2017.

Konstandaras, Nikos. "In Greece, Property Is Debt." The New York Times. The New York Times,

01 Nov. 2016. Web. 15 Mar. 2017.

Makortoff, Kalyeena. "Acropolis Wow! Greece Hikes Tourist Tickets." CNBC. CNBC, 15 Oct.

2015. Web. 15 Mar. 2017.

Menton, Jessica. "Why Is The Euro Dropping? As Greek Debt Crisis Drags On, The Currency

On Track For Its Biggest Quarterly Decline Ever Against US Dollar." International

Business Times. N.p., 05 Dec. 2015. Web. 15 Mar. 2017.

Micallef, Joseph V. "Europe's Next Financial Crisis." The Huffington Post., 06 June 2016. Web. 15 Mar. 2017.

Pappas, Gregory. "Increase in Arrivals in Greece Reported for 2016 as Tourism Keeps Greek

Economy Floating; Crete Experiences 10% Increase Over Last Year." The Pappas Post.

N.p., 19 Sept. 2016. Web. 15 Mar. 2017.

Smith, Helena. "Home Ownership in Greece 'a Sick Joke' as Property Market Collapses." The

Guardian. Guardian News and Media, 28 Feb. 2014. Web. 15 Mar. 2017.

Weissmann, Jordan. "Greeces New Bailout Deal Sounds Like Its Destined to Fail." Slate

Magazine. N.p., 11 Aug. 2015. Web. 15 Mar. 2017.