Acropolis now

From joining the euro to economic meltdown: Lucy Mair charts the path of the Greek nation over the past twenty years

When Greece joined the euro in 2001, prime minister Costas Simitis expected membership of the single currency to put the fledgling Mediterranean economy at the heart of Europe, ensuring "greater stability" and new opportunities. But over the past decade mounting debts, austerity measures and political instability have pushed the Greek nation ever closer towards bankruptcy, forcing the government to take the unprecedented step of seeking European aid, and sending shockwaves across the eurozone. With a coalition government set to accept yet another European bailout package, is there light at the end of the tunnel - or are there further political pitfalls ahead?

January 1992

Maastricht Treaty is signed by members of the European Community

The Maastricht Treaty establishes the European Union and leads to the creation of the euro. By signing the Treaty, member states agree that their budget deficit will stay below 3 per cent of gross domestic product (GDP), and that government debt must be less than 60 per cent of GDP. The Treaty also explicitly forbids giving cash bailouts to member states in trouble.

January 1999

The euro is introduced to financial markets

January 2001

Greece joins the single currency

Greece is initially left out of the eurozone because the nation has failed to meet the levels of inflation and government debt deficits required to join the single currency. After adopting a tough austerity programme, Greece cuts its double-digit inflation to 4.2 per cent and claims to have reduced its debt deficit. Greece is then admitted to the euro, despite still being weaker than other eurozone economies.

January 2002

Euro coins and notes come into circulation

November 2004

Greece admits breaching the Maastricht Treaty

Greece reveals that its budget deficit has exceeded the 3 per cent of GDP limit imposed by the Maastricht Treaty since 1999. The high public deficit is blamed largely on the cost of hosting the 2004 Olympics, which reached €7 billion. However, it can also be attributed to a spending spree upon adopting the single currency.

March 2005

Greece imposes austerity measures

The conservative New Democracy-led government imposes the first of many austerity packages, aimed at bringing the public deficit to 3.5 per cent of GDP by the end of 2005. Alcohol and tobacco prices are the main victims of hefty tax hikes.

April 2009

The EU orders Greece to reduce its budget deficits

France, Spain and Ireland are also told to address their growing budget deficits in the wake of the credit crunch.

October 2009

George Papandreou elected Greek prime minister

The Panhellenic Socialist Movement (Pasok) seizes power after New Democracy calls a snap general election, asking Greece for a new mandate to tackle the financial crisis.

December 2009

Greece's credit rating is downgraded

As public spending rockets, widespread tax evasion and the impact of the global financial crisis takes the rising level of national debt from bad to worse, and Greece admits that its borrowings have reached €300 billion. In response, Greece's credit rating is downgraded from A- to BBB+ first by ratings agency Fitch, then by Standard & Poor's.

March 2010

Papandreou announces a second radical austerity package

Greece's 2009 budget deficit is almost 14 per cent of GDP, and government debt as a proportion of GDP goes over 115 per cent - nearly double the eurozone limit of 60 per cent. In response, Papandreou announces a tougher set of austerity measures, including cuts to public sector pay, a 2 per cent VAT hike, and even higher taxes on alcohol, tobacco and luxury goods. Protests erupt in Athens to protest against the measures.

April 2010

Greece requests a bailout from the EU

On the verge of bankruptcy, Papandreou bows to pressure from the global markets and takes the unprecedented step of requesting a €45 billion (£38 billion) bailout package from the EU and International Monetary Fund (IMF). A 24-hour strike is staged by civil servants to protest against austerity measures and job cuts.

May 2010

Eurozone members and the IMF agree a €110 billion bailout for Greece

Following two weeks of tough negotiations between the IMF, European Commission, and the European Central Bank, eurozone leaders agree to a three-year package, in exchange for further austerity cuts, to prevent Greece from defaulting on its debts and to protect the economic stability of the single currency area. The European Financial Stability Facility (EFSF) is established by members of the eurozone to act as the main bailout fund.

19 June 2011

Papandreou asks for a second bailout

Despite the bailout package and government cuts to reduce the deficit, Greek borrowing costs continue to rise as the economy is pushed further into recession. After Greek debt reaches the equivalent of 150 per cent of Greece's GDP in April, Papandreou is forced to request a second bailout in order to avoid a catastrophic debt default. Greece witnesses a summer of protests as those angry about the impact of austerity take to the streets.

22 June 2011

Papandreou narrowly survives confidence vote

The prime minister survives the test by 155 to 143 votes, giving him a parliamentary mandate to proceed with unpopular fiscal measures and secure the next €12 billion lifeline from the EU.

28-29 June 2011

Greece approves five-year austerity plan

As the Greek parliament votes to implement an austerity plan amounting to €28 billion of new taxes and spending cuts, riots and looting erupt in Athens against the measures.

July 2011

Second Greek bailout is agreed

The eurozone members agree a second comprehensive €109 billion package to resolve the Greek crisis and prevent contagion into the rest of the eurozone, as Spain and Italy are beginning to see their borrowing costs rise sharply. Satisfied by Greece's commitment to its austerity plan, the EU approves the latest tranche of the Greek loan, worth €12 billion.

October 2011

Greek protests escalate

Two general strikes in October are accompanied by violence and looting as Greeks seek to challenge the government's crippling austerity measures.

27 October 2011

European leaders agree comprehensive rescue package

Eurozone leaders reach a deal to write-down Greek debt by 50 per cent by converting the country's existing bonds of debt into new loans in exchange for tougher austerity measures in Greece. In addition, they agree to boost the EFSF, the main bailout fund, from €440 billion to €1 trillion, and to force Europe's banks to recapitalise to the tune of €106 billion. The plan is intended to reduce Greek debt from over 160 per cent of GDP, to 120 per cent of GDP by 2020.

28 October 2011

Military parades disrupted by demonstrators

Crowds of protestors angry about proposed far-reaching austerity measures force a commemorative annual parade to mark Greece's entry into World War One in Thessaloniki to be cancelled.

31 October 2011

Papandreou calls a referendum on the bailout package

In a move that catches eurozone leaders and members of his own Pasok party by surprise, Papandreou announces plans to ask the Greek people whether they accept the bailout deal, which includes more stringent austerity measures. The decision threatens to unravel the rescue package, undermines efforts to encourage China to invest in Europe, and leads to financial turmoil in the world's markets as traders fear a disorderly Grwault.

3 November 2011

Referendum abandoned by Papandreou

Under pressure from eurozone leaders and Greek politicians, Papandreou cancels the referendum.

3-4 November 2011

G20 summit in Cannes troubled by eurozone crisis

Hopes that the G20 would agree to bolster the IMF or the EFSF with more funds are dashed as world leaders fail to agree on the structure, size and contributors to the rescue pots. Leaders discuss the possibility of Greece leaving the euro and express fears that Italy, with debts of €1.9 trillion, or 120 per cent of GDP, will be the next country edging towards a financial bailout, or even default.

5 November 2011

Papandreou narrowly wins confidence vote in Greek parliament

After a speech in which Papandreou promised to start power-sharing talks to form a coalition government to see Greece through the debt crisis, he wins the vote by 153-145.

6 November 2011

Greek leaders agree to form a coalition

Under the auspices of the Greek president, Karolos Papoulias, Papandreou and the opposition leader of the centre-right New Democracy party, Antonis Samaras, strike a deal to form an interim coalition to steer Greece through the crisis.

15 December 2011

Greece receives its next tranche of aid?

Greek Finance Minister Evangelos Venizelos predicts that Greece will need the next €8 billion tranche of aid from the IMF and EU by mid-December, putting intense pressure on the new coalition to reach an agreement on the bailout package.

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