The Greek government has asked the European Union for a bail out. But while global spending to help troubled banking institutions reached $1.5 trillion in 2008/2009, the EU member states appear less than willing to help out their Hellenic cousins. Germany in particular has been vocal in its disapproval and some economists have even suggested that the crisis marks the beginning of the end for the euro.

Maastricht Treaty and the Euro

Greece entered the euro in 2001; it had originally wanted to enter in 1999 but had been denied under the terms of the Maastricht Treaty. The Maastricht Treaty, which led to the creation of the euro, set out a set of convergence criteria that must be met before a country could join. These included:

  • Inflation in a potential euro member must be no more than 1.5% higher than the average of the three best performing member states of the EU.
  • The annual budget deficit of the government must no more than 3% of Gross Domestic Product.
  • The total debt of the government must be no more than 60% of Gross Domestic Product.

The Greeks failed to meet these criteria in the first instance and were admitted two years later, despite doubts by many member states. The doubts proved well-founded – Greece had lied about its debts.