GD Topic - Germany vs. Greece – A Relation Went Sour

Published by MBA Skool Team, Last Updated: June 30, 2018

6 people are having a discussion on the topic (Amanda, Brooke, Claire, Dustin, Ellen, Frank)

Category: Politics

Group Discussion Starts

Amanda: Well, to start with, it’d be good to point out that the relationship between Greece and Germany was always sour. It goes way back in history with the Holy Roman Empire and Adolf Hitler

Brooke: Now that you mention it, when the Germanic Roman Empire wanted Greece to pay its dues, it had kept the port of Piraeus as collateral. Funnily enough, under the EU bailout plan, Germany wants to keep 50 billion euros worth assets as collateral, including the Port of Piraeus

Claire: Talking about the bailout plan, I feel that Germany, as the pre-eminent leader of Europe, needs to step in to save Greece, as it is the basis of all western civilization

Dustin: I think that rather than using cultural and historical reasons that economists don’t care for, we need to use statistical data. Since the Euro came into being, Germany has been the largest beneficiary at the cost of others like Greece. This is because their currency is relatively devalued while that of Greece is relatively overvalued for their economic output.

Ellen: While that’s a good point, you must also consider that Greece has a history of  going back on its promises after it receives money from IMF or Germany. Therefore, on ethical grounds, they do not deserve another round of bailouts as they will refuse to restructure the economy yet again

Claire: I disagree quite sharply with your statement, I think on ethical and humanitarian grounds, Germany needs to step up to save their Greek brethren.

Image: pixabay

Frank: Rather than pinning the blame on someone, I would like to bring in a systems perspective. The Euro was destined for failure. As the countries were governed by the same monetary policy, but different fiscal policies, it encouraged fiscal carelessness as interest rates remained constant no matter how ridiculous the government debt was.

Brooke: Yes, and the only way to rectify the situation is to give the ECB the power over fiscal policies too

Amanda: I do not agree to that, as giving up fiscal policy will mean an almost total surrender of sovereignty, which will lead to a United States of Europe. And no European country is going to agree to that.

Dustin: I think the situation can be peacefully resolved with a Grexit, where Greece could go back to the Drachma and Eurozone will be stable again

Claire: But that would imply a failure of the European experiment. Disharmony will be back in Europe, and already Russia seems to be eyeing the situation hawkishly to take advantage wherever there is an opportunity

Frank: Whatever the solution may be, it cannot be implemented until Greece is held accountable for its actions. Greeks must stop evading taxes, and if the want to continue borrowing at Germany-like lending rates, they must spend at Germany-like fiscal surplus

Ellen: Yes, at the same time, Grexit is not a realistic solution, at it will crumble everything that has been worked for over the last few decades. He correct solution has to be within the European framework.

Brooke: I agree, the policy of austerity has worked brilliantly in Iceland and Ireland very recently, with Ireland recording a growth of 6.5% in the most recent quarter.

Amanda: I think we can all agree to that.


The solution to the Greek crisis is not a Greek exit for the Eurozone (Grexit), but staying within the zone and improving productivity while eliminating wasteful public spending a la Ireland.

Facts related to the topic:

• Euro destined for failure (Fiscal vs Monetary Policy)

• Stricter control will reduce sovereignty

• Bailouts are a Germany responsibility as Germany was the biggest beneficiary of Euro

• Greece went back on its commitments in exchange for money- which makes further bailout hazardous for creditors

• Other countries have resolved similar problems using effective spending cuts

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