Greece has been surviving since May 2010 on a $150 billion bailout. But its financial crisis was so severe that a second rescue was needed as the country remained locked out of international bond markets by sky-high interest rates and facing an unsustainable national debt increase.
The new European deal, agreed to on Oct. 27 after marathon negotiations, would give Greece an additional $179 billion in rescue loans and bank support. It would also see banks write off 50 percent of Greek debt, worth some $138 billion. The goal is to reduce Greece’s debts to the point where the country is able to handle its finances without relying on constant bailouts.
In return for bailout money, Greece was forced to embark on a punishing program of tax increases and cuts in pensions and salaries that sent Prime Minister George Papandreou’s popularity plummeting and his majority in parliament whittled down from a comfortable 10 seats to just two.