Conversation with the Greek Consul General: The Greek Financial Crisis

This summer, I have an internship at the Consulate General of Greece in Los Angeles. If you are curious, I have no ties to Greece (and I don't speak Greek). I got this internship because many countries require their interns to be over 18 or in college already, but Greece needs the help. A consulate performs many different functions, many of which are just appointments and office work. For example, some of our most popular services are visas, power of attorney, and Greek citizenship. I, as an intern, answer phones and emails and help people when they come into the office. However, when I have a free moment, the Consul General himself is kind enough to invite me into his office to discuss whatever I would like.


A Consul General is a professional diplomat who has duties similar to an Ambassador, but outside of a country's capital. In my time here at the Consulate, I am still not entirely sure what the exact job description of a Consul General is, but it includes attending diplomatic events, (such as the anniversary of Peruvian independence) reporting back to the Greek government on political activity (such as the German President's visit to California), and overseeing office proceedings.

Hon. Consul General Gregory Karahalios

Of course, one of the first topics I asked to discuss with the Consul was the Greek financial crisis. I had already researched it, but because I don't speak Greek, I only had the perspective of the English-speaking world. The Consul presented whole new ideas and highlighted the practical consequences of the crisis. My notes (not a transcript) of his account of the crisis are as follows.

When Greece entered the European Union in 1980, the economy was not strong enough for this drastic change. Other EU countries pumped in money to Greece and some of the other countries whose economies were not very strong. The EU gave the money to the Greek government to spend on infrastructure and other projects, but there was minimal oversight and the funds were terribly misused. Because of the influx of cash, there was a facade of wealth with no true growth.

Meanwhile, there were scandals surrounding the Prime Minister, which split the support of the people. Many people lost trust in the Greek government. The Greek stock exchange was essentially in a bubble, and because people thought the economy was booming, they put all their money in stocks. Then, the stock exchange crashed. People lost their retirements and savings, and the PM tried a last-ditch effort to use pension money as a way to restart the economy.

Prime Minister George Papandreou

In 2004, there is a new government in Greece. They hosted the Olympics in Athens, which was intended to bring in money. However, the new Prime Minister realized that they were in too much debt. Incoming money was not spent correctly, no austerity measures were taken, and the government went further into debt. In the election for Prime Minister in 2009, the incumbent acknowledged the financial crisis while his opponent did not. The opposition, George Papandreou (son of the scandalous previous PM), won.

At this point, the crisis officially starts. The European Central Bank and the IMF provide funds, but that means they essentially control Greece. In a panic, many Greeks withdrew their money from the bank, which crippled the banking system. The money from the ECB andn the IMF is used to save the banking system. The ECB and the IMF imposed strict austerity measures, such as raising taxes to 40-45% of income, cutting salary and pensions, and restricting bank withdrawals. These restrictions are hugely impactful for the Greek people.

Eventually, with these extreme cuts, the economy is balanced and the crisis is officially over. But, while the government is in a primary surplus at the moment, the economy is much smaller than it once was and many people continue to feel the effects through their personal finances. People lost their jobs and huge sections of their income. And, with low incomes and unemployment comes low spending. The EU and the IMF still largely control the country.

So, who was at fault and why? The Consul argued that blame should be shared between the EU countries for pumping money into Greece without regulation and the Greek government for mismanagement of funds. He also maintained firmly that the country was not healed and the crisis was not over. When asked about the future, the Consul highlighted various unpredictable factors that could easily throw Greece into disarray (such as conflict with Turkey). Nothing is in place to prevent something like the crisis from happening again, and the future of the Greek financial system is unknown.

I am very grateful to the Consul for taking the time to explain the crisis to me, including the intangibles you can't find in an article done by an outsider. When I first researched the crisis, I didn't think twice of the austerity measures, but the Consul called to my attention the effects on the public. The consulate I work in is a representation of the austerity measures. There are about eight offices in the consulate, and yet only four are filled. But, it’s not as though the consulate has been restructured or made more efficient. When I started, there was a backlog of 150 emails and we had no available appointments until September. Oh, and all the appointments were made in a literal, physical BOOK. Huge numbers of people’s emails were getting lost because the consulate was understaffed and overworked, and these are people who are literally trying to go and spend money in Greece, where tourism is the country’s biggest industry. Yes, on paper, the austerity measures seemed to quell the crisis, but in practice, they are often counterproductive. The Consul continued to point out the often-overlooked consequence of public sentiment, which now is distrusting of the government and worn out by years of huge hits on their personal finances. This conversation with the Consul served as a reminder that social issues are inextricably intertwined with economics and governmental policy.

Long story short, that's why my internship this summer is unpaid.