Historical Context

First memorandum

In January 2019, the increased borrowing needs of Greece, which signalled the concept of ‘public debt crisis’, led the rating agency Standard & Poor's to downgrade the country's credit rating from A to A–. Under such pressure, the prime minister of Greece, K. Karamanlis, affiliated with New Democracy (ND) (the Greek right-wing party), announced early elections for 4 October 2009, where PASOK (the Greek centre party) emerged as the winning party with a percentage of 43.92% with the party leader G. Papandreou uttering the characteristic words ‘The money's there’. Sixteen days later, on 20 October 2009, the – at the time – Minister of Finance G. Papakonstantinou announced to ECOFIN that the deficit for 2009 would be around 12.7% as a percentage of GDP and not 6%, as had been calculated by the previous government of ND. At the same time, on 22 October, the rating agency Fitch downgraded Greece's credit rating from level A to level A– and on 8 December, from A– to BBB+. Eight days later, the Standard & Poor's agency downgraded Greece from status A to status BBB+ and, on 23 December, the Moody's from level A1 to level A2. At the same time, the European press appeared to be aggressive towards Greece (see the cover of the German magazine Focus, on 22 February 2010, with the title ‘Swindlers in the Euro Family’ and the statue of the Goddess Aphrodite (Venus de Milo) ‘making an obscene gesture’ against Europe or the cover of The Economist reminiscent of the movie Apocalypse Now with the modified title Acropolis now, which depicts the Acropolis surrounded by military helicopters and Angela Merkel on the right side of the cover next to the subtitle ‘The horror, the horror’). In this context of solid European pressure, Greece was called upon to comply with the European labour market reform and fiscal consolidation, which has begun since the 1990s, with the main aim of strengthening competitiveness.

Second memorandum

Following Papandreou government's first memorandum and the severe social unrest, Papandreou resigned. Before that, he had announced a referendum on the new loan agreement that was cancelled four days later, following the stance of the European partners, who jointly decided that in the event of a referendum, the question should be whether Greece will remain in the EU or not.