In early 2010, then Prime Minister George Papandreou concluded that the state of Greek public finances was so dire that the country could not hope to borrow on global markets, and thus could no longer service its public debt.
Contrary to prevailing notions, Greece’s problems did not stem from high-wage Greek workers, nor was it simply the result of a spendthrift state: Greek wages are only about 83 percent of prevailing levels across the EU15 (i.e. the countries that were members of the European Union prior to the expansion of 2004), while as a percentage of the national GDP, per capita public expenditures are just about average for the bloc. Rather, the Greek financial crisis stemmed from the strategy of the national ruling class and the way it integrated into the international division of labor, especially with Greece’s accession to the European Economic Community (EEC) in 1981 and the European Monetary Union in 2002. The inability of Greek capitalism to compete on the terms set by the single currency led to a collapse in GDP with a consequent increase in the debt-to-GDP ratio.