Germany Profits From Greece’s Hardships

As Greeks suffer in multiple ways the effects of the economic crisis their country is going through, Germany has profited handsomely from the Greek crisis.

A view of Greece’s capital, Athens, with the acropolis hill in the background, on Nov. 28, 2013. Louisa Gouliamaki/AFP/Getty Images

As Greeks suffer in multiple ways the effects of the economic crisis their country is going through, Germany has profited handsomely from the Greek crisis. This is a conclusion of research carried out by the Halle Institute for Economic Research (IWH). The study shows that the Greek debt crisis resulted in a reduction in German bund rates of about 300 basis points (BP). This led to interest savings of more than 100 billion euros ($1.10 billion) (equivalent to more than 3 percent of gross domestic product (GDP) during the period 2010 to 2015.

According to the study, Germany would still benefit if Greece defaults on all its debt. The savings would still be substantial if Greece does pay or pays at least in part. This is the result of investors’ increased demand for German bonds because of the greater safety they provide. Many investors would lend money to the German government at extremely low rates rather than risk losses on higher return enterprises.

The Greeks have paid dearly for the country's troubles—a mixture of its own leader's corruption and inefficiency and international corruption and inefficiency.