European Commission, ECB, and IMF Form 'Troika' and Impose First Greek Bailout with Harsh Austerity

The European Commission, European Central Bank (ECB), and International Monetary Fund form a tripartite committee known as the ‘Troika’ and agree on a three-year €110 billion financial aid package for Greece in exchange for severe austerity measures outlined in a Memorandum of Understanding (First Economic Adjustment Programme). The Troika is led by Servaas Deroose from the European Commission, with Poul Thomsen (IMF) and Klaus Masuch (ECB) as partners. To avoid default, Germany provides the largest sum (€22 billion) of the EU’s €80 billion portion, with the IMF contributing €30 billion. Prime Minister George Papandreou commits to €30 billion in spending cuts and tax increases. The bailout is signed on May 3, 2010, initiating what becomes a devastating cycle of austerity that ultimately requires three separate bailout programs totaling approximately €290 billion ($330 billion) through 2018. From 2010 to 2016, the government enacts 12 rounds of tax increases, spending cuts, and reforms that trigger local riots and nationwide protests. Despite these harsh measures, Greece’s debt-to-GDP ratio climbs to 180%, demonstrating the failure of austerity economics. The European Network of National Human Rights Institutions later condemns the Troika’s policies as violating the Greek constitution and human rights, noting that privatization ‘complicated access to essential public services such as water, sanitation and energy’ while poor Greek citizens are denied healthcare due to government cuts. The IMF’s own hindsight analysis reveals diverging approaches among Troika members, with the Fund eventually advocating for debt relief while the EU maintains hardline positions on repayment and strict monitoring. The Greek crisis becomes a defining case of how international financial institutions use debt crises to impose neoliberal restructuring that enriches creditors while devastating social welfare systems, wages, and public services.