Greece

Over the last decade, Greece went on a debt binge that came crashing to an end in 2010, provoking the biggest crisis yet seen in the move toward European integration that began more than half a century ago.

In December 2009, Prime Minister George A. Papandreouannounced that his predecessor had disguised the size of the country's ballooning deficit. After rounds of deep budget cuts and months of vague pledges of support from the rest of Europe failed to stop the steady rise of the interest rates, Mr. Papandreou in April 2010 formally requested a promised $60 billion aid package, calling his country's economy "a sinking ship.''

But global investors, who had seen Greece's bonds downgraded to junk status, were not reassured, forcing the International Monetary Fund and Greece's European partners to hastily prepare a far larger package. Mr. Papandreou, the scion of a Socialist dynasty whose father helped erect the sprawling Greek welfare state when he was prime minister in the 1980s, prepared Greeks for cost-cutting measures, which included freezing public-sector salaries, raising taxes and slashing pensions.

Three months into a historic rescue program worth €110 billion - about $140 billion at the time, and half of Greece's gross domestic product - the government exceeded the deficit-cutting benchmarks set by the I.M.F. The tough new austerity measures met angry resistance in a country where one out of three people is employed in the civil service, which until now has guaranteed jobs for life. The shake-up of Greece's public sector represents one of the biggest overhauls of the country's welfare state in a generation. Demonstrations claimed their first fatalities on May 5, 2010, with three people reported to have died inside a bank building set ablaze by protesters as workers across Greece went on strike.

Protests became relatively restrained after that. But almost a year after the bailout, the Greek economy continued to sag under 340 billion euros in debt. Greece’s budget deficit for 2011 was expected to be 8.4 percent of gross domestic product, compared with a mandated target of 7.5 percent. In April, yields on government bonds hit a high of 14.3 percent. The tax increases and spending cuts imposed as part of the austerity package have sent the economy headed toward an expected double-dip recession, with some economists forecasting that Greek growth will plunge 2 to 3 percent in 2012 after an expected 4 percent retraction in 2011.

Such a double dip would likely drive unemployment, already around 14 percent, to Spanish levels of around 20 percent and further complicate the Greek government’s task of persuading its citizens to sacrifice more.

New data showed that the slowing growth raised Greece’s deficit to 10.5 percent of gross domestic product in 2010, exceeding the 9.6 percent target set  by the government, while public debt swelled to 142.8 percent of G.D.P., Eurostat said.

All of these factors appeared to feed an emerging view that it makes little economic sense for the monetary fund and the European Union to keep lending money to Greece so that the government can pay back private investors at double-digit interest rates — especially as Greek citizens suffer the effects of a severe austerity program.