	Introduction

Since 2009, Greece has grappled with a serious debt crisis. Most economists believe that Greece's public debt, 180% of Greek gross domestic product (GDP),  is unsustainable. The ramifications of the debt have been felt throughout the Greek economy, which contracted by 25% from its pre-crisis level. One in five Greeks is unemployed, with youth unemployment at nearly 50%, and the Greek banking system is unstable. The European Central Bank (ECB) has taken unprecedented policy measures in response to the crisis. More broadly, the crisis has exposed problems with the institutional architecture of the Eurozone, whose member states share a common currency and monetary policy, but retain national control over fiscal and banking policies. Even as Greek and European leaders have reiterated throughout the crisis their commitment to keeping Greece in the Eurozone, some analysts argue that Greece exiting the Eurozone and adopting a national currency ("Grexit") could provide the government with greater autonomy and flexibility for responding to the crisis. Analysts argue that the resulting, fraught debates among European leaders about the appropriate crisis response have heightened political tensions to a degree that could negatively affect the EU over the longer term. In terms of impact on the U.S. economy, Greece is a small economy, accounting for 2% of Eurozone GDP, and the direct financial exposure of the United States to Greece is limited. Broadly speaking, they fell into three major categories: (1) extend a third financial assistance package and require additional reforms in Greece, while keeping Greece in the Eurozone; (2) have Greece exit the Eurozone, either through a unilateral decision by the Greek government or a negotiated temporary suspension; or (3) keep Greece in the Eurozone, but provide more flexibility to the Greek government in terms of debt relief and reforms. In the short term, the July 2015 agreement helped stabilize the economic situation in Greece. Recent Developments

Although the third package stabilized investor panic about a possible Greek exit from the Eurozone through 2016, continuing disagreements between the Greek government and European creditors repeatedly delayed disbursements of funds to the Greek government. Greece needs these funds to make a €6.3 billion (about $6.7 billion) debt payment falling due in July. If an agreement cannot be reached, Greece may  again default  on its debt. In current negotiations over financial assistance, a key issue is the role of the IMF. The IMF left open the possibility of participating if Greece agreed to a comprehensive set of reforms and Eurozone governments agreed on substantial debt relief for Greece. It is also asking European creditors to grant debt relief for Greece. Implications for the United States

Europe is an important economic and political partner of the United States, and the impact of the crisis in Greece on the United States has been a key issue for Congress over the past seven years. Proponents of the IMF programs in the Eurozone point out that the programs are consistent with the IMF's mandate of maintaining international monetary stability; the IMF has lent to developed countries in the past, if not recently; and that as a member of the IMF, Greece is entitled to draw on IMF resources. The EU is not only the largest U.S. trading and investment partner, but the institution and its member states are key U.S. allies on a range of global challenges, including Russian aggression in Ukraine, the Iranian nuclear program, and instability and terrorism in the Middle East and Africa. Political tensions in Europe and a focus on the Greek and broader Eurozone crisis arguably has and could continue to prevent the EU from focusing more intently on these and other key U.S.-European policy priorities.
Crisis Overview
Since 2009, Greece has grappled with a serious debt crisis. Most economists believe that Greece's public debt, 180% of Greek gross domestic product (GDP), is unsustainable. The ramifications of the debt have been felt throughout the Greek economy, which contracted by 25% from its pre-crisis level. A fifth of Greeks are unemployed, with youth unemployment at nearly 50%, and the Greek banking system is unstable. Although other Eurozone governments, the International Monetary Fund (IMF), and the European Central Bank coordinated a substantial crisis response, Greece continues to face serious economic challenges.
The economic crisis in Greece is also one of several major challenges currently facing the 28-member European Union (EU) that have heightened concerns about the legitimacy and structure of the EU and its institutions and raised questions about the bloc's future shape and character. Acrimonious debates among European leaders about the appropriate response to the Greek crisis and other challenges have heightened political tensions in Europe that could negatively affect the EU over the longer term. In particular, the crisis in Greece has exposed problems with the institutional architecture of the Eurozone, whose member states share a common currency and monetary policy, but retain national control over fiscal and banking policies.
Recent Developments and Outlook
In the short-term, attention is focused on whether the Greek government can make €6.3 billion (about $6.7 billion) in debt payments falling due in July. The Greek government and European creditors are in negotiations to unlock disbursements of financial assistance to the Greek government that would allow it to make the July repayments. If an agreement cannot be reached, Greece may again default on its debt.
A key issue in current negotiations is the role of the IMF. The IMF did not participate in the third rescue package for Greece, but left open the possibility of doing so at a later date. The IMF is pushing the Greek government to implement pension and tax reforms and pushing European creditors to grant debt relief to Greece.
After seven years through the crisis, how the crisis will ultimately be resolved remains unclear. Possible scenarios could include (1) Europeans continue to "muddle through" the crisis, providing financial assistance to Greece in exchange for reforms, while keeping Eurozone membership in tact; (2) Europeans provide greater flexibility to Greece on debt relief and reforms, allowing Greece to grow out of the crisis while maintaining membership in the Eurozone; or (3) an eventual splintering of the Eurozone, with Greece choosing or being forced to leave the euro in favor of a national currency ("Grexit").
Issues for Congress
Impact on the U.S. Economy: Although direct U.S. exposure to Greece is limited, Europe as a whole is a major economic partner of the United States. The pace of economic recovery in the Eurozone and in Greece is expected to pick up, albeit at a still relatively low rate, but should ease some of the pressure on financial stability and on the dollar.
IMF Involvement: Some analysts criticize IMF involvement in Greece, particularly extending large loans when questions surrounded the sustainability of Greek debt. Other analysts argue that IMF programs in Greece were critical for stemming contagion and ensuring stability in the global economy.
U.S.-European Cooperation: The United States looks to Europe for partnership in addressing a range of global challenges. Political tensions in Europe and a focus on the Greek crisis could prevent the EU from focusing more intently on other key U.S.-European policy priorities, such as deterring Russian aggression in Ukraine and Eastern Europe and responding to conflict in the Middle East and North Africa.