Chapter 6 examines severe and protracted economic contractions following the Great Recession of 2008–09 in two countries on the European periphery: Latvia and Greece. It documents the evolution of main macroeconomic aggregates and social indicators in these two countries before, during, and after the 2008–09 crisis. The chapter also critically examines the role played by the International Monetary Fund (IMF) and other European institutions in the design and implementation of austerity in these economies, and draws lessons for other nations from these two experiences. The chapter also discusses the futility of democratic consultation (referendums) in Greece for the amelioration of conditionality and austerity.

Slovenia has long been cited as a success story among the post-socialist countries due to the successful political management of multiple transitions, including the creation of an independent state and joining the European Union (EU) in 2004. However, the national political elite not only failed to formulate further developmental goals for Slovenia, but also proved incapable of effectively managing Slovenia’s socio-economic development in the context of full integration into the EU, which brought about a high availability of external finances. This, and particularly extensive borrowing of external money in mismanagement of the impacts of the international financial and economic crisis turned Slovenia into a country dependent on external loans and thereby also subordinated to policies dictated by external actors. Although Slovenia has been recovering from the economic crisis, the political crisis in the form of a series of early elections and complete de-institutionalization of a party system continues.