Greece and the economic crisis 2015

NEWS ARCHIVE - Sept 15 - Sept 22

Sept 22, 2015

"Alexis Tsipras moved swiftly to form a new Greek government on Monday after his convincing victory in the national election a day earlier, with some officials close to him suggesting that he would create a new ministry solely dedicated to carrying out the tough bailout package he reluctantly agreed to last summer.

While Sunday’s election consolidated his power and rid his leftist Syriza party of its most rebellious faction, Mr. Tsipras has a daunting job ahead by almost any standard, starting with the need to push through Parliament legislation carrying out widespread changes to business and the economy.

Perhaps the biggest losers in the election were the breakaway Syriza leftists, who formed their own party, Popular Unity, and campaigned urging a return to the drachma rather than an acceptance of new austerity measures. The party got so few votes that it will not even get into Parliament, leaving the former speaker of Parliament, Zoi Konstantopoulou, who is one of the country’s most ardent corruption fighters, on the sidelines. "

"[Tsipras]decision to re-enter coalition with the small right-wing Independent Greeks (ANEL) party has sparked concerns from EU chiefs that a recently-agreed debt deal could soon collapse.

Despite having congratulated Mr Tspiras on his election victory, this morning the president of the European Parliament, Martin Schulz, revealed his fears at Syriza’s continuing pact with a party who were supported by less than four per cent of Greek voters.

Both Syriza and the Independent Greeks spoke against the harsh terms demanded by its European creditors during the election campaign, despite Mr Tspiras supposedly seeking a mandate among Greek voters to implement the deal."

"European Union ambassadors have proposed relocating all 120,000 migrants slated for resettlement from just Italy and Greece with the possibility of changes if other countries should need them, EU sources said Tuesday. The total would include 54,000 Hungary has refused, the sources said.

The proposal was made ahead of a meeting Tuesday of EU interior ministers on mandatory migrant quotas that eastern European countries have so far rejected and an extraordinary summit of government leaders on Wednesday. In the end, the EU interior ministers approved the plan on migrant quotas by qualified majority, given the impossibility of reaching a unanimous accord.

Romania, the Czech Republic, Slovakia and Hungary voted against while Finland abstained."

Sept 21, 2015

Alexis Tsipras Is Elected Again, and Greece Faces an Uncertain Future - NY Times

"Prime Minister Alexis Tsipras of Greece won an unexpectedly decisive victory in elections on Sunday, renewing his mandate to lead the austerity-weary nation. Defying many experts’ predictions of a tight race, his leftist party, Syriza, received just over 35 percent of the vote, beating the main right-leaning opposition party by more than 7 percentage points.

Mr. Tsipras, 41, a charismatic left-wing populist, is expected to waste no time announcing a new cabinet. The heavily indebted country faces huge challenges, including skeptical creditors who will be watching closely to see if the government follows through on promised changes. It must push a slew of tough economic measures in the coming weeks in exchange for crucial rescue funding.

Though Mr. Tsipras succeeded in purging Syriza of radicals who had hampered his progress during his previous term, he still faces deep-rooted opposition to austerity from a population worn out by seemingly endless belt-tightening."

"Tsipras, who had justified the austerity deal he signed in July with European leaders as saving Greece from a chaotic exit from the eurozone, said the election victory would "change the balance" in Europe and strengthen Greece's fight against endemic corruption and hidden wealth.

"We have difficulties ahead," he told supporters. "Recovery cannot come through magic but through lots of work, stubbornness and struggle."

... With 99.66 of results tabulated, Syriza won 35.46 percent of the vote against 28.09 percent for their main rivals, the conservative New Democracy party."

Sept 20, 2015

"Greek voters returned Alexis Tsipras to power with a strong election victory on Sunday, ensuring the charismatic leftist remains Greece's dominant political figure despite caving in to European demands for a bailout he once opposed.

With about a quarter of votes counted, Tsipras's Syriza party was on course to claim 35.3 percent of the vote, easily seeing off his main conservative challengers New Democracy on 28.1 percent.

...Third place in the election looked set to go again to Golden Dawn, a far right party with a swastika-like symbol, with around 7 percent of the vote.

....Apart from Golden Dawn and the communist KKE party, the major parties in the new parliament have now accepted the cash-for-reforms deal to keep Greece in the euro zone."

"Jubilant supporters of Alexis Tsipras's left-wing SYRIZA party cheered, waved party flags and danced Sunday after the party comfortably won Greece's third national vote this year despite a rebellion within his party over his acceptance of a painful third international bailout.

...Meimarakis's campaign had centered on a return to stability. He painted Tsipras as a reckless, inexperienced politician who led the country toward a potential catastrophe and introduced strict banking restrictions in an effort to stem a bank run.

SYRIZA's campaign focused on doing away with the staid and often corrupt politics of the past.

The new government will have little time to waste. Creditors are expected to review progress of reforms as part of the bailout next month, while the government will also have to draft the 2016 state budget, overhaul the pension system, raise a series of taxes, including on farmers, carry out privatizations and merge social security funds."

"Greece has held its fifth general election in six years, with a tight finish predicted between the left-wing Syriza party and conservative New Democracy.

Initial exit polls suggested a slight lead for Alexis Tsipras's Syriza.

The snap election was called after Syriza lost its parliamentary majority in August.

Mr Tsipras's popularity plummeted after he agreed a new bailout deal with European leaders.

The bailout involved austerity measures which Syriza had vowed to oppose.

A combined exit poll from five TV stations suggested Syriza would get between 30% and 34% of the vote, with New Democracy securing between 28.5% and 32.5% but the exit polls have in the past been unreliable."

Sept 18, 2015

Polls swing towards Syriza as campaigning ends - Reuters

"Tspiras has pointed to what he sees as Syriza's success in getting the EU to consider ways of easing Greece's debt burden. "We fought the battle until the end and won ground for the country ... because there will be a negotiation for debt reduction," he said.

EU sources have told Reuters that euro zone governments, Greece's biggest creditors, are ready to cap the country's debt servicing costs at 15 percent of GDP annually over the long-term as part of the promised debt relief to help the economy grow.

New Democracy, meanwhile, has been keen to highlight perceived credibility issues under Syriza, which swept to power in January on the promise of ridding the country of bailouts, only to agree to stringent new austerity terms six months later. "

"The election is looking unexpectedly close. Popular Unity, a group of Syriza's most left-wing members of parliament, quit the party and is running separately. Now the remaining Syriza MPs are pretty much neck and neck with New Democracy, the centre-right party that held government previously.

Europe has already won this election, and the brunt of the next government's programme has been decided in Brussels already. International headlines have disappeared, and Athens is no longer the centre of attention for global financiers.

Europe has even moved on to a new crisis.

Things are no doubt more stable in Greence than they were ealrier this year, but the actual debt deal doesn't seem any more likely to be implemented by whichever side wins on Sunday.

The country's tremendously large privatisation programme will be a huge millstone even for a centre-right government, let alone for a party like Syriza."

"Like all politicians, Greek politicians love a stage. And this week, in the run-up to Sunday’s election, the scene was set with scaffolding, billboards and loudspeakers being erected at seemingly record speed in the squares of central Athens.

On Thursday night, it was Vangelis Meimarakis, the veteran conservative recently catapulted to the helm of the New Democracy party, addressing the crowds in Omonia square. “Let’s take Greece forward,” he exhorted supporters, many sullen, glum-faced and wide eyed as they went through the motions of roaring approval, waving flags and honking horns. “The lies are over. The Syriza experiment is over.”

Up the road, in the cavernous tent serving as Syriza’s central campaign booth – adorned with posters of the leftist leader and former prime minister Alexis Tsipras – the mood was not much better: where hundreds may once have thronged, it was now only dozens of mostly young party members glowering behind sunglasses.

...Yet, despite the ennui, few elections will be as decisive. In the great arc of crisis that has hit Greeks since the eruption of their country’s debt drama, Sunday’s poll is a potential turning point, a fork in the road that could put Europe’s most volatile state back on the path to normality. With the race too close to call – polls have Syriza and New Democracy neck and neck – concerns that Greece could once again be plunged into political uncertainty are on the rise."

Greece’s Century-Long Subjugation - Politico

Long article chronicling Greek and European relations through the most significant recent events of Greek history starting from Greek Independence.

"With the next round of national elections coming up Sunday, Greek voters are casting around for a new champion to defend them against European bankers following the left-wing SYRIZA Coalition’s abrupt concessions last spring. But the Greeks have been without an effective champion for far longer than most people realize. Many critics trace what Greece is going through today—debt crisis, infighting, panic, economic devastation and above all the manipulation of the nation’s fate by larger European powers—to the start of the Eurozone a decade and a half ago. In fact these problems go back nearly two centuries to the very beginnings of the Greek state, which was founded in 1830. Earlier this year Alexis Tsipras, the leader of the SYRIZA Coalition, gave his acceptance speech as prime minister at the University of Athens standing directly below an image of King Otto, a Bavarian prince imposed on Greece in 1832 by the European powers of Great Britain, France and Austria Hungary, with an assist from Russia, to protect their interests. It is hard to escape the symbolism of that image—of Tsipras and Otto in the same picture. The history of King Otto’s curious reign, and Tsipras’ massive problems today in facing down the European institutions, have many discomfiting parallels

....All during this time, Greece continued to pursue the Great Idea, sinking the country into the red again and again. From 1900 to 1922, the Great Idea entered into two new phases. In the first, Greece emerged victorious in the Balkan War of 1912. Although it incurred additional war debt, Greece nearly doubled its territory into what is now northern Greece made up of parts of Epirus, Thessaly, Western Thrace and the important commercial cities of Thessaloniki and Kavala. These areas had arable land and were rich in agricultural production, increasing revenues to the Greek state enough to offset at least some of the war loans. But the other phase was an abject disaster for Greece. Following the end of the First World War, Greece sought to redeem the ethnic Greeks who lived in and around the commercial cities of Asia Minor and Eastern Thrace, which are today in Turkey. The army that Greece sent into Asia Minor was decisively defeated by the forces of the nascent Republic of Turkey. Under the treaty ending the war, Greece was obligated to exchange ethnic populations with Turkey. About 1.2 million ethnic Greeks and other Orthodox Christians were forced to leave Turkey and settle in Greece. About 500,000 ethnic Turks and Muslims were forced to leave Greece and settle in Turkey. The Greek economy, which was already exhausted from ten years of continuous war, had to absorb a refugee population which was almost one fourth of its then population."

Sept 17, 2015

Greece in the Middle as Europe Is Divided on Refugee Issue - Greek Reporter

"The Hungarian government has accused Athens for not taking all necessary steps to prevent the migrant influx, thus causing problems to fellow EU countries.

The Greek Ministry of Foreign Affairs in Athens has responded to the accusations. Spokesperson Constantinos Koutras commented that the behavior of Hungarian authorities towards the refugees – even babies – who are experiencing the drama and misery of war, is “unacceptable.”

Koutras stressed that “the use of violence, patrols with machine guns and pushing innocent war victims into Balkan minefields do not constitute behavior that belongs to a member state of the European Union.”

The foreign ministry spokesman also said that Greece has done everything humanly possible to tackle the “unprecedented refugee crisis” and added that this crisis requires “humanity, cooperation, solidarity and coordination with the European partners”.

"...Take farmers, who enjoy a 13 percent income tax — half the rate at which Greek businesses, and most Greeks, are taxed. They also receive diesel oil subsidies and cheaper electricity. No wonder thousands of Greeks who may be only tangentially employed in the agriculture sector identify themselves as farmers.

With the new agreement, the government will increase the tax rate to 26 percent, phase out subsidized diesel and tighten requirements to ensure that benefits go only to those who genuinely live off the land. The adjustment process will be harsh, but the result will be fairer.

Prior to the latest bailout, Greece capped the shelf life of “fresh” pasteurized milk at seven days, well under the 10-day European Union average. This made importing milk impractical: In 2011, the price of fresh milk in Greece was 35 percent above the E.U. average, according to the O.E.C.D. The new agreement abolishes the rule setting the shelf life of fresh milk. The resulting shift to cheaper imports may increase competition for Greek farmers, but should benefit consumers."

"Greece's jobless rate fell to 24.6 percent in the second quarter from 26.6 percent in the first three months of the year, data from the country's statistics service showed on Thursday.

The highest rate had been 27.8 percent in the first quarter of 2014. About 71.4 percent of Greece's 1.16 million jobless are long-term unemployed, meaning they have been out of work for at least 12 months, the figures showed."

Sept 16, 2015

National Bank Of Greece (ADR): ECB Reduces Funding Ahead Of Elections - Bidness

"Ahead of the crucial Greek elections scheduled for September 20, Europe’s central bank has consistently been reducing its funding to crippled Greek banks, as per data released by Greece’s central bank on Monday. The European Central Bank (ECB) cut its emergency liquidity assistance (ELA) to Greek banks by 1.35 billion euros during August. The cut holds substantial significance with its timing as even a meager withdrawal in its lifeline prior to election day sends a positive signal to investors on the state of Greek banks. It also signals that capital controls placed on Greek banks, worked in their favor, and helped ease deposit outflows.

...Separately, in a recent article published on Bloomberg, reservations were placed on ECB’s assessment of lender capital needs. The article cites U.S. billionaire investor, Wilbur Ross, as stating that the ECB’s approach toward Greek banks could potentially be too conservative; consequently, placing an inflated and unnecessary burden on tax payers to finance Greek banks. It implies that ECB’s pessimistic stance in miscalculating the amount of capital required by Greek banks has caused taxpayers to pay out a much larger fraction to help Greek banks."

"Greece would be much better off if the government could collect the taxes owed by the self-employed. That's the lesson from a paper released this month that uses an innovative method of capturing tax evasion.

...Estimating shadow economies is tough. Friedrich Schneider of the Johannes Kepler University of Linz in Austria, Europe's leading authority on the subject, has pointed out that none of the accepted methods is completely reliable. For example, comparing expenditure and income statistics isn't ideal because the results are distorted by omissions and errors in national accounts; and using indicators such as electricity consumption doesn't take into account shadow sector activities that don't require much energy."

"Greece's two dominant politicians on Monday ruled out working with each other in a coalition, casting doubt on whether a stable government will emerge from an election that polls indicate neither of them can win outright.

In the final televised debate before Sunday's national ballot, leftist Syriza party leader Alexis Tsipras and his conservative rival Vangelis Meimarakis said they would broadly honor the country's bailout commitments while fighting to cushion their impact.

Meimarakis said Syriza was welcome to join his New Democracy party in an alliance, as Greeks sought the stability that would come if both parties - running neck-and-neck in opinion polls - worked together.

"We can have a national team not only in the governance of the country, but also a national negotiating team (for the bailout)," he said. But he ruled out sharing power with Tspiras."

"At least three cruise lines have changed their itineraries in Greece to avoid the island of Lesbos, where some 20,000 migrants from the Middle East and Africa are living in camps.

Regent Seven Seas Cruises and Oceania Cruises began altering their scheduled stops at Lesbos on Sept. 6 and then announced they would skip all remaining calls at the island this fall. The Regent Seven Seas Cruises ship Mariner will skip Lesbos for a day at sea on Sept. 17 and a stop in Kavala in northern Greece on Sept. 29. Its ship Voyager will also visit Kavala on Oct. 29 rather than Lesbos. The Nautica from Oceania Cruises will make the same swap on Oct. 6."

"Both Syriza and New Democracy are committed to keeping Greece in the eurozone under the new terms of an €86bn three-year rescue package.

The conditions set out by its creditors - the European Central Bank, European Commission and International Monetary Fund - are widely seen as the most intrusive and punishing set of measures ever imposed on a debtor nation in the eurozone's history.

They include the privatisation of €50bn of Greek assets to help pay back its debts, slashing pensions, and handing over of a veto power on domestic laws to Brussels."

Sept 15, 2015

"Greece's conservative New Democracy party received a 27.5 percent support rate, narrowly beating leftist Syriza party's 27.0 percent, in the latest poll by Pulse for Action 24 TV, days ahead of Sunday's general election.

Tuesday's poll, collated on Monday and Tuesday, was the first to take account of voter reactions to the final televised head-to-head debate between the parties' leaders, Vangelis Meimarakis and ex-prime minister Alexis Tsipras, on Monday night."

"Greek leaders presented their goals during a highly charged televised debate Monday night, in advance of the Sept. 20 general election for prime minister. The election was forced when former Prime Minister Alexis Tsipras resigned in August, trying to quell a rebellion and win a stronger mandate to push through tax hikes and spending cuts agreed under the €86 billion ($97.3 billion) bailout he initially opposed.

With Sunday's national ballot looming, the marathon event was an opportunity for voters to draw more conclusions about the candidates' positions. The spotlight was on the top two contenders: Former Prime Minister Alexis Tsipras of the Syriza party, and Evangelos Meimarakis, who heads the conservative New Democracy (ND) party.

...Meimarakis urged Greeks to vote for his party to complete the work that was left unfinished when Greece headed to early elections in January. "We brought investments, and Tsipras chased them away," he said, stressing the need for growth-boosting policies to turbocharge the recession-hit economy."

"The last time Greeks went to the polls, global markets tumbled. While Greece’s general election isn’t being as closely watched as that bailout referendum, this summer has taught us to be wary of events out of Athens. So should investors worry about the vote on Sunday?

Probably not that much, says Heather McArdle at S&P Dow Jones Indices.

She points to a recent drop in the yield for a key Greek bond index, which the chart below shows. That indicates investors in the debt-laden nation’s bonds have been willing to accept increasingly lower compensation for the risk that they’re incurring, rather than demanding more as the election nears."

"The question that kept Europe on the existential edge of its seat earlier this year asked whether Greece's economic dysfunction was so severe it should be ejected from the Euro Zone, the select group of European Union countries that share a common currency.

But the ongoing torrent of immigrants washing over Europe, and Germany's announcement Sunday it was reimposing border controls because of them, raise equally troubling questions about Greece's membership in another exclusive club, the Schengen Zone, where border checks between its 26 members no longer exist.

Has Greece, the easternmost portal to a borderless Europe, done its job to protect the continent's southeastern flank? And if not, should it be kicked out of the Schengen Zone before Europe's historic experiment with seamless internal travel collapses?

...Kicking Greece out of Schengen could be difficult. No mechanism exists for ejecting a member -- indeed, all new EU members are required to join after they prove they can live up to Schengen's requirements. It would also be unfair.

Greece is just the poster child for an open-border system that suffers from a major weakness. Because while the consequences of a porous external border affect all Schengen members, the burden of actually patrolling it falls to the individual states on the periphery, like Greece. In extremis, these states can call on centrally funded Schengen institutions for assistance."

NEWS ARCHIVE - September 2015

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