Greece and the economic crisis 2016

NEWS ARCHIVE - April 19 - April 30

April 30, 2016

"Yanis Varoufakis, the former finance minister and longtime economics professor, says Europe is “confusing butchery for surgery” by continuing to demand crippling austerity policies, also known as structural reforms.

“Greece is being trampled upon,” he said in an interview on Democracy Now. Varoufakis accused the Troika of trying “to turn Greece into a desert” and condemned the past three bailouts as money-making opportunities for German and French banks.

He also slammed the Obama administration for continuing to support this “cruel, self-defeating, irrational, inefficient, mind-blowingly inane austerity.”

"Germany took in more than one million migrants last year. But the number of arrivals has slowed significantly after border clampdowns were imposed by Austria and other countries along the migrants' main Balkans route northwards from Greece.

"Even if the refugee situation has eased at internal borders along the West Balkan route, we look with concern at the developments on the external borders of the Union," De Maiziere said in a statement."

April 29, 2016

"The International Monetary Fund has lost patience with the strained math of the Greek bailout plan. It is refusing to lend Greece any more money, unless either the country enacts extra austerity to guarantee a high budget surplus, or eurozone countries led by Germany write down a lot of what Greece owes them.

...The IMF is convinced that previously negotiated austerity measures will leave Greece short of its agreed target—a budget surplus before interest of 3.5% of GDP in 2018—by two percentage points."

"Those who thought the situation in Greece was solved after prime minister Alexis Tsipras suddenly caved in to creditors’ demands need think again.

Greek tax revenues are running well under expectations. A default looms in July unless the creditors give more money to Greece so that Greece can pay back the creditors. As convoluted as that sounds, that’s precisely the way this madness works."

"We are 99 percent of the way there, we have converged on almost all aspects," European Commissioner for Economic and Financial Affairs Pierre Moscovici said on Thursday on the original reform package, which includes a pension and income tax reform, a way to deal with bad loans and setting up a privatization fund.

"As for the contingency mechanism, which in our view is not really justified by data but politically necessary, let's work on that," he added."

April 28, 2016

"A meeting to discuss Greece was due to take place Thursday but was canceled due to a lack of progress in identifying the necessary Greek government reform actions. Now, an extraordinary meeting of the Eurogroup is expected to be held ahead of a scheduled gathering on May 24.

A major stumbling block between Greece and those overseeing its third bailout program – the Eurogroup, European Central Bank, European Commission and International Monetary Fund (IMF) – is what happens if Greece fails to meet its fiscal targets by 2018."

"Speaking on TV, Stournaras said it's only the IMF asking for contingency measures and a deal is a matter of days away."

"Despite the progress made in the talks, the economy is deteriorating. Indicative of this is a growing inability to pay taxes. Today outstanding tax debts exceed 87 billion euros. At the end of 2012 they were at 55.1 billion.

...The government cannot undertake the burden of what creditors demand, and the creditors, in turn, appear disinclined to help out. "

"...The German FinMin, Mr. Schaeuble also rejected the idea of an extraordinary EU summit as there is not sufficient progress in the negotiations between Greece and the Institutions."

April 27, 2016

"The head of the European Union is resisting Greece's demand for an emergency leaders' summit on the country's troubled bailout program, arguing that finance officials need to resume talks and agree within days on reforms needed.

Greek Prime Minister Alexis Tsipras spoke Wednesday with European Union Council President Donald Tusk to propose the meeting of leaders from the 19 European countries that use the euro currency. But Tusk sounded skeptical, arguing the finance ministers should make more progress before the leaders intervene."

"Tusk said he had discussed the matter with Greek Prime Minister Alexis Tsipras, who on Tuesday had said he wanted a special summit of euro zone leaders to discuss Greece's third bailout. Tusk chairs EU summits and would be responsible for calling one on Greece.

"I am convinced that there is still more work to be done by the ministers of finance," Tusk told reporters."

"A senior European official says Greece has failed to reach a deal with bailout lenders before a May 1 target date set by Athens.

...The delay is a setback for Greece's leftwing Prime Minister Alexis Tsipras who is seeking improved bailout repayment terms to try and revive the country's stagnant economy."

April 26, 2016

"The impasse is the latest in a saga of troubled talks. The Greek government and the International Monetary Fund are at loggerheads over how to find up to €3.6 billion ($4 billion) in so-called contingency measures, or additional austerity, if Greece misses its budget targets.

...Greece’s government coffers are emptying rapidly and the remaining cash reserves in the public sector will probably run out in June, according to some European officials.

If the reserves run dry, Greece could be forced to delay paying public-sector wages or pensions—or else default on loan repayments to the IMF, like it did in 2015."

"Prime Minister Alexis Tsipras is expected to call European Council President Donald Tusk today to ask for an extraordinary EU leaders’ summit to discuss the Greek program as the SYRIZA leader feels that Athens has met its bailout commitments and that the lenders’ side is standing in the way of an agreement.

Greek government sources said earlier that the details of an initial 5.4-billion-euro package of tax hikes and pension cuts had been finalized. However, the standby measures, which total 2 percent of GDP, proved to be a stumbling block."

"...In the countdown to Orthodox Easter on 1 May – and with it, the start of the tourist season – the race is on to clear the port of its makeshift refugee camp, which until recently numbered more than 5,000. Buses were dispatched, leaflets distributed, and young boys who had jumped into the sea placated as the authorities moved men, women and children from the port gate of E1 to another at E2.

“A lot of them don’t want to leave because they fear that if they do, they’ll be stuck in camps,” says Nikos Souras, a US-based academic overseeing volunteers who have stepped in to make up for the basic services Greece’s cash-strapped state is unable to provide. “But how can they possibly stay here? It’s getting hot. There are fears that disease will spread.”

Greece proposes automatic cutbacks in case of fiscal fallout - Yahoo/Reuters

"Greece has offered to automatically cut spending as a contingency plan for further financial aid, using official data as a trigger point if bailout targets are missed, a government official said on Tuesday.

...Greece and its official creditors were "very close" to an agreement on the main package of pension and tax reforms which would be the equivalent of 3.0 percent of GDP, the official said. Talks resumed in Greece on Monday."

"They were less than three miles from a detention facility in Mória – a re-purposed Greek prison laced with barbed wire, where refugees are now indefinitely held after smuggling themselves across the narrow strait from Turkey – and they were running in the opposite direction.

...The prison here is Greece’s harsh response to a crushing tide of migrants, over half a million last year, which traumatized an island of 86,000 residents and cast it as a symbol of the Syrian refugee crisis. An agreement between the European Union and Turkey, which allows the EU to return every unregistered refugee arriving on Greek shores for one documented in Turkish camps, has largely halted that flow."

"Two ferries left Greece for Turkey on Tuesday with 18 migrants on board, as a government spokesman said Athens was doing all it could to process returnees under a deal with Turkey intended to stem a huge refugee influx into Europe.

...Greece has said authorities would start ruling on asylum applications in late April, but requests have been piling up and it has been criticized for being too slow to process them."

"The Labour Minister Mr. Katrougalos said yesterday after a meeting with the mission chiefs that an agreement in principle was reached on the pension reform, which includes an increase by 1% in social security contributions for workers and pensioners by 0.5% each for 3 years. He added that a €70m difference will be bridged by the technical teams."

"Greece’s biggest betting company OPAP, will pay an extra 70 million to 75 million euros in tax this year under new laws on gross gaming revenues, Chief Executive Kamil Ziegler said on Monday.

...With an eye on the company’s 210 million euros annual revenue, the Greek government introduced a 5-cent levy on OPAP’s wagers at the start of the year as part of measures agreed with its lenders under an international bailout signed last summer.

Last week, Athens unveiled a tax bill that scrapped that levy, but it raised taxation on the company’s gross gaming revenue by 5 percentage points to 35 percent."

April 25, 2016

Greece: Queen Rania Highlights 'Unspeakable Horror' of Refugees - Telesur

"Queen Rania of Jordan met refugees at a camp on the Greek island of Lesbos Monday in a visit to highlight the plight of people she said had "seen unspeakable horror and experienced unthinkable tragedy".

"It is impossible to really understand the magnitude of the crisis until you come face to face with it," Rania told journalists after speaking with refugee women in the camp.

...More than 4,000 refugees and migrants are living on Lesbos, most of them behind the barbed wire fence of a disused military camp."

"US President Barack Obama expressed the public view that Greece should receive debt relief, during his visit to Germany. ...The US President said growth should return to Greece, repeating the stated US position on the matter that an alleviation of the Greek debt was necessary for this to be achieved."

"Almost two in three Greeks doubt that the refugees who remain in the country will be able to integrate into local society, according to a new poll by Public Issue published Monday.

...However, the most definitive answer of the poll came when the sample of 1,010 respondents were questioned about whether they thought Turkey would uphold its part of the refugee agreement with the European Union: 85 percent said they thought Ankara would probably not abide by the deal."

"What sets Greece apart is the continuing recession. Without growth the government will always struggle to achieve even unambitious target, let alone large sustained primary surpluses. Some argue of course that austerity is the problem: if the government were allowed to spend more income would increase and growth would return. But this is realistic: with all the debt it has Greece cannot base its growth on even larger borrowing. Higher growth can be achieved on a sustainable basis only if the country exports more. The real problem of Greece is thus not austerity, but the under-performance of Greek exports."

April 24, 2016

"The 48-year-old mother is one of thousands trapped in the detention center – formerly used as a refugee registration camp – on the Greek island of Lesvos. Um Safwan’s three children had passed through the same island on to Germany in 2015, under drastically different conditions. She was unable to reunify with her children through legal means in Turkey, and decided to trek the same smuggling route with her husband, the shrapnel in his leg a reminder of the war they left behind in Syria.

Um Safwan was describing the humiliating conditions in Moria, where she said there is not enough food, shelter, or information, and her fear of being returned to Turkey, when policemen took my passport and escorted me away from the camp. Since the military started running the camp, press is no longer allowed access there."

"Kyriakos Mitsotakis, leader of Greece’s major opposition party New Democracy, promised to ‘rebuild’ the party and enter ‘a truth pact’ with the people, during his address at the party’s opening day of its 10th Convention in Athens, Friday. ‘You gave me the mandate to build New Democracy from scratch’, he told party delegates. Speaking to a packed convention of 4,000, he went on to say that he would propose a ‘truth pact’ with the people’. ‘All united we will bring Greece that is suffocating and in danger the oxygen it needs’, said Mitsotakis."

"Many in Nicosia, Athens, Brussels and Washington are confident – and some concerned – that the Cyprus issue may be resolved by the end of the year. In the US, especially, top officials are eager for this to happen by the end of 2016, as every US government likes to wrap up as many international affairs as possible before their term ends so as to boost its legacy. US Vice President Joe Biden and Secretary of State John Kerry are the key players pushing for a solution in this case.

...Russia, for instance, a country that has traditionally played a role in Cyprus, is not keen for a solution based on a Western plan.

... the Greek-Cypriot lobby in the US will not accept a solution along the lines of the Annan Plan."

April 23, 2016

Euro-area finance ministers and IMF Managing Director Christine Lagarde said a long-delayed accord to unlock more funding for Athens could be struck within days as long as Greece approves "contingency measures" to ensure a 2018 budget-surplus target is met.

Greek Finance Minister Euclid Tsakalotos said legislating on that basis isn't allowed in Greece, a factor that may dash hopes for a political agreement on April 28.

"We believe that substantial progress has been made" and are "close to an agreement on a number of key areas," Jeroen Dijsselbloem, the Dutch finance minister who chairs the group of his euro-area counterparts, told reporters after they met on Friday in Amsterdam. "The policy package should include a contingent package of additional measures that would be implemented only if necessary."

"The Greek Parliament has erected a monument to eight Greek Jewish lawmakers who were killed by the Nazis during the Second World War.

...“For 75 years this has been on the conscience of this house. Seventy-five is too long for us to honor our colleagues who were killed by the Nazis,” Voutsis said at the ceremony, which was attended by representatives of all the Greek political parties except the neo-Nazi Golden Dawn."

April 22, 2016

"I'm hearing good news from Athens, so let's see where we are," the chairman of euro zone finance ministers Jeroen Dijsselbloem told reporters.

"If we make progress on the content of the program and the next steps then we need to start the discussion on debt. We're only at the beginning of that discussion, so don't expect any deals today," he said on entering a meeting with euro zone ministers.

"Debt is a discussion we've not had before. The only thing we had was a promise that if the Greeks would commit fully and deliver on the program we would look at, if necessary, further debt measures," he said."

Lenders split over path ahead for Greece - eKathimerini

"A high-ranking EU official told Kathimerini on Wednesday that the only way Athens will complete the review of its bailout and unlock a tranche of rescue funds is to implement reforms, legislate contingency measures and complete talks on debt relief, which must also be approved by some parliaments in eurozone member states. He added that Greece will only have to implement contingency measures if it fails to meet its budget targets over the next three years.

Greece has said it may agree to implement further measures but not now, as demanded by the International Monetary Fund (IMF) and the European Commission last weekend."

"Greece and its creditors made a big jump Friday toward resolving disagreements that have long hobbled the country’s international bailout program, including how to ease its debt burden.

...The IMF’s managing directer, Christine Lagarde, stressed that contingency measures will only be a convincing solution if they are already put into law and can be triggered without a lengthy discussion between Greece and its creditors. However, Ms. Lagarde also signaled that the creditors had moved closer toward each other on what is needed in terms of debt relief."

"Almost seven years after sparking the euro-area debt crisis, Greece faces a new budget confrontation with creditors amid fresh German warnings that its long-term success is far from assured and the International Monetary Fund raising questions about the latest economic data.

...A faction of the creditors want Greece to commit to further austerity measures in the event the nation doesn’t comply with the budget targets set out in its bailout program, an unpalatable proposition for the government in Athens that was elected on a promise to unwind the strict economic rules. While Greece doesn’t face an immediate threat of a return to the drachma, concern that the country can’t commit to fiscal rectitude and a mountain of debt are reviving questions about its long-term viability. "

April 21, 2016

"The closer a deal approaches, the more new measures are revealed.

The Greek government seems ready to offer more concessions and ‘shift’ its red lines in talks with the Quartet, in order to reach a deal as soon as possible. Even though the Greek side showed its willingness to close a deal by accepting to raise the VAT from 23% to 24%, it is becoming apparent the an agreement is unlikely any time soon. Following protracted talks, which lasted for 17 hours and ended in the early hours of Thursday, little progress was made regarding the key areas of dispute between the two sides."

"Greece had a primary surplus last year that beat the target set in its bailout program, according to the European Commission, but euro zone officials said the number was already discounted in talks between Athens and lenders on reforms and debt relief.

But the Commission announcement on Thursday may change little.

"It is irrelevant, because it had been fully discounted beforehand," one senior euro zone official said. "

"Print media in Greece will be on strike on Thursday and Friday in a protest over pension reforms.

The 48-hour strike was called by the Panhellenic Federation of Journalists’ Unions (POESY). The strike will affect electronic media and the semi-state ANA-MPA news agency as well."

The EU Commission said Athens attained a primary surplus of 0.7 percent of Gross Domestic Product in 2015, beating a target set in its bailout programme that projected a 0.25 percent primary deficit.

"This result exposes the credibility of the IMF's projections and of those who talk of the need for extra measures so that Greece achieves the goals of 2018," the official said."

"The official lighting ceremony has taken place in Olympia in southern Greece, the birthplace of the Games.

The ritual itself involves lighting the torch using a concave mirror to catch the sun's rays.

A 6-day torch relay is now underway in Greece before the flame is moved to Brazil for this summer's Olympics.

In a move to promote solidarity in a Greece - and broader Europe - divide over the influx of refugees from the Middle East and North Africa, this year's relay in Greece will see the torch passed through a refugee camp in Athens."

"Its economy has shrunk as much as the United States' did during the Great Depression, its government has collapsed over and over and over again as a result, and its bailout is in its third iteration — without which it would have been forced out of the euro zone. How bad are things? Greek Prime Minister Alexis Tsipras just touted the fact that his country's unemployment rate has fallen from 26.5 percent to 24.9 percent, and that there was a month last year in which Greece's industrial production grew faster than anyone else's in Europe.

...Here's the easiest way to think about what's going on. There are three sides to these bailout talks, and three totally different set of priorities. Greece cares, in this order, about: 1) getting its debt written down, 2) keeping any cuts from striking its poorest people, and 3) keeping the surplus it's supposed to achieve as small as possible. The cynical — or is it sensible? — idea is that since their lenders will never forgive any of their debt, it's better to focus on minimizing pension cuts that will always hurt rather than budget targets that can be always be missed."

April 20, 2016

"The Greek crisis was caused by huge deficits in the budget and the current account, which means that the country had been spending and consuming much more than it had been producing for a long time. When the 2008-2009 global financial crunch hit, Greece revealed the depth of its economic problems. Global lenders no longer considered Greece a good credit risk, and the country could not make its loan payments.

...When the options are costly, leaders dig in and avoid reforms. My research, published as part of a special issue of Comparative Political Studies on the “Political Economy of the Euro Crisis” and in my book, shows this reaction is typical for countries where the dominant crisis resolution strategies are economically and politically costly. So in Greece, leaders were unwilling to make internal adjustments, such as widespread austerity measures, and especially significant structural reforms. But Grexit, which would entail a strongly devalued new Greek currency (“external adjustment”) was even more unpopular."

"In Business Insider Films's short documentary, "Ikaria: The Island Where People Live Forever," we interviewed and captured the lifestyle amongst residents, elders and doctors on this remote isle to find out their secrets to living past 100.

One of the primary factors contributing to the island's longevity is diet. The most common foods are fresh vegetables often harvested from own their gardens and legumes. They eat meat sparingly, use olive oil abundantly and forage for herbs and greens seasonally."

Schaeuble says feels optimistic about Greece for first time - Reuters

"Regarding Greece, I'm optimistic for the first time," Schaeuble said, adding that the Greeks had, for the first time, agreed to have people from other countries like Germany and France working in Greece on dealing with the refugee crisis.

He said the Greeks would now experience what modern administration is like."

April 19, 2016

"...The border patrol fired back: rubber bullets big enough to see as they cut the air. The migrants ducked and ran, then circled back, cursing, with middle fingers raised.

This is how it would go for most of the day: skirmish and standoff at the chain-link and razor-wire fence in Idomeni, where Greece meets Macedonia. More than 10,000 men, women and children have taken temporary refuge here since February, in a makeshift tent city with only the barest of services....

...After three hours of talk, however, the border remained closed. That's when a frustrated group of about 300 men and boys stormed the fence and managed to tear through the reinforced chain link and razor wire in four places. The Macedonians moved swiftly, swinging batons, according to some reports, and using tear gas and rubber bullets to push the migrants off the fence."

"European Union institutions and the International Monetary Fund are set to resume talks in Athens on Tuesday and Wednesday after reaching a deal among themselves in Washington at the weekend. The IMF and the EU’s executive arm, the European Commission, agreed to reconcile their differing views on Greece’s budget outlook by demanding an extra austerity package of about 2% of Greece’s gross domestic product, or €3.6 billion ($4.1 billion).

The package would be triggered only if Greece falls short of targets over the next three years. But the proposals, which come on top of a list of austerity measures already being negotiated, would have to be passed into law now—posing a stiff test for the governing coalition of Prime Minister Alexis Tsipras, which has a majority of only three seats in parliament."

"...Visitors can head for Greece without fear; it is still safe to travel around this beautiful country and tourists are not targets of violence. Certainly the quirky white-washed beauty of the island towns and their pocket-sized sandy beaches has not been diminished, and the wow-factor of the great classical sights at Cape Sounion, Delphi, Olympia and Epidaurus remains intact.

....Greek hospitality has always been second to none, and now its people are even more welcoming, so happy are they to see the tourists who help maintain their livelihoods. Go to Greece now, and you’ll be supporting its people - travel and tourism make up 16.5 percent of the national GDP."

This is a nice, long article (3 pages) looking over the finer details of the ongoing agreement negotiations.

"If agreement is not reached, Greece once again faces debt default in the summer. Another year, another Greek crisis….

Meanwhile, the IMF is standing on the sidelines throwing grenades. The Fund was always skeptical about the deal reached last summer, and its view has not changed. It says that deeper cuts to the Greek government budget are needed, particularly to pensions. And it believes that Greece needs debt relief. With its call for deeper cuts AND debt relief, the Fund has managed to make itself unpopular with both sides....

...One of the IMF’s principal concerns is that the fiscal sustainability package is heavily weighted towards tax rises. They have a point. Tax rises drain productive capacity and depress demand. It is hard to see how this is compatible with the programme objective of “delivering sustainable public finances that support growth and jobs”.

And the Greek government will find the comprehensive pension reform hard to swallow. As always, the devil is in the detail: the provision for a minimum pension of 345 Euros from 15 years of contributions, rising to 384 Euros from 20 years, sounds reasonable until you discover that the “poverty line” in Greece is over 600 Euros. 45% of Greek pensioners already live below the poverty line: these reforms will make matters worse."

"The European Commission, the administrative arm of the European Union, will provide Greece with 700 million euros, or approximately $793.4 million, from now until 2018 to cope with an ongoing refugee crisis, the Associated Press reported Tuesday. This will be the first time such humanitarian funding will be given to a fellow European Union member, and it will primarily go to aid organizations that are already working on the ground in Greece."

NEWS ARCHIVE - April 2016

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