Greece and the economic crisis 2016

NEWS ARCHIVE - May 25 - May 31

May 31, 2016

Varoufakis: Greece is paying for "Europe’s spite"

Story at New York Times [English]

This 2016 polemic is slightly different from a diatribe. It is an angry, forcefully argued political criticism, written by someone who personally participated in the events he condemns. Varoufakis' central accusation was that European creditors were deliberately imposing economically destructive conditions on Greece, not simply attempting to recover their money. The most controversial accusation here the suggestion of intentional punishment.

"Against this background, Greek voters elected my then party, Syriza, in January 2015 to negotiate an end to self-defeating austerity in exchange for serious reforms. With the state now living within its means, I strove, as the country’s new finance minister, to convince our European and institutional lenders that their interest and ours would best be served by reducing tax rates and avoiding further cuts to already much reduced pensions. As a compromise, I even promised a “deficit brake” — automatic tax hikes that would kick in if government revenues did not pick up within an agreed period.

My pleas fell on deaf ears, and I resigned. Greece’s creditors insisted instead on even higher sales taxes, as well as new cuts in pensions and wages. The Greek government’s capitulation to the creditors even involved a preposterous obligation that all Greek companies should pay, immediately and in full, their estimated tax for the next year. The cruel screw of austerity turned again.

Once the new measures were implemented, incomes in Greece, which had picked up slightly while we put austerity on hold, began to fall again. The bank closures that were forced by Greece’s creditors to make our government yield, and the new austerity that followed, revived the recession. This increased the number of nonperforming loans on banks’ balance sheets — an astounding 45 percent of all loans — with the effect of denying credit to potentially profitable export-oriented firms. In 2014, close to half of Greek families had no adult in employment, while the cuts in public spending mean that for the past two years less than 10 percent of the jobless receive any unemployment benefit."

The European Commission's 2026 assessment accessed that Greece no longer suffered from the macroeconomic imbalances previously identified, but that economic recovery had not been fast enough to close the income gap with the rest of Europe. Greek per-capita income was only 68.4% of the EU average in 2025.

Yanis Varoufakis political career since leaving the finance ministry:

• 2017: Published Adults in the Room, his account of the 2015 bailout negotiations.
• 2018–2019: Established MeRA25 in Greece, which won nine parliamentary seats in 2019. He returned to parliament as an opposition politician.
• 2023: MeRA25 received approximately 2.5% of the vote in June, below the 3% threshold, and lost its parliamentary representation.
• 2024: MeRA25 also failed to secure European Parliament representation.
• 2026: Continues leading MeRA25, writing economic commentary and campaigning on European economic policy. His October 2026 commentary on French debt shows that his criticism of austerity remains central to his work.

Ultimately, Varoufakis was right that Greece's economic suffering was immense and that the debt arrangements needed substantial changes.

Greece and creditors fight over "politically sensitive measures"

Story at Wall Street Journal [English]

"Greece is arguing with its international creditors about a few small but politically sensitive measures creditors want implemented before they release some €7.5 billion ($8.4 billion) of badly needed bailout funds..."

A teleconference between Greek officials and representatives of the country’s lenders failed on Sunday to reach agreement on whether and how Greece should amend recent legislation to comply with the conditions of its bailout program.

Creditors, represented by the European Commission, other eurozone institutions, and the International Monetary Fund, say Greece must make specific changes to recent laws on areas including banking regulation, retiree benefits, and privatization.

Politcal realities in Greece and ambitions for Greece in the EU often, as they say, differ.

But Greek Finance Minister Euclid Tsakalotos has written a letter to the commission, the IMF and the European Central Bank saying his government can’t carry out all of the lenders’ demands, according to Greek officials, citing political obstacles."

May 29, 2016

Time for relief?

Story at Neo Kosmos [English]

"...According to officials, mutual trust has returned to the talks, nearly a year after Tsipras's rejection of austerity measures pushed Athens close to be pushed out of the euro. This kind of optimism was further confirmed when one of the finance ministers started playing the music of Zorba the Greek during the Eurogroup meeting.

"I think there is some ground for optimism that this can be the beginning of turning Greece's vicious circle of recession-measures-recession into one where investors have a clear runway to invest in Greece," said Greek Finance Minister Euclid Tsakalotos, returning from Brussels to Athens."

IMF turns its back on Europeans in Greece bailout

Story at Times of India [English]

In 2016, the IMF argued that Greece's debt was unsustainable and demanded substantial debt relief before committing more money. European creditors, particularly Germany under Finance Minister Wolfgang Schäuble, resisted. Gewrmany wanted continued lending tied to austerity and economic reforms.

In this situation, the IMF was also worried about its reputation after earlier Greek bailouts failed to restore financial stability.

The IMF hung on to this position and did not provide new financing for Greece's third bailout. Debt relief finally came from the EU in June 2018, principally through longer repayment periods and deferred interest rather than outright debt forgiveness.

Greece exited the bailout in August 2018, with the IMF remaining involved as an economic adviser and monitor.

"...The IMF said it won't give another penny until it sees a concrete plan from the Europeans to substantially cut the country's debt burden. Wednesday's agreement by the Eurogroup finance ministers failed to deliver that.

The IMF is now focused on protecting its own reputation after the failure of the first two joint Greek rescue operations -- even if it sours relations.

... German finance minister Wolfgang Schaeuble derided the IMF's suggestion to free Greece from servicing its debt until 2040, saying creditors might as well "do a grace period of a thousand years."

May 28, 2016

What can Putin bring to Greece?

Story at Reuters [English]

"Russian President Vladimir Putin arrives in Greece to sign oil and gas contracts - in a visit seen as signalling that both he and his hosts have options other than to rely on the West. Ivor Bennett reports."

Greece "is kicking the can down the road, again"

Story at Fortune [English]

"This ritual has become an established fixture in the European Union calendar, and usually involves some tough talk morphing into ambiguity and compromise, as behind-the-scenes negotiations thrash out the details of the inevitable last-minute agreement, which postpones big decisions for another year.

...As ever, politics stands in the way of a clear-headed assessment of how to revive the Greek economy. But this time, the fractious politics of Greece is the least of the EU’s worries. A more important reason for the obstinate refusal to contemplate a rational approach to the euro crisis is the volatile politics of the European Union’s Northern flank. The refugee crisis sparked by the conflict in Syria has heightened tensions over immigration in Europe’s creditor states, with nationalist and populist politicians fanning the flames of resentment amongst hard-pressed voters."

May 27, 2016

Greece planning cautious return to bond markets in 2017

Story at Fox News [English]

The predictions in this 2016 Fox News article came true. Greece successfully returned to international bond markets in July 2017. Also, by 2023–2024, Greece had accomplished something that looked very uncertain in 2016: international investors were once again treating Greek government bonds as investment-grade securities.

"George Houliarakis, a deputy finance minister, said the decision would hinge on a return to economic growth in 2017 — as forecast by the European Union — and a continued drop in sovereign borrowing rates.

Greece has been locked out of debt markets since 2010, with a brief return two years ago. Interest rates on Greek government bonds have eased after Athens and eurozone rescue lenders ended months of delays in reviewing the Greek bailout program. "

Worth noting from looking at this again in 2026: the recovery was not a return to the inexpensive borrowing conditions Greece enjoyed before its original debt crisis. The debt burden remained high, interest rates rose again after 2021, and improvements in the bond market did not translate into higher living standards for Greek households.

Putin visits Greece ahead of Russia sanctions vote

Story at RT Com [English]

"Before the visit, Putin published an article in Greece’s Kathimerini newspaper, where he spoke about the negative effect of mutual sanctions.

“These days, Greece is Russia's important partner in Europe. Unfortunately, the decline in relations between Russia and the European Union stands in the way of further strengthening our cooperation, with an adverse effect on the dynamics of bilateral trade that fell by a third to $2.75 billion as compared to last year. Particularly affected were Greek agricultural producers,” Putin said.

In 2015 trade between the two countries fell by 33.7 percent to about $2.8 billion. Ninety percent of that loss was exports from Russia to Greece. Russian imports from Greece decreased by 54 percent and amounted to $229.4 million."

Putin heads to Greece for business, Orthodox Christian site - JS Online

How the European Central Bank is playing a "very stupid political game with Greece"

Story at The Week [English]

This author is essentially accusing Greece's European creditors of playing a politically motivated financial shell game: they lend Greece billions of euros, knowing that much of the money would immediately flow back to creditors as repayment on existing debts, while demanding further spending cuts and tax increases that could weaken Greece's economy. Worth noting is that the European Central Bank (ECB) was not acting alone. The bailout conditions, at the time, were principally negotiated by eurozone governments through the Eurogroup and European Stability Mechanism.

"Wednesday's agreement is to provide Greece with a new bailout of $11.5 billion, to be doled out in stages starting in June, in exchange for yet another round of spending cuts and tax hikes from Greece. Some form of debt relief will be phased in starting in 2018. According to The Wall Street Journal, the Eurogroup president said, "Among the steps that will be considered in 2018 are caps and deferrals on interest rates as well as the return to Athens of profits from Greek government bonds held by eurozone central banks."

So it will be another round of the infuse-Greece-with-money-and-promptly-drain-it-again doom loop of the last few years. Then some more debt-relief-mumble in 2018. This is obviously nowhere near equal to the scale of the challenge as the IMF described it."

May 26, 2016

What is next for Greece? Loan averts crisis but debt is still huge

Story at Washington Post [English]

"After an 11-hour meeting lasting into the early hours Wednesday, European officials agreed to unfreeze more rescue loans and to consider ways to lighten Greece’s debt load. That means Greece stands to get 10.3 billion euros ($11.5 billion) from its bailout loan package from European governments and the International Monetary Fund.

"Guntram Wolff, director of the Bruegel think tank in Brussels, says it’s positive that the eurozone governments agree Greece’s financing needs — both borrowing to cover maturing debt and new borrowing — should stay below 15 percent of annual economic output.

...The money means Greece can make debt payments coming due in July.

...“Basically, the next two years we continue to see a story where Greece will have to continue to do a significant fiscal effort to achieve their target, and it’s going to be bad for growth and bad for an economy that’s already in recession and in deep trouble."

Lookign back from November 2026, the May 2016 agreement succeeded in its immediate purpose: Greece received the €10.3 billion in bailout assistance, avoided defaulting on its July debt obligations, and eventually benefited from debt-relief measures that eased its repayment burden.

The prediction of continued economic hardship here was only partly borne out: austerity measures remained burdensome, but Greece returned to economic growth in 2017 and 2018 rather than remaining in recession. Though debt remained a very substantial amount of money, all the same the prolonged financial deterioration feared in 2016 did not materialize.

Tsipras is the big winner of the Eurogroup

Story at Ethnos [Greek]

"The big winner of the Eurogroup agreement Tuesday is the Greek Prime Minister Alexis Tsipras, who managed again to shield the electoral base of the cuts, which have long been the IMF insists that they are necessary to put the finances of Greece sustainable basis, said the Simon Nixon at the Wall Street Journal

....The agreement is also a partial victory for the German Finance Minister Wolfgang Schaeuble. It is true that now Schäuble will have to pass a red line, asking the Bundestag to release additional rescue loans of 10 billion. Euros to Greece without the full participation of the IMF program. But at least managed to achieve postponing detailed decisions on debt relief until after the German elections in 2018..."

EU officials hail the deal that releases billions in bailout loans for Greece

Story at UK The Guardian [English]

"...debt campaigners criticised the lack of progress on debt relief and called for a significant cancellation of Greece’s liabilities. Ratings agencies Moody’s and Fitch, while welcoming the news, warned of the problems Greece faced in implementing the proposed reforms. Markets reacted well to the deal, which could pave the way for the European Central Bank to start buying Greek debt once more as part of its quantitative easing programme."

"Bailout cash" is a bandage on a deep economic wound

Story at US News [English]

In hindsight (in 2026), the IMF's long-range outlook proved much more pessimistic than Greece's actual unemployment trajectory through 2026. Looking at Hellenic Statistical Authority (ELSTAT) data showed that unemployment was 7.6% for September 2026, which puts the year of 2026 closer to the IMF prediction of 2060 when that number could be achieved. This doesn't establish that Greece will sustain such low unemployment, but it does show that the decline occurred much faster than the long-range scenario suggested.

"Greece's creditors, namely the German government and the IMF, have been hung up for months on how to handle the precarious situation. The indebted country will need to fork over billions of dollars in bailout repayments in June and July, but the Greek government's coffers aren't believed to be nearly full enough to meet all of those deadlines without a little extra help.

.....The IMF, in a report earlier this month, also estimated the Greek unemployment rate was hovering at "around 25 percent," or about five times the rate seen in the U.S. And even if Greece meets the IMF's admittedly lofty growth projections – under which its economy would expand at an average rate of more than 2.8 percent between 2017 and 2020 and more than 1.7 percent between 2017 and 2030 – the country's unemployment rate is still expected to hover around 12 percent by 2040. It won't be until 2060 that the rate should come down to about 6 percent, barring any kind of significant economic downturn between now and then."

Also note how Greece's debt situation has changed considerably, with public debt in 2016 at 183%, but in 2025 it was 145%. Worth noting is that Greece repaid all outstanding IMF loans in April 2022, two years ahead of schedule. Also

• Accelerated repayment of certain other European rescue loans.
• Built up cash reserves of approximately €40 billion by the end of 2025.

Nevertheless, Greece's public debt remains high.

On unemployment, the IMF scenario was substantially more pessimistic than the subsequent reality. Greece reached unemployment levels below the article's 2040 figure roughly 17 years early.

On economic growth, the IMF's assumptions were too optimistic for 2017–2020. Nevertheless, the labor market improved considerably faster than the scenario implied.

Returning the Parthenon Marbles to Athens is "a matter of cultural morality"

Story at Athens News Agency [Greek]

"Acropolis Museum, Professor Dimitris Pantermalis gave an interview to ANA-MPA ..."What is important is the constant struggle, the constant vigilance and keeping the issue constantly alive. And the issue is kept alive, to be realistic. I am optimistic. But it is also a matter of time," he underlined. Asked if he believed that the British Museum could return the sculptures, he replied: "Yes, but it is not so simple. They are not going to tell us 'take them back.' We should negotiate; we should give them something in exchange. For example, the idea of periodic exhibitions of Greek works to the British Museum is not bad. Good ideas exist, but it takes time to implement them."

More about the Parthenon Marbles aka "Elgin Marbles"

May 25, 2016

This very 2012-like Eurogroup deal and "the Draghi factor"

Story at Capital [English]

"...under immense pressure put on both the IMF and the Eurozone by the G7, both sides took a step back and made commitments for a resolution of the debt issue, under the condition of Greece fully achieving the primary surplus target.

The obvious backtracking on behalf of the IMF came in the shape of accepting a package of measures by the Eurozone that, contrary to the Fund΄s requirements, does not bring front-loaded debt relief, but rather tackles it in three distinct stages (short, medium and long term).

The Fund commited to participating in the program, so that the Eurozone countries would be able to pass the disbursement of the 10,3 billion euro tranche, in their respective parliaments."

"This deal is good enough, for now"

Story at Wall Street Journal [English]

"Greece is back in the European fold—for now, at least.

The late-night agreement struck with eurozone finance ministers and the International Monetary Fund in Brussels under which €10.3 billion ($11.5 billion) will be disbursed should remove the risk of a rerun of 2015’s summer crisis.

A further step for the ECB would be to include Greek bonds in its asset-purchase scheme, for which eligibility as collateral is a prerequisite. But this would be more symbolic than anything else: under the rules for quantitative easing the central bank cannot undertake purchases that would mean it held more than 33% of an issuer’s bonds."

Greece just made a 'major breakthrough' in solving its debt crisis

Story at Business Insider [English]

"Late on Tuesday night and into Wednesday morning, over nearly 12 hours of talks, representatives from Greece, the International Monetary Fund, and the Eurogroup agreed upon a series of loose measures to help restructure Greek debt when the country's bailout deal concludes in 2018. As it stands, that bailout is worth €86 billion (£65.4 billion, $95.8 billion).

...Dijsselbloem was not the only senior figure in the discussions to strike an upbeat tone about the restructuring, with the IMF's Europe chief, Poul Thomsen, saying the fund had made an "important concession" and everyone involved in the talks had "shown flexibility."

NEWS ARCHIVE - May 2016

INDEX NEWS ARCHIVE

Greece 112 Emergency Announcements on X/Twitter

Hellenic National Meteorological Service

www.gov.gr

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