Saturday, April 21, 2018

Greece’s Creditors Close to Compromising on Debt

by Viktoria Dendrinou

Bloomberg

April 21, 2018

Greece’s creditors are getting closer on a deal to ease the country’s debt burden, according to Eurogroup President Mario Centeno.

Greece’s 86-billion euro ($106-billion) bailout program is set to run out in August, and creditors are working on finding a compromise on debt repayments that would help to manage the country’s financing needs after it stops receiving international aid. A debt deal would also allow the International Monetary Fund to participate in the current bailout.

“The positions today are much closer than they used to be before,” Centeno, who is Portugal’s finance minister and chairs the meetings of his euro-area counterparts, said in an interview in Washington. “We still have a final mile to go but there is a positive sentiment around the table so I think that reflects a true willingness to be part of the program.”

Further easing Greek debt is a key precondition for the Washington-based IMF before it can participate in the country’s program. While the IMF has co-financed Greece’s first two bailouts it hasn’t yet activated its third one, arguing the euro area must arrange for more debt sustainability. But the participation of the fund, even a few months before the end of the bailout, is important for some countries including Germany, who see the IMF coming on board as a seal of approval that will offer credibility to the bailout.

A “committed presence” by the IMF will also help with market confidence, Centeno said.

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Thursday, April 19, 2018

Greek parliament ends probe into bribery allegations

by Kerin Hope

Financial Times

April 19, 2018

Greece's parliament has ended a probe into allegations that 10 senior politicians, including two former prime ministers, the governor of the central bank and the country's current EU commissioner, accepted millions of euros in bribes from the Swiss drug producer Novartis.

An all-party parliamentary committee decided late Wednesday night that it was not competent to pursue the case.

The committee will hand back the case to a special prosecutor to investigate possible money-laundering by the 10 accused, a parliamentary spokesperson said. An anti-corruption prosecutor has already ordered bank accounts belonging to the politicians to be opened as part of the probe.

All those accused have denied wrongdoing, claiming they were targeted by the leftwing Syriza government in a drive to undermine the credibility of its political opponents.

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Monday, April 16, 2018

Tsipras Fights on All Fronts as Greece Is Back in the Spotlight

by Eleni Chrepa

Bloomberg

April 16, 2018

Consider what Greek Prime Minister Alexis Tsipras is up against.

As Greece prepares to free itself from an eight-year European bailout, its 43 year-old premier is confronting challenges at home and abroad. On the domestic front: preparations for post-bailout economic life and the first general election since the end of the program, including feuds with both allies and rivals. On the foreign-policy front: increased tensions with traditional rival Turkey and regional instability stemming from a dispute over a neighboring country’s name.

Tsipras’s ability to navigate through all this could determine just how stable the country and its region will be in coming years, experts say, and the European Union, the U.S. and the North Atlantic Treaty Organization are all watching with interest.

“The worst problem for Tsipras, for the government, but also for Greece is the evolving ‘rogueness’ of Turkey,” said Aristides Hatzis, a professor of law and economics at the University of Athens. “Diminishing American influence on the region is a destabilizing factor and the stakes are very high,” Hatzis said, adding that Greece is not a primary concern for Turkey, but a part of an overall plan by President Recep Tayyip Erdogan to establish hegemony in the region.

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Thursday, April 12, 2018

How to Solve the Greek Debt Problem

by Jeromin Zettelmeyer, Emilios Avgouleas, Barry Eichengreen, Miguel Poiares Maduro, Ugo Panizza, Richard Portes, Beatrice Weder di Mauro, & Charles Wyplosz

Peterson Institute for International Economics

Policy Brief 18-10
April 2018

Greece’s debt currently stands at close to €330 billion, over 180 percent of GDP, with almost 70 percent owed to European official creditors. The fact that Greece’s public debts must be restructured is by now widely accepted. What remains controversial, however, is the extent of debt relief needed to make Greece’s debt sustainable.

This Policy Brief argues that the debt relief measures outlined by the Eurogroup will not be sufficient to restore the sustainability of Greece’s debt. At the same time it shows that Greece’s debt sustainability can in fact be restored without aggravating moral hazard—i.e., encouraging future governments in Greece and elsewhere in the euro area to take risks in the belief that they will be bailed out—and within the framework of EU law, in particular Article 125 of the Lisbon Treaty, which prohibits EU members from assuming liability for the debts of other members.

It concludes that only conditional face value debt relief, in combination with the measures already considered by the Eurogroup, would restore Greece’s debt sustainability with reasonable confidence. Furthermore, if the debt relief is structured in a way that creates incentives for additional fiscal adjustment, as proposed in this Brief, the amount of face value debt relief required could be modest—on the order of 10 to 15 percent of the outstanding official debt.

Read the PDF

Thursday, April 5, 2018

Uber to suspend service in Greece after new legislation

Reuters
April 5, 2018

Ride-hailing service Uber said on Thursday it would suspend its licensed service in Greece after the approval of local legislation which imposes stricter regulation on the sector.

Uber, which operates a licensed service in the Greek capital, has faced opposition from local taxi drivers who accuse it of taking their business.

“New local regulations were voted on recently with provisions that impact ride-sharing services,” Uber said in a blog post. “We have to assess if and how we can operate within this new framework and so will be suspending uberX in Athens from next Tuesday until we can find an appropriate solution.”

Uber operates two services in Athens: UberX, which uses professional licensed drivers, and UberTAXI, which uses taxi drivers.

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Friday, March 23, 2018

Lignite mining: Greece’s dirty secret - in pictures

Photographs and research by Anna Pantelia

Guardian

March 23, 2018

Mining for lignite - or brown coal - in Greece is a huge industry. Together with Germany and Poland, the country accounts for more than one-third of the world’s coal production. But for residents of villages in the extraction areas of West Macedonia, it has many impacts, from displacement to health problems.


Thick dust suspended in the atmosphere makes it hard to see the sun over Ptolemaida, a city 500 kilometres north-west of Athens in the West Macedonia region, known for its brown coal (lignite) mines and power stations.

Kostas works as a guard for the state-owned Public Power Corporation (PPC), like his father before him. “My father died of cancer when I was 12,” he says. “Four other men from his shift lost their lives from cancer.”

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Tuesday, March 20, 2018

Independent report on the Greek official debt

by Emilios Avgouleas, Barry Eichengreen, Ugo Panizza, Miguel Poiares Maduro, Richard Portes, Beatrice Weder di Mauro, Charles Wyplosz & Jeromin Zettelmeyer

CEPR Policy Insight No 92

March 20, 2018

Greece’s third economic programme has been relatively successful, but before it can return to private market financing, the country will require more official debt relief. This Policy Insight asks how much debt relief is required and how it should be delivered. Any debt relief package for Greece that wishes to avoid shifting the burden of repayment several generations into the future will need to include some degree of face-value debt relief.

Download the Paper (PDF)

Sunday, March 18, 2018

Bribery allegations dog Greek elite

by Kerin Hope

Financial Times

March 18, 2018

One witness reports that a smartly-dressed Greek executive working for a Swiss pharmaceuticals group wheeled a suitcase into the office of Greek Prime Minister Antonis Samaras. In the case: €2m in large-denomination notes.

On another occasion the same executive is said to have handed a briefcase containing €1m to Yannis Stournaras, then finance minister and now central bank governor, in his sixth-floor office.

These allegations of unabashed bribe-taking by former high-ranking government officials in Greece have emerged from a healthcare scandal being probed by an anti-corruption prosecutor, who has placed three anonymous whistleblowers in a witness protection scheme. The bribery allegations were leaked to Greek media ahead of a parliamentary investigation into the affair.

Mr Samaras and Mr Stournaras strongly deny wrongdoing. They say they are victims of a drive by the leftwing Syriza government of Alexis Tsipras, prime minister, to take control of the country’s judiciary and use legal means to discredit political opponents.

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Wednesday, March 14, 2018

Greece Is Quietly Backsliding on Reform

by Phyllis Papadavid

Bloomberg

March 14, 2018

Greece’s planned August exit from its third European Stability Mechanism bailout has triggered investor optimism. Its July 2017 bond issuance, the first in three years, was oversubscribed, as were subsequent issuances in February of this year. And yet financial investors should curb their optimism. Greece’s return to the markets, and its economic recovery, are likely to be a bumpy and slow -- especially if it continues to delay key reforms.

Greece’s growth appears to have stabilized at a low rate; some take that as a sign of normalization. The problem with this optimism is that it’s not clear where the future drivers of growth will come from. Household consumption has recovered somewhat, but at an average 0.65 percent growth in 2017, it remains weak by any measure. And with further tax increases and pension cuts planned, it’s hard to see any scope for further acceleration.

No news isn’t necessarily good news when it comes to Greece. Quietly, the government has backtracked on important reform efforts such as privatizing key industries, where it continues to miss its targets. In Athens I drive by the abandoned Ellinikon airport regularly, and its state is a sore reminder of how Greece has long failed to capitalize on its assets. A stalled recovery will mean no real boost in revenues to fund investments. Its debt dynamics will also continue to result in a higher cost of financing.

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Tuesday, March 13, 2018

Greek Regulator Probes Piraeus Ex-Head for Laundering Breaches

by Christos Ziotis

Bloomberg

March 13, 2018

Piraeus Bank SA property deals involving managers including Former Chairman Michalis Sallas may have cost the bank 6.4 million euros ($7.9 million), according to a report by Greece’s Anti Money-laundering Authority.

In the report, a copy of which was reviewed by Bloomberg, the regulator said it looked at the bank’s sale of five properties to a Cypriot firm in 2016 and found that “there are strong indications that Mr. Sallas and other members of Piraeus management who participated in the deals are guilty of malfeasance.” Sallas, who led the firm for a quarter of a century until he stepped down in July 2016, disputes the report’s findings and denies any wrongdoing.

The properties -- which had been sold in 2003 to companies “linked to Sallas or members of his family” and then repurchased in 2006 by Piraeus -- were offloaded to the Cypriot company in 2016 using loans from the bank, the report said. The transactions, with funds going through a series of intermediate companies, showed the lender was “breaching prudent banking methods,” resulting in a financial hit for the bank, the regulator said.

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Monday, March 12, 2018

Greek Superleague suspended after team owner invades pitch with a gun

by Helena Smith

Guardian

March 12, 2018

Greece’s Superleague has been suspended indefinitely and the country threatened with a ban from world football as the government scrambled to contain the fallout from the extraordinary scenes on Sunday when the gun‑toting oligarch owner of Paok Salonika stormed on to the pitch in a fit of fury to challenge a goal.

Athens’ leftist-led administration, facing widespread criticism of the lawlessness into which the country’s league has sunk, said all top-flight games would be brought to an immediate halt.

“We have decided to suspend the championship indefinitely,” the deputy sports minister, Giorgos Vassiliadis, said after holding two hours of emergency talks with the prime minister, Alexis Tsipras. “The most important thing is that rules apply to everyone. We are in communication with Uefa and the championship will not resume unless there is a new and clear framework, agreed by all, to move forward with rules and regulations.”

Speaking hours after the announcement of an arrest warrant for Paok’s proprietor, Ivan Savvidis, the politician insisted the government would not renege on its decision whatever the “political cost”. He said: “We are not going back, we will continue the fight for transparency and a better football.”

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Friday, March 9, 2018

Greek parliament throws out Syriza probe request after angry debate

by Kerin Hope

Financial Times

March 9, 2018

Greece’s parliament has thrown out a request by the centre-right opposition for a probe of three health ministers from the ruling Syriza party as tensions mounted in a dispute over alleged bribe-taking by senior politicians.

The New Democracy party made the proposal in retaliation against a parliamentary investigation launched this week of two former prime ministers, the central bank governor, Greece’s current EU commissioner and six former health ministers for allegedly taking bribes from Novartis, the Swiss drugs company.

All 10 politicians have strongly denied the accusations. Several argued the case lacked validity because it was based on second-hand testimony by unnamed protected witnesses.

Lawmakers from Syriza and its coalition partner, Independent Greeks, turned down the opposition proposal in a late night vote after a day of angry debate.

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Sunday, March 4, 2018

Greece and the Troika – Lessons from International Best Practice Cases of Successful Price (and Wage) Adjustment

by Ansgar Belke & Daniel Gros

European Journal of Comparative Economics

Volume 14, No. 2 (2018)

This paper reviews cases of successful price and wage adjustment in Australia, Latvia and the newly-formed German states and contrasts them with the Greek experience under the Troika programme. Latvia stands out as having had the quickest adjustment in wages. By contrast, before the crisis, Greek wages appeared to have been largely insensitive to labour market conditions, but this changed with the programme. The authors find that the reaction of wages to unemployment in Greece under the programme was increasingly similar to that observed in Germany and Portugal (a case that has attracted less attention). A priori it is likely that the change in wage behaviour in Greece was due to the labour market reforms imposed under the programme. But this cannot be proven beyond doubt.

Read the Paper (PDF)

Friday, March 2, 2018

Greece's "Clean Exit" from the Third Bailout: A Reality Check

by Miranda Xafa

Centre for International Governance Innovation

March 2, 2018
CIGI Policy Brief No. 124


With Greece and its creditors aligned in their desire to avoid a fourth bailout, a smooth exit from the current program appears likely in August after completion of the fourth review; however, several more steps are necessary before Greece exits the program. Greek Prime Minister Alexis Tsipras may try to capitalize on a smooth exit from the program by calling early elections in the fall of 2018, before politically painful cuts in pensions take effect. The “twin deficits” in the fiscal and external accounts have all but disappeared, but fiscal imbalances have migrated to private sector balance sheets. Tax arrears and non-performing loans remain at record-high levels while growth disappointed in 2017. These challenges test Tsipras’s promise to make Greece “normal” again. Without further reform to improve the entrepreneurial climate and attract investment, the Greek economy risks being trapped in a low-growth equilibrium.

Download the Policy Brief (PDF)

Thursday, March 1, 2018

The inconvenient truths about Greece

by Theodore Pelagidis & Michael Mitsopoulos

Brookings

March 1, 2018

As Greece seemingly returns to normal, everybody in Athens, Washington, and Brussels hopes to put the whole affair in the rear view mirror, possibly because they know that, at the height of the crisis, neither Greece nor Europe dealt with their respective weaknesses.

But how can this be, when so much has been done—so many pieces of legislation adopted in Europe to deal with the crisis, so many mechanisms created, and so many measures imposed on the mostly reluctant Greeks?

Europe has done rather little to update the structure of its governance to deal with the core issues that exposed it to the crisis, whether in terms of the shakiness of the European Union or with respect to the struggle to enforce EU law evenly in all member states to facilitate “convergence in institutions.” And Greece has done little to offer quality governance to the Greeks in line with an idealized European state.

Which brings us to the inconvenient truths about the supposed “Greek success story.” The average size of Greek firms remains small, a product of many longstanding structural weaknesses at the national level that served as an almost insurmountable barrier to growth. The fallout from this can still be observed in the weak private sector job market, weak innovation and export activity, the “missing tax base,” and a persistently high consumption to GDP ratio. The adjustment programs have failed to put Greece on a trajectory that clearly separates it from these negative metrics that characterize the years until the eruption of the crisis.

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