Friday, August 17, 2018

Greece’s eight-year odyssey shows the flaws of the EU

Economist
August 18, 2018

Kastellorizo is “the end of Europe—or perhaps its beginning”. So says Yannis Doulgaroglou, co-owner of the Hotel Kastellorizo, a sunny inn on Greece’s easternmost inhabited island. A tiny rocky outpost just off the Anatolian coast, on maps of Greece Kastellorizo is often relegated to an inset. Yet it was from the island’s picturesque harbour, on April 23rd 2010, that George Papandreou, the prime minister, stared blankly into a camera and acknowledged that his troubled country had lost access to capital markets and needed a financial rescue package from its euro-zone peers. The day is etched in the memory of most Greeks. Chuckling, Mr Doulgaroglou recalls the journalists who scarpered from his hotel once they realised the prime minister was saying something momentous, leaving behind their unpaid bills.

Eight years and three bail-outs later, as Greece prepares to leave its final programme on August 20th, Mr Papandreou’s remarks seem laden with pathos. He directed his ire at the “speculators” who had sent Greek bond yields soaring, more than at the successive governments that had overspent, under-reformed and fiddled the national accounts. Yet, he vowed, with a “common effort” Greece would “reach the port safely, more confident, more righteous and more proud.” He called this the “new Odyssey”.

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Tuesday, August 14, 2018

Greece Is Back on the Grid, But Recovery Remains Elusive

by Giorgos Christides & Tobias Rapp

Spiegel

August 14, 2018

On August 20, the third aid package for Greece will end, marking the end -- for now -- of the country's debt crisis. But the country's slow economic growth and grim demographic outlook mean that even without the onerous rules attached to its repayments, it faces an uphill battle.


The school on the small Greek village of Kerasochori looks like the set of a disaster movie. Everything is still there: the black board, the math books, tables and chairs, the sports equipment, the map of Greece on the wall. Even the class registers are still in the corner. A layer of dust covers everything. About 20 boys and girls once went to school here, but 12 years ago it was closed down. That's where it began. There were no longer enough families in Kerasochori to keep it running.

Konstantina Kalli, 34, has unlocked the door and stands helplessly in the ruins of the past. "Anyone who leaves doesn't come back," she says. "The village is shrinking."

Kalli is Kerasochori's hope. She has a three-year-old daughter and is six months pregnant, with a girl. The birth will likely be difficult. There is no medical clinic nearby, and she has had to drive to Athens for every checkup, a journey of five hours by car along many winding mountain roads. Kerasochori doesn't have any child care. The nearest school is in the neighboring village, as long as there are enough children for it to remain in operation.

Kalli works for the local government, the biggest employer in Kerasochori. Together with two colleagues, a mayor, a priest and a police officer, she runs the district. About 100 people still live here in the village, most of them retirees. The average income is about 300 euros per month. There is almost no work -- the main sources of income are beekeeping and a bit of forestry. There's no tourism, even though, according to UNESCO, the air here is cleaner than almost anywhere else in Europe.

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Thursday, August 9, 2018

What the crisis changed in Greece — and what it did not

by Kerin Hope & Jim Brunsden

Financial Times

August 9, 2018

Greece has lived through eight lost years. Since 2010, its economy has shrunk by one-quarter, the disposable income of its citizens by-one third. More than 300,000 of those people have emigrated; among those left, unemployment is at 20 per cent.

As the country prepares to draw a line under this grim period, with the international tutelage imposed after its bailout set formally to end on August 20, the question is whether the years of trauma will have acted as a purge — cleansing Greece of some of the problems that contributed to the crisis.

The reforms that Athens signed up to in exchange for bailout funds were intended to address glaring shortcomings: a ruinously spendthrift pension system, an overstaffed bureaucracy and deep-rooted problems of tax evasion.

Other measures such as liberalising labour law and new business licensing rules were aimed at promoting growth and investment in a corporate sector fenced in by outdated regulations and restrictive union practices.

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Friday, August 3, 2018

Only four economies have shrunk more than Greece’s in the last 10 years. Two of them have been hit by civil wars.

by Matt O'Brien

Washington Post

August 3, 2018

After eight years of bailouts, brinkmanship and even more bailouts, Greece’s economy is finally ready to stand on its own again. Well, what’s left of it.

The good news is that Greece really is about to wrap up its latest bailout program and won’t need any more financial assistance for now. But the bad news, as the International Monetary Fund points out, is that even with the lower interest rates and longer repayment periods that Greece has been given, it still has too much debt, too little growth and too fragile a private sector to be able to say that it won’t need more help for long.

Which brings us to the worst news of all: Europe might be celebrating this as a success story now, but Greece has been one of the biggest economic failures you’ll ever see short of a war or revolution.

Indeed, excluding microstates such as San Marino, there are only four countries that have grown less — or, more accurately, shrunk more — than Greece has in the last 10 years: Libya, Yemen, Venezuela and Equatorial Guinea. (The IMF doesn’t have numbers for Syria since the start of its conflict, otherwise it would probably be on this list as well).

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Thursday, August 2, 2018

Greece exits its bail-out programme, but its marathon has further to go

Economist
August 2, 2018

“No one buys furniture in a crisis,” laments Konstantinos Vourvoulakis. He and his father used to sell handmade furniture, but as customers became strapped for cash, they shut up shop in 2014. A chatty man with a sunny disposition, he started driving a taxi instead, ferrying tourists around Athens and offering travel tips. But he doubts he will be able to afford a holiday himself any time soon.

Greece’s public-debt woes triggered an economic collapse that lasted longer than the Great Depression in America. In 2009 the new prime minister admitted that budget-deficit figures had been understated for years, and were perhaps double those originally reported. Ratings agencies downgraded its debt. Interest rates surged. In 2010 the government turned to the euro zone and the IMF for help. Their loans had strings attached: that Greece implement deep spending cuts and structural reforms.

On August 20th Greece exits the last of three bail-out packages. Both its creditors and its government think its public finances have improved enough for it to borrow from the markets again. Debt relief agreed on in June helps cushion its return. The maturity of some loans has been extended, and interest-rate relief offered on others. A cash buffer of €24bn, enough to cover nearly two years of Greece’s funding needs, should also reassure investors.

But the public finances and economy have miles to go before they reach normality. Public spending is still severely restrained. The Greek government has signed up to exceedingly ambitious targets: primary surpluses (that is, excluding interest payments) of 3.5% of GDP until 2022—which only a few non-oil-producing countries have achieved in the past 30 years—and an average of 2.2% until 2060. In the early years, creditors will monitor progress every quarter.

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Tuesday, July 31, 2018

Greece: Much Progress, but Action Needed to Address Crisis Legacies, Boost Inclusive Growth

International Monetary Fund
IMF Country Focus
July 31, 2018

Greece has successfully eliminated its extraordinarily high fiscal and current account deficits, and restored growth. It must now take action to address crisis legacies and boost inclusive growth, says the IMF in its annual health check of the country’s economy.

As the Fund publishes its annual report on the state of the Greek economy, IMF Country Focus sat down with Peter Dohlman, the country’s mission chief, to discuss the report’s overall findings, key recommendations that could help lift the country’s growth prospects and living standards, and the Fund’s future relationship with Greece.

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Read the Report

Read the Press Release

Athens told to stick to reforms or risk losing investment

by Jim Brunsden & Kerin Hope

Financial Times

July 31, 2018

Greece’s central bank governor has warned that any backsliding by the country on economic reforms could shatter fragile investor confidence, as Athens prepares to exit eight years of international bailout programmes next month.

Yannis Stournaras told the Financial Times that “markets are waiting” to see if Greece will stick to its commitment to implement additional measures after the formal bailout ends on August 20. He said it would be a mistake to assume that a debt relief deal agreed with the eurozone in June would be enough to reassure investors that Greek bonds were a sound investment.

“As soon as we are out on our own, the markets will take a tough approach. They want to see how we are going to behave after August 20,” he said.

“They [investors] will be monitoring every move by the government as far as economic policies are concerned. If they feel that we’re backtracking, they’ll be off. If they feel we’re honouring our commitments, they’ll give us a chance”.

His comments come as Greece prepares to live without handouts from international creditors and once again raise its own money from investors, closing an unprecedented period of economic intervention that began after it was frozen out of bond markets in 2010.

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Friday, July 27, 2018

The Fires in Greece

by Nikos Konstandaras

New York Times

July 27, 2018

Four days after the wildfire that raced down from the mountains, incinerating all before it, cars were once again tangled up in traffic jams in this seaside resort’s narrow streets. Search parties combed ruined homes for bodies; volunteers sought out injured and frightened pets. The nation was in mourning, shocked by the magnitude of the disaster, shaken by the stories of victims and the missing.

In a V-shaped bend where on Monday desperate residents and visitors found themselves trapped, unable to escape the heat that melted even the metal of their cars, vehicles carrying survivors who had returned to salvage some possessions, volunteers, journalists and the simply curious edged carefully past one another as they sought a way out of Mati. The only reason they did not run the risk of being burned alive was that pretty much anything in the vicinity that could burn had already burned — pine trees, houses, people, pets and cars — even a wooden umbrella on a beach where people had fled into the water. Black dust and liquefied aluminum lay on the road when the incinerated hulks were removed.

By Friday, the death toll had reached 87, with scores still missing. It was unclear how many of the bodies had been identified, a daunting task because of the intense heat most had been exposed to.

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Wednesday, July 25, 2018

As Greek Wildfire Closed In, a Desperate Dash Ended in Death

by Jason Horowitz

New York Times

July 24, 2018

They nearly reached the water.

As wind-fueled wildfires that killed at least 76 people in vacation areas outside Athens bore down on their seaside resort, 26 men, women and children gathered in the hope that they could find the narrow path leading to a small staircase down to the water.

The gated entrance stood only a dozen paces away, but with smoke blotting their vision and choking their lungs, they appear to have lost their way. Officials found their bodies the next day, Tuesday; several were still clinging to one another.

At sundown, an eyeglass case, a belt buckle, the carcasses of dogs and the shells of cellphones dotted the still-smoldering field where they fell. Amid the burned pine cones and the naked trees, leaning as if slammed by a nuclear wind, lay a large leather sandal and a small blue one with a Velcro strap.

All around were the discarded blue rubber gloves of the emergency workers who carried the bodies away.

Greece, a country that understands tragedy all too well, woke Tuesday morning to its worst one in a decade. In addition to those killed by smoke or fire, or who drowned in the sea while trying to flee, 187 people were hospitalized, more than 20 of them children. Ten people remained in serious condition, the government said Tuesday night.

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Tuesday, July 24, 2018

At least 74 killed by Greek forest fires

by Kerin Hope

Financial Times

July 25, 2018

The devastating forest fires that have swept through crowded resorts on the Greek coast near Athens have killed at least 74 people.

The blaze, fanned by strong winds, raged out of control for a second day in eastern Attica, where more than 700 people were evacuated overnight in small boats. The fire service has also asked people to evacuate the area around Kineta, west of Athens.

Almost 50 wild fires have broken out across Greece in the past two days, with 10 still burning on Tuesday — including blazes in Corinth, Crete, and in central and northern Greece — after a weekend heatwave sent temperatures above 40C.

The number of fatalities makes this the highest death toll from forest fires in recent times and it looks set to rise further after a fire service spokeswoman said about 100 people were missing. More than 170 people have been injured. In 2007 more than 60 people were killed when a blaze devastated the southern Peloponnese peninsula.

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Monday, July 23, 2018

Athens and Moscow’s Stunning Falling-Out

by Nikos Konstandaras

New York Times

July 23, 2018

For centuries, even when Athens was a bastion of the West during the Cold War, Greece and Russia have seen themselves as natural allies. Both are Christian Orthodox nations on Islam’s western frontiers; even as a NATO member, Greece tried to maintain channels of communication with the Soviet Union. Yet a sudden dispute over alleged Russian meddling in Greek affairs has escalated rapidly. This could have long-term consequences for Greek-Russian ties and for the Western Balkans.

This month, Athens informed Moscow that it was expelling two Russian diplomats and refusing entry to two others. Among the accusations: the four were trying to stoke opposition to a recent agreement signed by Greece and a northern neighbor, the Former Yugoslav Republic of Macedonia, ending a 27-year dispute over the latter’s name.

Ratification by both countries would open the way for a renamed the Republic of North Macedonia to join NATO and the European Union. Greek opponents of the deal object to their neighbors’ use of “Macedonia” in any form, saying this implies claims on the Greek province of the same name; Macedonian nationalists object to adding a qualifier to their country’s name.

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Thursday, July 19, 2018

A Greek Bearing Grifts

by Alexander Clapp

American Interest

July 19, 2018

It is hard to understand how the Greek state works without grasping the power held by a small circle of industrialists and financiers in Athens. These are the oligarchs. Many inherited their fortunes or first accumulated them at sea; their fleets collectively comprise the largest merchant marine in the world. Then they moved into new spheres. Some went into construction. Others set up banks. Many own a line of hotels or collect blocs of real estate. Those with ships pay the minimal tax rate in Greece owing to legislation passed by the 1967-74 military junta that allows their capital to be assessed in vessel tonnage rather than profits. Sometimes tying their holdings through Cypriot or Liberian shell companies, oligarchs nevertheless stay based in Greece, where they compound additional advantages—bailouts courtesy of Greek taxpayers, lucrative state contracts—through blackmail.

With every new government that takes power in Athens, the oligarchs threaten to take away the jobs they provide and the cash they flush into the political system should any attempt be made to audit their assets or tax them more effectively. In the past three decades not a single major party in Greece has run for election without vowing to break the power of these men; not a single party has seriously attempted to do so once in office. What is more, oligarchs are able to control the narratives told about them because there hardly exists a newspaper, television channel, or magazine in Greece that is not owned by one of them. Their power is such that press outfits within—and outside—the country have many legal and financial incentives not to call them out by name.

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Russia’s Lavrov scraps Greek visit in row over Macedonia

by Kerin Hope

Financial Times

July 19, 2018

The Russian foreign minister, Sergei Lavrov, has called off a visit to Athens following the expulsion from Greece of two Russian diplomats accused of trying to step up nationalist protests against the country’s recent naming deal with Macedonia.

The Russian ambassador to Athens, Andrei Maslov, said on Thursday the timing of the trip was “no longer suitable,” according to the Tass news agency.

The leftwing Syriza-led government last month issued an invitation to Mr Lavrov to visit Greece in September.

Under Alexis Tsipras, the prime minister, Greece has maintained close ties with Russia. But a strong backlash against last month’s naming agreement has sent the government’s popularity plunging in opinion polls.

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Saturday, July 14, 2018

Russia meddles in Greek town to push back the west

by Kerin Hope

Financial Times

July 14, 2018

The sleepy Aegean port of Alexandroupolis in northern Greece has become a new focus for Russian efforts to extend its influence in south-eastern Europe and thwart the enlargement of Nato and the EU.

The town is home to a small community of Russian citizens with Greek connections. Two Russian diplomats, expelled this week for activities that allegedly violated Greek law, were well known in the port, according to two people with knowledge of their activities.

The diplomats were accused of working with businesspeople to bribe local government officials, Orthodox clergymen, and members of cultural associations and far-right groups across the north of the country in order to fan a popular backlash against the naming agreement signed last month between the leaders of Greece and Macedonia.

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Wednesday, July 11, 2018

Greece to expel 2 Russian diplomats

by Kerin Hope

Financial Times

July 11, 2018

Greece has decided to expel two Russian diplomats and block two others from entering the country in a spat prompted by last month’s deal on a new name for Macedonia, according to two people briefed on the issue.

Zoran Zaev, the Macedonian prime minister, expects to receive a formal invitation to join Nato at the alliance summit opening today in Brussels after agreeing with his Greek counterpart Alexis Tsipras to change the country’s official name to North Macedonia. Moscow is strongly opposed to Nato expanding further in the Balkans, warning that Macedonian membership of the alliance “might have negative consequences for regional security and bilateral relations.”

The Russian diplomats are suspected of bribing Greek officials — including a member of the armed forces — as part of an attempt to undermine negotiations on the name earlier this year. The deal triggered a fierce backlash, including dozens of street protests organised by nationalist Greeks.

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Saturday, June 30, 2018

Greece offers a glimpse of life after populism

by Anne Applebaum

Washington Post

June 29, 2018

There was a moment, at the height of the Greek debt crisis in July 2015, when many Athenians went to sleep expecting to wake up in a different country. One Greek academic told me he feared Greece would crash out of the euro currency overnight, that there would be no money in the banks in the morning, that there would be food shortages and then riots: “Greece is a middle-class country,” he told me. “I didn’t think we would be able to cope with the shock.” Several others told me that they had genuinely expected the arrival of a Venezuelan-style dictatorship, perhaps with tanks on the street.

These fears were not far-fetched. Greece was governed then — as it still is now — by a strange coalition of far-left and far-right extreme populists. At the time it was formed, this coalition seemed just as weird and jarring as the new Italian far-left and far-right government does today. Syriza, the larger party, had originated as a faction of the Greek Communist Party. The junior partner, the “Independent Greeks,” believes that Greece’s massive debt is the result of an international conspiracy. Both parties have at times voiced disdain for the institutions of what Lenin dismissively referred to as “bourgeois democracy.”

But the Venezuela-style dictatorship never emerged. Depending on who tells the story, Syriza’s leader, Greek Prime Minister Alexis Tsipras, was scared off by fear of a military counter-coup; feared the economic consequences of crashing out of the euro zone; or never really meant all that stuff anyway. Although he had stoked up his followers with angry, anti-European rhetoric and promises to enrich “the people” at the expense of the elites, the banks and the Germans, he wound up following the rules set by the international institutions who had taken charge of Greece’s finances. Greece remained inside the euro and inside the international financial and legal systems its leaders claimed to abhor.

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