Monday, September 18, 2017

When Is It Dangerous to Declare a Crisis Over?

by Jeremy Grant

Strategy & Business

September 18, 2017

When is it a good time to declare that a crisis is over? This is not an academic question. For people leading large organizations and governments, crises are part of the new normal. A recent PwC survey of chief executives found that 65 percent of CEOs had experienced at least one crisis in the past three years. About one-third predicted they would face more than one crisis in the next three years compared with just 16 percent who felt they’d face fewer.

There has been no shortage of corporate crises in the headlines recently, from the massive IT outage that hit British Airways in May, to the hack of Equifax data that was made public in early September. And for the past decade, the authorities that oversee the European economy have been grappling with a financial and economic crisis that began in 2007.

There is, of course, a natural tendency to want to see a crisis as being behind us when not all the facts support that view. Among the many cognitive biases humans grapple with is one that leads us to have, as Madan Pillutla, a professor in organizational behavior at London Business School puts it, a “more positive forecast for things than is statistically likely or possible.”

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Saturday, September 16, 2017

The eurozone may be back on its feet. But is Greece?

by Helena Smith

Observer

September 16, 2017

Is the eurozone on the mend? Jean-Claude Juncker certainly thinks so. The EU president was upbeat in Brussels last week as he gave his annual state-of-the-union address, proclaiming that “the wind is back in Europe’s sails”.

Juncker’s optimism appeared to match the view from Greece, the currency bloc’s problem child. In Athens only the previous week, the visiting French president, Emmanuel Macron, had been even more enthusiastic, declaring against the backdrop of the Acropolis that Greece’s prolonged crisis was over, and that therefore Europe’s was too.

Macron’s finance minister, Bruno Le Maire, went further, calling the Greek prime minister, Alexis Tsipras, “a real leader [who] works for the common good … a prime minister who works with great courage”.

But if progress on Greece’s privatisation programme is anything to go by, the eurozone’s most troubled economy is still in the foothills of recovery. Despite signs of resurgence – at 0.7%, Greece recorded two consecutive quarters of growth this year for the first time since 2006, and made a successful test return to the markets – foreign sell-offs have been plagued by red tape and political resistance.

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Wednesday, September 13, 2017

A New Challenge Looms for Greece’s Far Left

by Yannis Palaiologos

Wall Street Journal

September 13, 2017

Among the casualties of Greece’s extended economic crisis has been the country’s establishment left. The near-decimation of the center-left Pasok party has meant that in recent years the political space between the governing Syriza party on the far left and the parties of the center-right has had little effective representation. But now, after many false starts, an effort is under way to re-energize the center-left with a new political party, and Prime Minister Alexis Tsipras is concerned.

Pasok governed Greece for 21 of the 30 years between 1981 and 2011, never dropping below 38% in parliamentary elections. Under the weight of its own mishandling of the country’s fiscal collapse, however, the party’s support nosedived to 12% from 44% in two-and-half years. By the January 2015 election, its support plummeted below 5%. Meanwhile, Syriza won 35% of the vote in 2015, up from less than 5% in the October 2009 election.

Several initiatives since then to regroup and unify the ranks between Syriza and the center-right New Democracy party achieved little. The legacy of fragmentation and conflicting personal strategies that long bedevilled the political center seemed impossible to overcome.

Meanwhile, Mr. Tsipras’s abandonment of his radical agenda and his embrace, however half-hearted, of the reform-and-austerity policies of his predecessors, made him a plausible candidate to take up the leadership of Greek social democracy.

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Tuesday, September 12, 2017

Forget the Parthenon: how austerity is laying waste to Athens' modern heritage

by Helena Smith

Guardian

September 12, 2017

Not that long ago I received a questionnaire through my door. How had the 1930s Bauhaus building in which I live survived the rigours of time? Who had designed it? Who was its first owner? And, the form went on, what were my memories of it?

Circulated far and wide across Athens, the questionnaire and its findings are part of a vast inventory of 19th- and early 20th-century buildings that now stand at the heart of a burgeoning cultural heritage crisis in Greece. At least 10,600 buildings are on the database and it is growing by the day.

Against a backdrop of economic recession – the price of three gargantuan bailouts to keep the debt-stricken country afloat – home maintenance has become a luxury few can afford. With bank loans frozen and cuts and tax increases straining budgets, many of the buildings have been allowed to fall into disrepair, or have been pulled down altogether.

“In the present climate, people just don’t have the money to restore them,” says Irini Gratsia, co-founder of Monumenta, the association of archaeologists and architects that is collating the database. “There is a great danger that many will be demolished not because their owners want new builds, but because they want to avoid property taxes announced since the crisis began.”

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Monday, September 11, 2017

Greece: Where Literally Sitting on Goldmine Is Not Enough to Make Money

by Sotiris Nikas, Paul Tugwell & Danielle Bochove

Bloomberg

September 11, 2017

Eldorado Gold Corp. has put Greece on the spot.

The Canadian mining company’s decision on Monday to suspend all its operations in Greece, citing delays in acquiring routine permits, puts the Syriza government of Prime Minister Alexis Tsipras in a difficult position. Eldorado Gold is the largest foreign investor in Greece and its decision comes as the country, which is working on creating a sustainable path to exit its bailout program, tries to lure foreign investments.

“Irrespective of what will happen next, the damage for Greece as an investment destination is done and it is very significant,” said Wolfango Piccoli, co-president of Teneo Intelligence in London.

The Greek economy has shrunk by more than 25 percent since Europe’s sovereign debt crisis began in 2008. Since 2010, the country has been under bailout programs with stringent belt-tightening requirements. It has been working on attracting investments like Eldorado’s to end the bailouts and tackle high unemployment.

Eldorado’s decision “is a major blow for the Greek economy,” Mujtaba Rahman, managing director of Eurasia said. “It will make it harder for Syriza to successfully exit the bailout next year.”

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Eldorado Gold threatens to freeze Greek operations

by Kerin Hope

Financial Times

September 11, 2017

Eldorado Gold, the biggest foreign investor in Greece, threatened to suspend its operations in the country in the first test for Alexis Tsipras and his leftwing Syriza government over their new policy of welcoming private investment.

Less than 48 hours after the premier told a business conference that a drive for “Grinvestment” had replaced the fear of a “Grexit” [from the euro], the Vancouver-based miner said it planned to put a $3bn mining investment in north Greece on hold because of delays in securing permits from the development ministry.

George Burns, chief executive, on Monday said Eldorado would shut all its operations in Greece on September 22 if key permits for two gold extraction projects were not issued in the next few days.

“This decision is not one we’ve taken lightly,” Mr Burns said in Athens. ‘We’ve held several meetings with development minister [George] Stathakis and were encouraged [to believe] the permits would be issued. But we’re still waiting.

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No escape from debtors’ prison for Greece

by Hugo Dixon

Reuters

September 11, 2017

Alexis Tsipras is desperate to avoid “suffocating supervision” of Greece’s actions when the country’s third bailout programme ends next August. At the weekend, he promised as much. But the best the Greek prime minister can hope for is that Athens will move from its current high-security prison to an open one – and that will happen only if he behaves.

Tsipras wants a clean exit from the 86 billion euro bailout so he has a good story to tell Greek voters in advance of an election that has to be held no later than September 2019. The socialist leader is currently trailing the conservative opposition in the opinion polls because of a string of broken promises and errors that have damaged the economy.

However, if Greece could escape its debtors’ prison – which involves detailed monitoring of the government’s actions by the euro zone and the International Monetary Fund and is seen as an affront to national pride – Tsipras might conceivably win a future election. Failing that, he might at least avoid an electoral wipeout and live to fight another day.

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Thursday, September 7, 2017

Emmanuel Macron to stress EU financial solidarity in Athens

by Anne-Sylvaine Chassany & Kerin Hope

Financial Times

September 7, 2017

Emmanuel Macron will make the case for an overhaul of the eurozone during a two-day state visit to Greece designed to mark the member of the single-currency union’s relative return to normality.

The French president and his wife are flying to Athens with about 40 French executives on Thursday to emphasise the need for more financial solidarity with weaker members of the eurozone, in the form of investment and a common budget to help prevent new existential crises in the bloc, Elysée aides said.

The leader is pushing for the EU to adopt tighter labour rules, more protective trade tools and more stimulus, in exchange for more budget discipline at home and deregulation in the French jobs market — a bargain that Germany is showing signs it might consider.

Mr Macron has said he would like each country’s contribution to the future eurozone budget to amount to “several” gross domestic product percentage points.

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Monday, September 4, 2017

Moscovici: Greek bailout was a ‘scandal’ for democratic procedures

by Sarantis Michalopoulos

EURACTIV.com

September 4, 2017

The Eurogroup’s handling of Greece’s bailout programme was a scandal in terms of democratic processes, Economic Affairs Commissioner Pierre Moscovici insisted in an interview with Corriere della Sera.

After eight years of crisis and tough austerity-driven policies, the French Commissioner admitted that the Eurogroup’s decisions “behind closed doors” on the Greek bailout was a scandal in terms of democratic processes.

In June, the much-awaited second assessment of Greece’s third bailout was successfully concluded. On Tuesday (5 September), Moscovici will meet Greek Finance Minister Euclid Tsakalotos in order to start the negotiations on the third evaluation.

“It is a scandal in terms of democratic processes, not because the decisions were scandalous, but because by deciding in this way the fate of a nation, imposing detailed decisions on pensions, the labor market,” Moscovici told Corriere della Sera.

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Friday, September 1, 2017

Greek economy expands in second quarter, net exports help

by George Georgiopoulos

Reuters

September 1, 2017

Greece’s economy expanded for a second straight quarter between April and June, its statistics service said on Friday, driven by gains in exports and higher government spending.

The seasonally adjusted data showed gross domestic product expanded 0.5 percent in the second quarter from the first, at the same pace as in the previous three months, for which growth was upwardly revised.

Annual growth accelerated to 0.8 percent from 0.4 percent growth.

The economy’s gradual recovery after a deep recession that shrank it by a quarter and drove unemployment to record highs is boosting hopes that Greece will be able to emerge successfully from years of bailouts.

“The reading was in line with our forecasts. Growth was based on an increase in net exports and a continuing strengthening of consumption,” said National Bank economist Nikos Magginas.

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Tuesday, August 29, 2017

Syriza revives radical policies to placate supporters

by Kerin Hope

Financial Times

August 29, 2017

After the reforms came the backlash.

Greece’s cabinet may be focused on implementing economic reforms agreed in return for an €86bn third international bailout.

But the government has also revived some of its radical policies in an effort to placate its core supporters, fearful that the leftwing party has gone soft under pressure from the bailout monitors.

Measures adopted last month by the Syriza government of Alexis Tsipras, prime minister, take aim at the party’s traditional enemies: high-earning lawyers and doctors, foreign-trained academics and private investors from abroad.

A tax squeeze on Greek professionals is being tightened, new legislation on universities rolls back reforms aimed at boosting academic standards, and the authorities are further delaying a €1.5bn gold extraction project by Canada’s Eldorado Gold, the country’s largest foreign investor.

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Saturday, August 26, 2017

Chastised by E.U., a Resentful Greece Embraces China’s Cash and Interests

by Jason Horowitz & Liz Alderman

New York Times

August 26, 2017

After years of struggling under austerity imposed by European partners and a chilly shoulder from the United States, Greece has embraced the advances of China, its most ardent and geopolitically ambitious suitor.

While Europe was busy squeezing Greece, the Chinese swooped in with bucket-loads of investments that have begun to pay off, not only economically but also by apparently giving China a political foothold in Greece, and by extension, in Europe.

Last summer, Greece helped stop the European Union from issuing a unified statement against Chinese aggression in the South China Sea. This June, Athens prevented the bloc from condemning China’s human rights record. Days later it opposed tougher screening of Chinese investments in Europe.

Greece’s diplomatic stance hardly went unnoticed by its European partners or by the United States, all of which had previously worried that the country’s economic vulnerability might make it a ripe target for Russia, always eager to divide the bloc.

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Tuesday, August 22, 2017

Europe Owes More to a truth-teller in Athens

by Thanos Catsambas

Wall Street Journal

August 22, 2017

Few debacles in recent memory better represent the moral collapse of modern Greek society than the persecution of Andreas Georgiou. This endless ordeal is the culmination of failure at multiple levels of stakeholders, not least of which being the European institutions that have repeatedly bailed the country out over the past seven years.

From 1997 to 2009, a succession of Greek governments provided false data to the European Commission’s bureau of statistics, Eurostat. This led to three years of underreported deficits, which prevented Greece from taking earlier and more effective measures, according to EU rules. Reports from the Commission and the European Parliament have noted that some of these data were outright fraudulent. The term “Greek statistics” began to assume derogatory connotations.

Mr. Georgiou, a former member of the statistics department at the International Monetary Fund, in August 2010 took over the Greek statistics office, known as Elstat, and began to improve the quality of the data. His efforts helped remove the reservations international creditors had about the quality of the information coming out of Elstat.

Mr. Georgiou’s long-overdue truth-telling about the government’s finances revealed that Athens had been spending far beyond its means for many years. Crucially, the new reliability of Greek statistics also enabled the rescues that international creditors have offered Greece since 2010. Other eurozone governments and the IMF wouldn’t have provided these loans to save Greece from bankruptcy had they been unable to trust Elstat.

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Monday, August 21, 2017

Greece in Crisis: The Cultural Politics of Austerity

Edited by Dimitris Tziovas

I.B. Tauris Publishers

July 2017

Since 2010 Greece has been experiencing the longest period of austerity and economic downturn in its recent history. Economic changes may be happening more rapidly and be more visible than the cultural effects of the crisis which are likely to take longer to become visible, however in recent times, both at home and abroad, the Greek arts scene has been discussed mainly in terms of the crisis. While there is no shortage of accounts of Greece’s economic crisis by financial and political analysts, the cultural impact of austerity has yet to be properly addressed. This book analyses hitherto uncharted cultural aspects of the Greek economic crisis by exploring the connections between austerity and culture. Covering literary, artistic and visual representations of the crisis, it includes a range of chapters focusing on different aspects of the cultural politics of austerity such as the uses of history and archaeology, the brain drain and the Greek diaspora, Greek cinema, museums, music festivals, street art and literature as well as manifestations of how the crisis has led Greeks to rethink or question cultural discourses and conceptions of identity.

Dimitris Tziovas is Professor of Modern Greek Studies at the University of Birmingham. He has served as Director of the Centre for Byzantine, Ottoman and Modern Greek Studies at the University of Birmingham and as Secretary of the European Association of Modern Greek Studies. He is the author of The Other Self: Selfhood and Society in Modern Greek Fiction and editor of Re-imagining the Past: Greek Antiquity and Modern Greek Culture.

Wednesday, August 9, 2017

Minister’s court win intensifies fears for rule of law in Greece

by Kerin Hope

Financial Times

August 9, 2017

Fears for the independence of the Greek judicial system are mounting after the foreign minister won a court order freezing the bank accounts of a leading magazine over a reader’s letter describing him as a former “fanatical” Stalinist.

The ruling in favour of Nikos Kotzias has drawn sharp criticism from academics and public figures, who say it violates EU law on freedom of expression. It also highlights broader concern over perceived interference in the justice system by the leftwing Syriza government.

The concerns widened beyond Greece last week when senior eurozone officials warned the government that the continued prosecution of Andreas Georgiou, its former statistics chief, over claims he inflated the size of the country’s budget deficit in 2009, threatened to drive a wedge between Athens and its euro area creditors.

The affair comes as Brussels is already locked in stand-offs with Poland and Hungary over the rule of law that have raised questions over the EU’s ability to enforce the democratic standards at the core of the European project.

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Monday, August 7, 2017

Lessons for the eurozone from Greece’s painful crisis years

by George Pagoulatos

Financial Times

August 7, 2017

Greece is finally growing again. But it has been arguably the eurozone’s greatest failure. Catapulted into a debt crisis with a 15 per cent government spending deficit in 2009, the country suffered eight years of economic contraction. Unemployment is still 23 per cent, youth unemployment 45 per cent. Greece’s “Great Depression” has been as deep as that of the US in the early 1930s, but twice as long.

Can Europe learn from the country’s painful experience? A first lesson is to reform at the top of the cycle. Greece had to adjust in recession because it failed to do so in its pre-crisis boom. Reforms should always be adopted in times of growth, when people are confident and losers can be compensated. An upswing can buy time to implement reforms, but should not be invoked as evidence that reforms are unnecessary. The eurozone is now in its strongest period of post-crisis recovery. But it should avoid complacency. Reforms are necessary for the long-term viability of the monetary union. We need a stabilisation budget and joint-borrowing capacity; greater risk sharing; and financial union to break the doom loop between banks and government.

After September’s election in Germany, and assuming Emmanuel Macron delivers domestic reforms in France, Europe will be at the top of its political cycle. This is the time to push ahead with eurozone reforms. They will require painful concessions: the Germans refuse joint deposit insurance or a fiscal backstop, the French are not keen to surrender control over the national budget and the Italians reject ceilings on bank exposure to sovereign debt. But something must give.

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Elstat suspends preliminary Greek GDP estimate after discrepancies

by Kerin Hope & Eleftheria Kourtali

Financial Times

August 7, 2017

Greece’s statistical agency will no longer public “flash” estimates of the country’s gross domestic product after delays in data collection have led to frequent revisions of official growth figures.

Elstat said on Monday that its second quarter GDP estimate for 2017, which was due to be announced on August 14, would not be made public. Instead it said the provisional estimate, which is calculated using a bigger range of inputs from the economy, would be published on September 1 as scheduled.

The agency said it decided to suspend the flash estimate “in order to explore the availability of the necessary data sources that would help improve the consistency of the flash estimate.”

An Elstat official said some data used to calculate the flash estimate was incomplete, making revisions necessary when updated figures arrived.

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Sunday, August 6, 2017

A legal farce calls Greek reform into question

Financial Times
Editorial
August 6, 2017


After years of punishing austerity, Greece finally has grounds to hope it will regain its financial independence when its bailout programme ends next summer. The economy has returned to modest growth. Against expectations, Athens has hit its fiscal targets and secured a pledge of further debt relief from creditors. Yet despite the huge efforts made to put the public finances on a more sustainable trajectory, there remain serious doubts over the government’s commitment to reform the Greek state, rid institutions of political influence and guarantee the rule of law.

The conviction last week of Andreas Georgiou, the country’s former chief statistician, for “violating” his duties during the sovereign debt crisis, is especially worrying. Mr Georgiou has for six years been fighting accusations that, as head of Elstat, the statistical agency, he inflated Greece’s 2009 budget deficit, forcing the country to undergo deeper austerity.

No matter that he had been acquitted of these charges a few months earlier, only to have the case reopened. No matter that the EU’s statisticians — whose standards he was supposed to be following — have endorsed both the procedures he followed and the figures he produced, describing last week’s trial as a “preset farce”. Mr Georgiou — a former IMF official and thus part of a hated international technocracy — is a convenient scapegoat for the failures of Greece’s political class.

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