Sunday, January 21, 2018

Greece set to win plaudits but not next tranche of bailout cash

by Jim Brunsden, Mehreen Khan & Kerin Hope

Financial Times

January 21, 2018

Eurozone finance ministers were set to hail Greece’s recent steps to improve its public finances on Monday — but also to hold off on giving Athens a full bill of health it seeks as it prepares to return to financial markets.

In Mário Centeno’s first meeting as president of the eurogroup, the finance ministers will confirm that Athens has adopted the vast majority of 113 economic reforms the country needs to take under this phase of its €86bn bailout.

The measures range from labour market reform to removing bureaucratic obstacles blocking a €7bn tourism and leisure project in Athens.

For Greece to receive its next allocation of bailout money, estimated at €6.7bn, a further check will need to take place in early February to ensure that the remaining measures have been completed. But at Monday’s meeting ministers will say the recent progress in effect closes the latest review of the bailout.


Monday, January 15, 2018

Greek parliament approves reform package in face of protests

by Kerin Hope

Financial Times

January 15, 2018

Greek lawmakers on Monday approved an omnibus package of labour, energy and fiscal reforms needed to wrap up the penultimate review of its €86bn bailout, as police clashed with leftwing demonstrators outside the parliament building.

The protests were prompted by a controversial labour reform that requires unions to win the support of 50 per cent of their membership before calling a strike. Public transport and government offices shut down on Monday as workers stayed away in protest against the move.

Protestors also objected to the launch of electronic auctions to dispose of properties that banks have already foreclosed on, as well as looming cuts in social benefits to be decided later this year.


How Greece sleepwalked off a cliff in 2009, in black and white

by Yiannis Mouzakis


January 15, 2018

Nine years since facing bankruptcy and subsequently having experienced the most severe economic crisis in its modern history, which took away a quarter of the economy and employment, a country should at least have identified the reasons that it found itself in such a mess.

A self-respecting political system burdened by the responsibility of chronic shortcomings should have reached a consensus, which would ensure that future generations will never face a similar calamity.

Greece, though, is not a normal country and certainly does not have a political elite that respects itself, or anyone else.

All these years, Greeks have been fed a diet of half-truths, conspiracy theories and witch-hunts that mainly aimed at deflecting the attention and discouraging any serious debate about what happened in 2009.

All sorts of ridiculous claims have been thrown around, from a global conspiracy to steal the country’s “rich natural resources” to scapegoating the head of the statistical office even though he hadn’t even started the job when the events unfolded.


Friday, January 12, 2018

Greece: suspension of protection grant after first-ever government appeal against positive asylum decision

European Council on Refugees and Exiles
January 12, 2018

The Administrative Court of Appeal of Athens has accepted a request by the Greek Ministry of Migration Policy for a provisional order to suspend a decision of the Appeals Committee granting refugee status to a Turkish soldier, pending the outcome of judicial review proceedings against the decision. The highly unorthodox order, issued on grounds of public interest to avoid risks of disruption of diplomatic relations with Turkey, follows the first-ever challenge of an Appeals Committee decision by the government before the court. The soldier has been arbitrarily detained following the order.

“The case is a blow not only to the right to asylum, but also to the rule of law and human rights, which the judiciary will once again try to remedy,” said Eleni Koutsouraki, lawyer of the Greek Council for Refugees who represent the applicant.

The applicant was among a group of eight soldiers arriving in Greece following the attempted coup d’état of 15 July 2016 in Turkey. While their extradition upon Turkey’s request was blocked by the Greek Supreme Court due to risks of ill-treatment, his asylum application was rejected by the Asylum Service on grounds of commission of a “serious non-political crime” under the exclusion clauses of Article 1F of the Refugee Convention on the basis that the acts committed were disproportionate to the political aim pursued. The Appeals Committee noted, however, that no documents in the case file contained evidence of the appellant’s participation in the attempted coup d’état, the killings of civilians or the attempted murder of the Turkish President.


Tuesday, January 9, 2018

Macedonia says new push underway to resolve naming dispute with Greece

by Kerin Hope

Financial Times

January 9, 2017

The Republic of Macedonia’s deputy prime minister for European affairs said on Tuesday that a new push was underway to settle a 25-year-old dispute with Greece over the country’s name.

After a meeting with Greek foreign minister Nikos Kotzias in Athens, Bujar Osmani said both sides were committed to resolve the issue within six months.

They have already agreed that Macedonia, known internationally as Fyrom (Former Yugoslav Republic of Macedonia), should adopt a “composite” name.

According to diplomats, this would most likely be either “New Macedonia” or, in a geographical reference, Vardarska Macedonia. The use of a composite name would avoid confusion with Greece’s own region of Macedonia.


Hedge Fund Sees Juice in Greek Rally as Yields Hit 2006 Low

by Todd White & Sid Verma


January 9, 2018

One of Western Europe’s most dramatic bond-convergence trades this decade -- Greece over Germany -- looks like it will reward investors yet again in 2018.

London hedge fund Algebris Investments is among those betting economic momentum will take the country’s borrowing costs even closer to Germany’s after the Mediterranean country’s 10-year yield spread narrowed by about 44 basis points this month alone. Algebris says it may shrink by as much as 75 basis points.

Greece’s economic recovery and speculation the country may exit its bailout program this year are coinciding with strong risk appetite, driving down borrowing costs.

“Greece has been one of our strongest views in 2017 and 2016,” said Alberto Gallo, a portfolio manager and head of macro strategies at Algebris Investments. The firm has cashed out on some of its positions even though it continues to favor the trade, he said.


Monday, January 8, 2018

Turkish officer’s asylum ‘temporarily’ suspended by Greek court

by Kerin Hope

Financial Times

January 8, 2018

A Greek court has accepted an unusual government request to “temporarily” suspend the granting of political asylum to one of eight Turkish officers who flew an army helicopter to Greece in July 2016 after an attempted military coup in Turkey.

The court cited the “public interest…and the interests of the officer himself” in its decision. Suleyman Ozkaynakçi, the co-pilot of the helicopter, was ordered to be held in custody until a full hearing of the case on February 15.

Greece’s independent asylum authority granted asylum to the officer in December, 10 months after its supreme court rejected Turkey’s extradition request for the eight officers. They all applied for asylum in Greece.

The asylum authority said in its ruling there was no evidence that Ozkaynakçi participated in the coup, and that Turkey was seeking his extradition for political reasons.


Friday, January 5, 2018

The New Greek Oligarchy

by Alexander Clapp

American Interest
January 5, 2017

Ivan Ignatyevich Savvidis has played many unusual roles in his life—one of the great tobacco tycoons of Eurasia, a member of Russia’s Duma, a confidante of Vladimir Putin —but it is his latest one that is now sounding off alarm bells throughout Europe. Savvidis is the parvenu of Greece’s oligarchic scene. Since the onset of the economic crisis, he has effectively seized personal ownership over vast sectors of Thessaloniki, Greece’s second city and its maritime gateway to the Balkans. The fire sale of old state assets—an auctioning process ordained by the European Union as part of its enforcement of economic austerity, but which has become overwhelmingly rigged by vested political interests within Greece—has given Savvidis a rare opportunity to invest hundreds of millions of euros into his ancestral homeland. A soccer team, a grand luxury hotel, a tobacco conglomerate, a water-bottling company, a fleet of beach resorts, a television station, a trio of newspapers, great stretches of coastline and blocs of Thessaloniki real estate, the port of Salonika and its industrial warehouses: these are but a few of the holdings that Savvidis has quietly acquired in the last eight years. The buying spree has lately given rise to a strange new coinage across the newspaper headlines and streets of his adopted city: Ivanaptiksi, “prosperity emanating from Ivan.”

This slow-motion conquest, taking place hundreds of kilometers from Athens in a city that makes few international headlines, has now begun to raise serious questions. How has a man worth $760 million on paper invested close to half of that amount in Greece in less than a decade? Allegations now being openly raised by the European press, along with concerns publicly voiced by the American ambassador in Athens, suggest that Ivan Savvidis is not what he appears to be: Masquerading as the financial savior of Thessaloniki, the theory runs, he is in fact a conduit of Putinist interests in the Aegean.

Seen in this light, virtually all of Savvidis’s business deals and public undertakings in Greece seem to serve Moscow’s agenda. His dealings with the center-right New Democracy party—marrying off his niece to its general secretary, pitting its various clans against one another, peeling off the loyalties of its elected constituents through purported bribery all across northern Greece—appear an effort to sow division within the party most bent on Greece’s continued membership in the European Union. His purchase of Thessaloniki’s port seems a move to stymy NATO’s naval access to the interior of the Balkans, a region at the convergence of Russian and American spheres of influence. The millions of euros Savvidis has donated to the monasteries of Mount Athos for the construction of new churches act simultaneously as a Russian investment of soft power in a no-man’s land of international authority and financial transparency.


Thursday, January 4, 2018

Greece risks complacency as its eight-year bailout cycle ends

by Tony Barber

Financial Times

January 4, 2018

Like Prometheus, the mythological titan, Greece has been chained to a rock since 2010, its liver gnawed by pitiless foreign creditors as punishment for having sparked the eurozone debt crisis. So runs a certain national narrative. But just as the heroic Hercules rescued Prometheus, so Alexis Tsipras — in his own eyes, at least — is the leader who will achieve Greece’s salvation in 2018 by ending an eight-year cycle of bailouts and restoring the nation’s sovereignty.

It represents an extraordinary turnround for Mr Tsipras. He took office in January 2015 as the most radical leftist prime minister of a European democracy in the post-1945 era. An intransigent opponent of the creditors, he abhorred their stranglehold on Greek economic policy. His foolhardiness almost caused Greece to crash out of the eurozone. Then at the eleventh hour he reversed course and started doing the creditors’ bidding. His surrender kept Greece in the currency union.

Barring some unforeseen turmoil in domestic politics or global markets, Greece will leave its third bailout, this one worth €86bn, in August. European governments and EU institutions will declare that Mr Tsipras and his government have done enough, by maintaining a fiscal surplus and carrying out economic reforms, to justify an exit. To everyone’s relief, this will, in principle, draw the curtain on the acute phase of a crisis that has dragged on for eight years of the eurozone’s 19-year existence.


Wednesday, December 27, 2017

Is Greece Ready for a Ronald Reagan or Margaret Thatcher?

by Dan Mitchell

International Liberty

December 27, 2017

I’ve written that it’s theoretically possible for Greece to pay its debts and restore prosperity.

After all, it’s simply a matter of obeying fiscal policy’s Golden Rule and reforming a suffocating tax system.

But I’ve always figured none of that will happen because Greek voters would never vote for a government that favors Reagan-style or Thatcher-style economic reforms.

Simply stated, there are too may Greek people living off the state. But that’s just part of the problem. An even bigger obstacle to reform is that the people have decided that it’s morally acceptable to mooch off the government.

As a result, I’ve assumed that Greece has passed a tipping point because the moral foundation of Greek society has been corroded by dependency. And it’s very difficult to put that toothpaste back in the tube.


Wednesday, December 20, 2017

Check, please: How much Alexis Tsipras's first months cost Greece

by Yiannis Mouzakis


December 20, 2017

This time last year, Alexis Tsipras was in the awkward position of having missed his main objectives and found himself at odds with Greece’s creditors over his decision to hand out a 13th pension.

The conflicting interests of key stakeholders in Greece’s programme did not converge and the last Eurogroup of 2016 did not lead to the conclusion of the second review. Instead, it dragged on until June this year. Most critically, the main goal of being included in the European Central Bank’s QE programme was missed as the ECB required assurances about the country’s long-term debt sustainability and Germany was not willing to discuss even the medium-term debt relief measures, which were eventually pushed back to the end of the programme in 2018.

The months that followed were ridden with uncertainty and the economy slowed down. To seal a deal at last June’s Eurogroup, Tsipras agreed to additional fiscal measures worth 2 percent of GDP in the form of pension cuts and tax hikes for 2019 and 2020, mostly to appease the fiscal concerns of the International Monetary Fund.


Sunday, December 17, 2017

The Greek Experiment: Can an Economy Be Wiped Out by Taxation?

by Dan Mitchell

International Liberty

December 16, 2017

Greece has confirmed that a nation can spend itself into a fiscal crisis.

And the Greek experience also has confirmed that bailouts exacerbate a fiscal crisis by enabling more bad policy, while also rewarding spendthrift politicians and reckless lenders (as I predicted when Greece’s finances first began to unravel).

So now let’s look at a third question: Can a country tax itself to death? Greek politicians are doing their best to see if this is possible, with a seemingly endless parade of tax increases (so many that even the tax-loving folks at the IMF have balked).

At the very least, they’ve pushed the private sector into hospice care.


Friday, December 15, 2017

Greek Bond Yields Fall to Lowest Since 2006

by Christopher Whittall

Wall Street Journal

December 15, 2017

The yield on 10-year Greek government bonds closed Friday below 4% for the time since 2006, the latest sign of investor optimism over the outlook for the formerly troubled economy.

The 10-year yield declined to 3.93% from 4.096% on Thursday, according to Tradeweb. Yields fall as prices rise. That compares to a high of 37% during the eurozone crisis in 2012 when Greece defaulted on its debt, and 7.86% in February.

Earlier this year, the Greek government reached a deal with its international creditors over its bailout package, sparking a sharp rally in the bonds. That enabled the country to return to capital markets in July with its first debt sale in three years. The rally has accelerated in recent sessions, with the yield dipping below 5% for the first time in years on Dec. 5.


Friday, December 8, 2017

Erdogan wraps up tense Greece visit with trip to Thrace

by Kerin Hope

Financial Times

December 8, 2017

Turkish President Recep Tayyip Erdogan wrapped up a tense visit to Greece on Friday with a brief trip to the northeastern region of Thrace, the home of a Muslim minority of mainly ethnic Turkish descent.

“Erdogan, Erdogan, our leader,” shouted a crowd of several hundred people outside a mosque in Komotini where the Turkish leader attended midday prayers.

Later, Mr Erdogan addressed members of the minority at a Greek state highschool where most lessons are taught in Turkish. He also met with community representatives, including Muslim MPs from the governing left-wing Syriza party and Muslim religious leaders, before flying back to Ankara.

In Athens, Mr Erdogan on Thursday accused Greece of historic discrimination against the minority, asserting that the per capita income of the ethnic Turkish community was more than 80 per cent lower than that of other Greek citizens.


Outspoken Erdogan shocks hosts on visit to Greece

by Kerin Hope

Financial Times

December 8, 2017

Greece has been left smarting after Recep Tayyip Erdogan used the first visit by a Turkish head of state in 65 years to make outspoken remarks on bilateral disputes between the two neighbours

During a two-day visit Mr Erdogan’s comments on minority rights, Cyprus and the treaty that defines the Greek-Turkish relationship visibly shocked Prokopis Pavlopoulos, his Greek counterpart, and put Alexis Tsipras, the prime minister, on the defensive at a joint news conference.

Mr Erdogan publicly rehearsed a series of bilateral grievances that at their most extreme have brought the two Nato allies and Aegean neighbours to the brink of war.

Athens had billed Mr Erdogan’s visit as an opportunity to consolidate bilateral ties and perhaps make progress towards reducing the continued flow of refugees and migrants from Turkey to the eastern Greek islands. While refugee arrivals have shrunk since last year’s deal between Ankara and the EU, Greek officials are concerned about an rise in numbers over the past six months.


Monday, December 4, 2017

Greece Just Witnessed Something It Hasn’t Seen Since 2006

by Marcus Bensasson


December 4, 2017

Greece’s economy expanded for a third straight quarter for the first time in more than a decade, providing a foundation for the country’s attempts to exit its bailout program next year.

Gross domestic product grew 0.3 percent in the three months through September after expanding a revised 0.8 percent in the previous quarter, the Hellenic Statistical Authority said in a statement on Monday. From a year earlier, GDP grew 1.3 percent.

Greece’s government and representatives of the country’s creditor institutions on Saturday agreed on a set of economic overhauls the country must undertake in exchange for fresh loans. The payout, supplemented by more bond market forays next year, will help the government build a cash buffer as it seeks to prepare for its bailout exit when the current program expires in August 2018.


Sunday, December 3, 2017

Greece’s Dangerous Budget Surplus

by Yannis Palaiologos

Wall Street Journal

December 3, 2017

At first glance, Greece’s traumatic 2015 bailout—its third in five years—appears to be working. The government’s budget is back in surplus, excluding debt service, after the years of deficits that contributed to the country’s first crisis in 2010. The radical leftist prime minister, Alexis Tsipras, now touts the “restoration of Greece’s fiscal credibility.” As recently as 2014 he savaged his predecessor, who achieved much lower surpluses, for “austerity.”

The only problem is that the bailout is not in fact working, if you think the goal should be to restore Athens to sound public finances and to offer Greeks economic hope for the future.

The European Commission’s autumn forecast predicts eurozone economic growth of 2.2% this year, the fastest in a decade. But Greece is falling further behind. It was originally projected to grow by as much as 2.7% in 2017. Six months ago, the EU’s number crunchers reduced that forecast to 2.1%. Last month they cut it further, to 1.6%.

This anemic performance is caused both by excessively demanding fiscal targets and by persistent structural impediments to investment. On both fronts, Greece’s creditors are complicit in the country’s continuing woes.


Greek central bank chief cleared over personal assets statement

by Kerin Hope

Financial Times

December 3, 2017

Greece’s central bank governor has been cleared by a Greek parliamentary audit committee of charges that he made false statements about his personal assets while serving as finance minister between 2012 and 2014.

Yannis Stournaras last month requested a fresh audit of his asset statements made between 2012 and 2014 after Documenta, a pro-government weekly newspaper, revived an earlier accusation in Hot Doc, an investigative magazine, concerning his family’s summer home on the Aegean island of Syros.

Documenta wrote that Mr Stournaras failed in 2012 and 2013 to declare alterations carried out at his property on Syros that increased its value.

“The new audit showed that everything [concerning the Syros property] took place according to the law . . . There is no outstanding legal or political issue,” a person involved in the parliamentary procedure said on Sunday.


Greece hopes reforms deal will smooth bailout exit

by Kerin Hope

Financial Times

December 3, 2017

Greece has reached agreement with its international creditors on reforms required to release the next loan tranche under its current bailout, boosting the leftwing Syriza government’s hopes of achieving a smooth exit from the €86bn programme next August.

“The [EU and IMF bailout monitors’] visit is completed, we have closed the [technical] agreement,” Euclid Tsakalotos, finance minister, said after the week-long talks ended on Saturday.

An EU statement confirmed that a deal — which includes energy sector reforms and fiscal and structural measures bringing Greece in line with eurozone counterparts — had been reached. It must be approved by eurozone finance ministers, who are due to meet on Monday.

Since the creditors’ third review of progress made by Athens was launched in October, the Syriza government has shown greater willingness than previously to make compromises.


Wednesday, November 29, 2017

Europe Needs a Way to Prevent the Next Greek-Style Debt Crisis

by Ferdinando Giugliano


November 29, 2017

If there was ever a textbook example of how not to handle a sovereign debt crisis, it was Greece. Nearly a decade since Athens first asked for help from its euro zone partners and the International Monetary Fund, the Greek economy is still struggling to recover. Even after a steep restructuring, sovereign debt remains unsustainable. If Greece is not to be crippled by its debt load, European governments will have to accept further debt-reducing measures, on top of the maturity extensions and the cut in interest rates they have already agreed to.

So it's no surprise that one of the key debates on the future of the euro zone relates to how sovereign debt restructuring should be made easier. There is little doubt that forcing losses on creditors at an earlier stage, as some propose, would increase the chance that a program of financial assistance is successful. However, the euro zone should be wary of automatic triggers; they risk bringing on the very crisis they are designed to avert.

The debate on the future of debt restructuring in the euro zone largely involves two positions. The first, which is widely shared in Germany, sees an orderly debt restructuring mechanism as an essential next step for the currency union. When a country applies for financial help from the European Stability Mechanism (ESM), creditors should face some form of debt restructuring immediately. This would ensure a better distribution of risks between debt-holders and the ESM. The threat of a haircut will make investors more discerning in their lending, contributing to fiscal discipline within the euro zone.