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.


Wednesday, March 14, 2018

Greece Is Quietly Backsliding on Reform

by Phyllis Papadavid


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.


Tuesday, March 13, 2018

Greek Regulator Probes Piraeus Ex-Head for Laundering Breaches

by Christos Ziotis


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.


Monday, March 12, 2018

Greek Superleague suspended after team owner invades pitch with a gun

by Helena Smith


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.”


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.


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


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.


Monday, February 26, 2018

Greek central bank governor repeats call for post-bailout safety net

by Kerin Hope

Financial Times

February 26, 2018

Greece’s central bank governor has again urged the government to seek a precautionary credit line after the current €86bn bailout ends in August to reduce borrowing costs on international financial markets.

Yannis Stournaras told the annual meeting of shareholders of the Bank of Greece that “such an arrangement would provide secure access to financing for Greek banks and the public sector after the [bailout] programme ends.”

“The possibility of making use of a preventive support programme shouldn’t be over-dramatised . . . these European mechanisms were created to be used when they are needed,” Mr Stournaras added.


Friday, February 23, 2018

Greece wraps up port privatisation after three years

by Kerin Hope

Financial Times

February 23, 2018

Greece’s parliament has ratified the €1.1bn privatisation of the northern Greek port of Thessaloniki, with a sale to to a consortium of German, French and Russian-Greek companies.

The disposal of OLTH, operator of the port, takes the form of a combined share sale and concession deal, and was agreed under terms of Greece’s international bailout programme. It took three years to complete.

The Hellenic Republic Asset Development Fund, the country’s privatisation agency, is now moving ahead with the disposal of the Alexandroupolis port in northeastern Greece and nine other regional ports that are 100 per cent state-owned.


Thursday, February 22, 2018

A Modern Greek Tragedy

by Adam Tooze

New York Review of Books

March 8, 2018

On January 25, 2015, after five years of debt crisis and economic and social decline that left half the country’s young people unemployed, the Greek electorate handed power to the most radical coalition to govern a European country in decades. Under the leadership of the youthful Alexis Tsipras, the Coalition of the Radical Left (Syriza) won 36.3 percent of the vote, qualifying it for the fifty-seat bonus awarded to the party with a plurality. To the horror of bien pensant opinion in Berlin and Paris, it chose as its partner in government a right-wing nationalist party, the Independent Greeks (ANEL).

In Greece the left was jubilant. The memory of the heroic anti-Nazi resistance, the civil war, and the students who rose up against the dictatorship of the colonels in the 1970s was vindicated. Syriza was the toast of the radical chic from Berlin to Brooklyn. Centrists were bemused. Had such left-wing enthusiasm not had its day? NATO hawks were up in arms. With Ukraine and Syria in mind, columnists fretted over Syriza’s possible ties to Moscow. The oligarchs who controlled much of the Greek media were on the warpath. Tens of billions of euros fled Greek bank accounts.

Meanwhile, Greece’s new finance minister, the ferociously charismatic and thoroughly Anglophone Yanis Varoufakis, became a global celebrity. His glamorous lifestyle, motorcycle, and tight T-shirts delighted the media. In Brussels, European officials still fume about his disruptive impact on their staid proceedings. In Greece he would face charges of treason. The appearance this fall of Varoufakis’s memoir, Adults in the Room, stirs old memories. The legendary Greek-French filmmaker Costa-Gavras has pronounced himself so “enraged by the violence and indifference of the Eurogroup members [i.e., the eurozone finance ministers], especially the German side, to the…unsustainable situation in which the Greek people live,” that he will turn Varoufakis’s exposé into a film.


Greek parliament backs Novartis probe

by Kerin Hope

Financial Times

February 22, 2018

Greece’s parliament has voted to investigate allegations that 10 senior politicians, including two former prime ministers, the country’s EU commissioner and the governor of the central bank, accepted bribes from the Swiss drugmaker Novartis.

Those accused strongly denied wrongdoing in formal speeches during a heated debate that lasted more than 20 hours.

Several argued they had been targeted as political enemies of the ruling leftwing Syriza party, which brought the case to parliament.

Alexis Tsipras, the prime minister, said the vote marked a “break with the past system of arrogance, greed and no transparency.”

A special parliamentary committee will carry out the probe.


Wednesday, February 21, 2018

Novartis Bribery Case in Greece Threatens to Bolster Populists

by Eleni Chrepa


February 21, 2018

Greek lawmakers begin discussions Wednesday on the alleged role of former senior government officials in a Novartis AG bribery case, which is part of a drug-overpricing scandal that’s estimated to have cost the country about 23 billion euros ($28.7 billion).

The case has snared 10 politicians, including former Finance Minister and current Bank of Greece Governor and European Central Bank Governing Council member Yannis Stournaras. All have denied wrongdoing. The Greek parliamentary hearing comes after another ECB Governing Council member, Ilmars Rimsevics of Latvia, was detained over the weekend by the country’s anti-corruption agency on suspicion of securing bribes. He has denied the charges and refused to step down.

The Novartis case in Greece is part of a global pharmaceuticals industry scandal and investigates the Swiss drug-maker’s part in allegedly inflating drug and vaccine prices. The bribery investigation, which has also drawn in two former prime ministers and a European Union commissioner, is roiling the political landscape in Greece as the country prepares for an exit from its bailout program. The case threatens to deepen the public’s disillusionment with established political parties and bolster groups on the extreme, observers said.


Tuesday, February 20, 2018

Your Next Truffle May Be Coming From Greece

by Larissa Zimberoff


February 20, 2018

So you’re dining at a fancy restaurant and choose to splurge on some truffles to top off your repast. The server steps up and presents the vaguely ugly tuber. As the pungent slices rain down on your main course, the waiter announces that these truffles didn’t come from Italy, the traditional provenance of this decadent garnish. They hail from Greece.

Don’t be shocked—be glad. Italians have successfully positioned their product as the most luxurious under the forest floor. But white Alba truffles—tuber magnatum pico—also grow magnificently well in Greece. Even Aristotle mentions them in his writings, but they never made it into the local cuisine. Unlike Italy’s truffles, which have been dug up and eaten for centuries, Greece’s truffles have remained largely undisturbed. At least they did until the Athens-based culinary exporter Eklekto saw their potential for the U.S. market.

But there’s an additional reason to embrace Greek truffles. Usually, countless middlemen touch an Italian truffle before it makes it to market, increasing the consumer’s chances of getting a counterfeit version. Eklekto partners Peter Weltman and George Athanas say they work only with a small group of Greek foragers and know exactly where the product is from. Apart from the forager working with his trusty dog, Weltman and Athanas are the only people that touch the truffles before export, the company says.


Sunday, February 18, 2018

Greece seeks to calm Brussels’ bailout fears

by Kerin Hope

Financial Times

February 18, 2018

Greece’s finance minister has said his country will not need to be subject to tight monitoring once its bailout programme ends in August, insisting the concerns of EU partners are misplaced as it can be trusted to manage its finances safely.

Euclid Tsakalotos says that Greece’s new economic growth plan, to be unveiled in April, will assuage fears in Brussels and Washington that the leftwing Syriza government will roll back unpopular economic reforms as soon as bailout constraints are lifted.

“We want as ‘clean’ an exit as possible [from the bailout],” Mr Tsakalotos said in an interview with the Financial Times, using Syriza’s term for drawing a line under eight years of austerity that has seen Greece’s output shrink by about one-quarter and an exodus of some 450,000 young skilled workers to other EU countries.