Thursday, August 25, 2016

Former Greek chief statistician gets backing from Brussels

by Arthur Beesley

Financial Times

August 24, 2016

Brussels has urged Athens to repudiate claims that Greece’s national statistics agency produced false data under its former chief, intervening in a domestic criminal case that has angered the country’s international lenders.

The European Commission’s call for Greece to back Elstat, the country’s statistical body, has also raised questions over its bailout loans. Athens is required to uphold public support for the country’s statistics as a condition for international aid.

The commission stopped short of demanding a halt to criminal proceedings against Andreas Georgiou, who faces trial over allegations that Elstat inflated deficit figures, which supported the case for years of harsh austerity in a succession of bailouts. Mr Georgiou has denied any wrongdoing.

“The commission and Eurostat continue to have full confidence in the quality and reliability of the data delivered by Elstat during the term of office of Mr Georgiou,” the commission said in a letter to Athens on Wednesday.

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Friday, August 19, 2016

Turkish soldiers asylum case strains Athens and Ankara relations

by Kerin Hope and Mehul Srivastava

Financial Times

August 19, 2016

The first of eight Turkish military officers who fled the country after a failed coup appeared before a Greek asylum committee on Friday in a case that has strained relations between Athens and Ankara — and within the ruling Syriza party.

The officers flew a military helicopter across the border after the attempt to topple President Recep Tayyip Erdogan last month.

Turkey is ratcheting up pressure on Alexis Tsipras, the Greek prime minister, to return the junior officers. While Turkish officials have pushed ahead with a formal extradition demand for the soldiers, they have not made any public statements criticising Greece.

This is in stark contrast to its near-daily attacks on the US for its refusal to extradite Fethullah Gulen, the self-exiled preacher blamed for the coup.

It is not known when the formal extradition hearings will be held, but two Turkish officials said this week that the return of the soldiers would show that Greece and the EU were serious about helping Turkey find the perpetrators of the coup. But the officials also made clear that their return was a symbolic issue, rather than a requirement to complete the investigation.

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Wednesday, August 17, 2016

Greek Villagers Rescued Migrants. Now They Are the Ones Suffering.

by Liza Alderman

New York Times

August 17, 2016

Stratis Valamios revved the motor on his small white boat and steered under a thumbnail moon out of the harbor of this fishing village, perched on the northern tip of Lesbos, Greece’s third-largest island.

Skies were clear enough to see the purple mountains of Turkey a short distance across the Aegean Sea. It would be easy on this tranquil evening to catch calamari. These days, he needed a good haul to make ends meet.

A year ago, he and other fishermen in the tiny village, Skala Sikaminias, were making a more unusual catch: thousands of sea-drenched asylum seekers who streamed across the Aegean to escape conflict and poverty in the Middle East and Africa.

As one of the landfalls in Greece that is closest to Turkey, Skala Sikaminias, with its 100 residents, fast became ground zero for the crisis, the first stop in Europe for people trying to reach Germany in a desperate bid to start new lives.

“I’d be in the middle of the sea, and I would see 50 boats zigzagging toward me,” Mr. Valamios said, gazing across the narrow channel. “I would speed toward them, and they would throw their children into my boat to be saved.”

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James Angelos, "The Full Catastrophe Travels Among the New Greek Ruins"

Penguin, 2015

A transporting, good-humored, and revealing account of Greece’s dire troubles, reported from the mountain villages, idyllic islands, and hardscrabble streets that define the country today

In recent years, small Greece, often associated with ancient philosophers and marble ruins, whitewashed villages and cerulean seas, has been at the center of a debt crisis that has sown economic and social ruin, spurred panic in international markets, and tested Europe’s decades-old project of forging a closer union.

In The Full Catastrophe, James Angelos makes sense of contrasting images of Greece, a nation both romanticized for its classical past and castigated for its dysfunctional present. With vivid character-driven narratives and engaging reporting that offers an immersive sense of place, he brings to life some of the causes of the country’s financial collapse, and examines the changes, some hopeful and others deeply worrisome, emerging in its aftermath. A small rebellion against tax authorities breaks out on a normally serene Aegean island. A mayor from a bucolic, northern Greek village is gunned down by the municipal treasurer. An aging, leftist hero of the Second World War fights to win compensation from Germany for the wartime occupation. A once marginal group of neo-Nazis rises to political prominence out of a ramshackle Athens neighborhood.

The Full Catastrophe goes beyond the transient coverage in the daily headlines to deliver an enduring and absorbing portrait of modern Greece.

Monday, August 15, 2016

Why the fate of Greece’s chief statistician matters

Financial Times
Editorial
August 15, 2016


No one loves the messenger who brings bad news. The sentiment expressed by Sophocles is as much in evidence as ever in Athens, where Andreas Georgiou, the former chief of Greece’s statistical agency, faces criminal charges of “undermining the national interest” — because he applied EU rules to produce an accurate calculation of the country’s budget deficit. The figures were validated by EU statisticians, but his critics accuse him of colluding with Eurostat to inflate the debt, and say Greece was forced to accept bigger loans and harsher austerity as a result.

There are many people at fault in this latest twist in the Greek debt crisis but Mr Georgiou is not among them.

First and foremost is the government led by Costas Karamanlis from 2004 to 2009 — responsible for the worst excesses of over-borrowing in the run-up to the global financial crisis, and for its persistent under-reporting. The campaign against Mr Georgiou looks like a vindictive attempt to shift the blame for Greece’s financial collapse from a discredited political class that still hopes to make a comeback.

The socialist government that succeeded Mr Karamanlis showed a similar suspicion of Mr Georgiou’s work. They appointed him to head Elstat, an independent statistical agency set up as a condition of Greece’s first bailout, but also installed two political appointees on its board to keep him in check — one of whom will soon go on trial charged with hacking Mr Georgiou’s computer.

Alexis Tsipras, the prime minister, pledged to reform Greece’s corrupt political system when he brought his radical Syriza party to power but he too appears content to see the case against Mr Georgiou go ahead. The statistician, who spent more than two decades at the International Monetary Fund, is too convenient a scapegoat for a party ideologically opposed to all the IMF represents. Above all, Mr Georgiou’s prosecution reflects a political culture in which facts and figures are a matter of negotiation and convenience, and not of objective reality. If statistics can be massaged and manufactured, then an unwelcome number must be an act of hostility — and it becomes easy to believe that a former IMF official implementing European rules is serving the interests of Greece’s creditors.

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Sunday, August 14, 2016

Greek statistician Andreas Georgiou hits back at criminal charges

by Kerin Hope

Financial Times

August 14, 2016

Statistics experts are open to criticism if the numbers fail to add up. But Andreas Georgiou, former chief of Greece’s statistical agency, says he is living in an upside-down world where he is being prosecuted for consistently getting them right.

Mr Georgiou and two colleagues are to face trial on criminal charges of undermining the “national interest”, according to a ruling last week by the Greek supreme court overturning their acquittal by a lower court.

The charges concern the alleged “inflation” of the budget deficit and debt figures for 2009, the year in which Greece plunged into an unprecedented financial crisis that prompted the first of three bailouts by the EU and the International Monetary Fund.

The case has sparked outrage from economists and statisticians worldwide who believe Mr Georgiou has become a scapegoat for Greece’s political class, which refuses to accept responsibility for the country’s financial collapse or take ownership of a bitterly contested seven-year programme of fiscal and structural reform.

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Aid and Attention Dwindling, Migrant Crisis Intensifies in Greece

by Liz Alderman

New York Times

August 13, 2016

As her young children played near heaps of garbage, picking through burned corn cobs and crushed plastic bottles to fashion new toys, Shiraz Madran, a 28-year-old mother of four, turned with tear-rimmed eyes to survey the desolate encampment that has become her home.

This year, her family fled Syria, only to get stuck at Greece’s northern border with Macedonia in Idomeni, a town that had been the gateway to northern Europe for more than one million migrants from the Middle East and Africa seeking a haven from conflict. After Europe sealed the border in February to curb the unceasing stream, the Greek authorities relocated many of those massed in Idomeni to a camp on this wind-beaten agricultural plain in northern Greece, with promises to process their asylum bids quickly.

But weeks have turned into months, and Mrs. Madran’s life has spiraled into a despondent daily routine of scrounging for food for her dust-covered children and begging the authorities for any news about their asylum application. “No one tells us anything — we have no idea what our future is going to be,” she said.

“If we knew it would be like this, we would not have left Syria,” she continued. “We die a thousand deaths here every day.”

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Saturday, August 13, 2016

A year after the crisis was declared over, Greece is still spiralling down

by Helena Smith

Observer

August 13, 2016

In a side street in the heart of Athens, two siblings are hard at work. For the past year they have run their hairdressing business – an enterprise that was once located on a busy boulevard – out of a two-bedroom flat. The move was purely financial: last summer, as it became clear that Greeks would be hit by yet more austerity to foot the bill for saving their country from economic collapse, they realised their business would go bust if it continued operating legally.

“We did our sums and understood that staying put made no sense at all,” says one sibling. “If we didn’t [offer] receipts, if we avoided taxes and social security contributions, we could just about make ends meet.”

They are far from being alone. A year after debt-stricken Greece received its third financial rescue in the form of international funding worth €86bn, such survival techniques have become commonplace. For a middle class eviscerated by relentless rounds of cuts and tax rises – the price of the country’s ongoing struggle to avert bankruptcy – the draconian conditions attached to the latest bailout are invariably invoked in their defence. Measures ranging from the overhaul of the pension system to indirect duties – slapped on beer, fuel and almost everything in between – and a controversial increase in VAT are similarly cited by Greeks now reneging on loan repayments, property taxes and energy bills.

Against a backdrop of monumental debt – €320bn, or 180% of GDP, the accumulation of decades of profligacy – fatalism is fast replacing pessimism on the streets. “Our country is doomed,” sighs Savvas Tzironis, summing up the mood. “Everything goes from bad to worse.”

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Thursday, August 11, 2016

Greek Crisis, the Book. Or Actually Several of Them.

by Landon Thomas Jr.

New York Times

August 10, 2016

In May last year, James K. Galbraith, a left-leaning American economist, sent an email to Greece’s finance minister, Yanis Varoufakis, in which he argued that an exit from the eurozone would benefit Greece.

Mr. Galbraith, who was advising Mr. Varoufakis at the time, made the case that a new currency would wash away the country’s debts, solve Greece’s competitiveness problem and ultimately create what he called a “good society.” Though the step was opposed by most Greeks, he had drawn up a contingency plan for Greece under Mr. Varoufakis’s direction, in the event the country was forced to leave the currency zone by its creditors.

In the end, there was not a so-called Grexit. One year ago this month, after the polarizing finance minister left his post, Greece agreed to its third bailout with Europe, accepting yet another round of brutal austerity measures as the price for a new round of loans.

Mr. Galbraith’s vision of a sun-kissed utopia of powerful unions, small businesses and cultural exchanges was published in June in his book of essays, speeches and assorted memorandums (Welcome to the Poisoned Chalice; Yale University Press) describing the five months he spent as an unofficial member of Mr. Varoufakis’s inner policy circle.

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Saturday, August 6, 2016

N. Christodoulakis, "An Economic Analysis of Conflicts With an Application to the Greek Civil War 1946-1949"

Springer, 2016

This book provides a quantitative framework for the analysis of conflict dynamics and for estimating the economic costs associated with civil wars. The author develops modified Lotka-Volterra equations to model conflict dynamics, to yield realistic representations of battle processes, and to allow us to assess prolonged conflict traps. The economic costs of civil wars are evaluated with the help of two alternative methods: Firstly, the author employs a production function to determine how the destruction of human and physical capital stocks undermines economic growth in the medium term. Secondly, he develops a synthetic control approach, where the cost is obtained as the divergence of actual economic activity from a hypothetical path in the absence of civil war. The difference between the two approaches gives an indication of the adverse externalities impinging upon the economy in the form of institutional destruction. By using detailed time-series regarding battle casualties, local socio-economic indicators, and capital stock destruction during the Greek Civil War (1946-1949), a full-scale application of the above framework is presented and discussed.

Friday, August 5, 2016

The Greek crisis: An autopsy

by Pierre-Olivier Gourinchas, Thomas Philippon & Dimitri Vayanos

Vox

August 5, 2016

The Greek crisis is one of the worst in history, even in the context of recorded ‘trifecta’ crises – the combination of a sudden stop with output collapse, a sovereign debt crisis, and a lending boom/bust. This column quantifies the role of each of these factors to better understand the crisis and formulate appropriate policy responses. While fiscal consolidation was important in driving the drop in output, it accounted for only for half of that drop. Much of the remainder can be explained by the higher funding costs of the government and private sectors due to the sudden stop.


For its sheer intensity and duration, the Greek crisis has been quite unprecedented. One measure says it all – real income per capita declined every single year between 2007 and 2013, a cumulated drop of 26%. Since then, it has barely risen.

To put the Greek crisis in perspective, we compare it in Figure 1 with the sample of all ‘Trifecta crises’ since 1980 – the combination of a sudden stop with output collapse, a sovereign debt crisis, and a lending boom/bust. This is the who’s who of financial crises, a distinguished group that includes Argentina and Turkey in 2001, Ecuador in 1999, Indonesia and Russia in 1998, Chile and Uruguay in 1983, and Mexico in 1982. Greece's drop in output was significantly more severe and protracted than any of these episodes.

Figure 1 Greece versus the universe of all `Trifecta crises’ since 1980


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Thursday, August 4, 2016

Feeding Greece’s Tax Addiction Is Starving Its Economy

by Yannis Palaiologos

Wall Street Journal

August 4, 2016

The relative calm in Greece this summer compared to last year’s chaos may lead outside observers to believe that the country’s financial problems are on their way to being resolved. After all, the national government, led by the far-left Syriza party, seems committed to implementing the bailout program it signed last year. And negotiations are already under way for a deal on debt relief.

But these negotiations will likely take a long time. No one expects a meaningful restructuring of Greece’s debt before the next German government is formed at the end of 2017. Until that happens, Athens will labor under requirements for budget surpluses that will suffocate the economy.

This has made a bad situation on the ground even worse. The combination of overambitious fiscal targets and widespread tax evasion has led, throughout the bailout period but especially under Syriza, to constantly rising tax and insurance-contribution rates, which leave even law-abiding, relatively well-off Greeks unable to meet their obligations.

According to calculations recently released by the Kathimerini newspaper, once the full array of new tax and insurance-contribution increases come into effect early next year, real-estate owners who rent out their property may be forced to pay more than 100% of the income they earn in personal and property taxes. Self-employed individuals who make as little as €10,000 ($11,195) a year will have to pay 60% to 74% of it in taxes and insurance contributions. Private-capital firms—a new category of company, introduced during the recent crisis and designed to boost entrepreneurship—will have to hand over 43% to 60% of their profits to the state, even for earnings as low as €5,000 a year.

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Tuesday, August 2, 2016

Greece to press ahead with criminal trial for ex-statistics chief

Financial Times
August 2, 2016

The former chief of the Greek statistics agency is to face criminal trial for undermining the “national interest” after he allegedly overstated the country’s budget deficit.

Greece’s supreme court ruled that Andreas Georgiou should face charges that carry a prison term of up to 10 years despite concern inside Greece that the radical left government is politicising independent institutions.

The case has also prompted concern among officials at the European Commission and the European Central Bank, who accepted without reservation the accuracy of data produced by Elstat, an agency set up in the wake of Greece’s first international bailout.

“The situation is clear. It is not a pleasant case. The commission and ECB have been watching this and have reacted very negatively to the case,” said a high-level eurozone official.

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Thursday, July 28, 2016

IMF internal probe exposes failings in response to Greek crisis

by Arthur Beesley

Financial Times

July 28, 2016

An unsparing assessment of the International Monetary Fund’s intervention in the eurozone debt crisis prompts new questions over its approach to Greece, the origin of the saga and its epicentre.

At issue is an IMF decision expected this autumn on whether to take part in a third bailout of Greece, which has been under international tutelage for six long years. Germany has threatened to stop lending to Athens if the fund pulls out.

The IMF has warned repeatedly that it cannot participate in any further bailout without meaningful debt relief. Amid ructions in Turkey after a failed military coup two weeks ago, the US has stepped up pressure on European creditors of Greece to settle its finances so it can serve as a regional anchor. But this remains deeply contentious in the eurozone, where Germany leads resistance to far-reaching debt forgiveness.

The report by internal IMF inspectors makes clear that this question goes right back to the beginning of the crisis in 2010, when the fund was drawn into Europe’s chaotic campaign to shore up the single currency. A succession of huge bailouts for Greece and other weaker states followed. It paints a picture of poor pre-crisis surveillance, followed by problems in the design and execution of rescue programmes. Improvisation was the order of the day and rules were stretched, not least in the IMF where there was doubt from the outset about the Greek rescue.

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Read the Report

How the refugee crisis turned waiters into goatherds on the Greek islands

by William Booth

Washington Post

July 27, 2016

This is a story about war and waiting tables, about how a line can be drawn between the chaos in Syria and why Theodore Kourniaris lost his job on the Greek island of Lesbos.

In the eastern isles of Greece, the hidden face of the European refu­gee crisis is an everyday dude like Kourniaris, who suspects he has been cheated — not only by Syrian President Bashar al-Assad, who drops barrel bombs on his own people, but also by leaders such as German Chancellor Angela Merkel, who threw open the door to refugees and then slammed it shut.

Kourniaris, 27, is a Greek waiter who lives with his mom. He has spent every summer season since he was a kid humping bottles of chilled retsina and plates of grilled octopus to German and British and Dutch ­merry-makers in packed tavernas in his picture-postcard-perfect village on the sea.

The tourists?

“They’re gone, man,” said Kourniaris. The April-to-October trade that sustains the island has — poof! — vanished, as middle-class European pensioners and young families with children decided they would not spend their holidays on an island that hosted 600,000 war refugees and economic migrants over the past 18 months.

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Wednesday, July 27, 2016

Erdogan Should Look Across the Aegean

by Nikos Konstandaras

New York Times

July 27, 2016

Military coups have been an integral part of politics through most of the modern history of Greece and Turkey, shaping them domestically and determining relations between them. If war is diplomacy by other means, in these two neighbors and NATO allies, military coups were politics by other means. The recent attempt by military forces to overthrow Turkey’s elected government underlines the different course the two countries have taken in the past few decades. What follows may lead them even further apart.

Turkey’s president, Recep Tayyip Erdogan, appears determined to use the failed coup as an opportunity to wipe out opposition from every quarter, ordering a sweeping purge of the military, the judiciary, the police, academia, the civil service and some journalists.

Before the July 15 mutiny, Mr. Erdogan was already showing increasingly autocratic tendencies: curbing media freedom, cracking down on anti-government demonstrators, flirting with Islamist extremists, cultivating tension with his country’s Kurdish minority, deposing his own prime minister for not being enthusiastic enough in his support, allowing readings of the Quran in the Hagia Sophia museum — formerly the greatest cathedral of eastern Christendom.

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Tuesday, July 26, 2016

Greece loosens capital controls to win back deposits

by Kerin Hope

Financial Times

July 25, 2016

Greece’s central bank has loosened capital controls it imposed 13 months ago in the hope that depositors will return some of the cash they pulled from banks during last year’s panic.

George Chouliarakis, deputy finance minister, said he expected that lifting various restrictions on cash withdrawals would soon attract some €3-4bn in fresh deposits.

The controls were imposed in June last year to stem a run on Greek banks as the government’s negotiations with its international creditors foundered and many feared the country was poised to crash out of the euro. Among other measures, they set strict limits on how much money depositors could withdraw from their accounts each week.

Lifting the controls will pose a critical test of confidence in the leftwing Syriza-led government of Alexis Tsipras, the prime minister. Specifically, it will show whether Greeks now feel safe holding their cash in the country’s banks.

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Friday, July 22, 2016

Tsipras Loses Bid to Apply New Rules in Next Greek Election

by Eleni Chrepa

Bloomberg

July 22, 2016

Greece won’t immediately implement new electoral rules which scrap a 50-seat bonus for the winning side after Prime Minister Alexis Tsipras failed to raise enough support to make the changes effective immediately.

Tsipras’s Syriza government failed to secure a majority of 200 lawmakers in the 300-seat chamber to make the new rules, approved in a session that ended early Friday, effective immediately. A total of 179 lawmakers voted to abolish the bonus, with 83 voting against and 19 abstaining. That means the bonus remains in place for Greece’s next election, scheduled for 2019, and will be scrapped for the subsequent vote.

With the bonus seats still in play, “the scenario of snap elections now looks completely distant, as it would only move Syriza further from governance,” said Aristides Hatzis, a professor of law and economics at the University of Athens. Syriza has struggled in recent opinion polls, which show that rival New Democracy could finish first if elections were held now.

“Greece dodged the worst,” by voting to maintain the old system for the next election, Hatzis said. Given political divisions in the country, any parliament formed under the new law “would be so fragmented it could be impossible to form a government.” Coalitions under the new law would likely consist of “many partners with vetoes to block any decision they don’t like.”

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