Monday, May 14, 2018

Greek consultant sues health minister and deputy

by Kerin Hope

Financial Times

May 14, 2018

The wife of Greece’s central bank governor has taken legal action against the country’s health minister and his deputy, claiming they unlawfully annulled an EU-backed project in which her company was involved and undermined her professional reputation.

Lina Nikolopoulou, a healthcare consultant, is married to Yannis Stournaras, governor of the Bank of Greece.

“I have faced harassment from the judicial authorities for more than a year over this particular project even though my company’s participation was ruled as satisfactory by auditors in line with EU regulations,” Ms Nikolopoulou said in an interview.

Greece’s health ministry last year retroactively annulled a €3.5m project in which Mindwork, a company that Ms Nikolopoulou controls, was involved. Her lawsuit requests that Greece’s anti-corruption prosecutor investigate why the ministry did so.


Monday, May 7, 2018

Fragile Balkans’ future depends on Macedonia deal

by Tony Barber

Financial Times

May 7, 2018

If the definition of progress is that a country no longer names its capital’s airport after a warrior king who died 2,300 years ago in Babylon, then there is surely hope for the Balkans — the source of many a modern European conflict. In February, Macedonia’s reformist leadership reversed the previous government’s bombastic nationalism and changed the name of Alexander the Great airport to Skopje International. The ice began to melt in one of post-Communist Europe’s most vexed disputes.

On the highway into Skopje, capital of the former Yugoslav republic, large green signs tell of more change. The road no longer bears Alexander’s name but is called Friendship Highway. Macedonian leaders consider these relabelling exercises to be not cosmetic but genuine concessions to Greece. For 27 years, Athens has accused its northern neighbour of laying claim to Greece’s territory, cultural heritage and identity by using Macedonia as a name and Alexander as a state symbol.

Negotiations aimed at finding a compromise on Macedonia’s name are approaching a climax. The foreign ministers of Greece and Macedonia have met 20 times. Should a deal be struck, it would send a rare signal to other quarrelling Balkan states and communities — Serbia and Kosovo, for example, or the Muslims, Croats and Serbs of Bosnia and Herzegovina — that even the most painful historical wounds heal with treatment.


Saturday, May 5, 2018

Greek banks face €15.5bn hit to capital under stress tests

by Martin Arnold & Kerin Hope

Financial Times

May 5, 2018

Greece’s four biggest banks would take a €15.5bn hit to their average capital in a future economic downturn, according to the results of the European Central Bank’s stress test of the country’s main lenders.

The ECB’s health check of the Greek banking system is designed to determine if any of the banks need extra equity before the country enters talks on leaving its eight-year bailout programme.

Senior Greek officials said the outcome of the exercise meant there was “no immediate need for a capital increase by any bank”. However, one official said that while the banks were out of immediate danger they needed to clean up their balance sheets and several were likely to raise capital soon — notably Piraeus Bank, which emerged as a laggard in the tests.

“The stress test have gone as well as we could expect,” said one official, adding that they would ease Greece’s return to borrowing on international markets.


Monday, April 30, 2018

Achieving an inclusive and sustainable recovery in Greece

by Mauro Pisu & Tim Bulman


April 30, 2018

Greece is finally recovering from a deep depression. In 2017 GDP expanded by 1.3%, according to initial estimates, and is projected to accelerate to 2% in 2018 and 2.3% in 2019 (Figure 1). Labour market reforms have improved competitiveness and exports are leading the expansion. Overall the economy is becoming more open. Exports rose from 24% of GDP in 2008 to 34% in 2017. Employment is rising strongly while the external and fiscal imbalances are being addressed. Public finances are outperforming European Stability Mechanism (ESM) Stability Support programme’s targets, helping to restore fiscal credibility. Financial markets are taking notice, with bond spreads falling and agencies upgrading their ratings of Greece’s public debt.

Despite these positive developments, the long crisis has left deep scars in the society that have yet to heal. GDP per capita is still 25% below its pre-crisis level. The public debt is still high. Wages are low. Though poverty has stabilised, it remains near a record high, especially among the young and families.

The OECD’s 2018 Economic Survey of Greece suggests that maintaining the reform momentum and strengthening reform ownership will be essential to sustaining the recovery and moving towards a more inclusive and prosperous society. Keeping the reform momentum is crucial to tackle the three key challenges highlighted in the 2018 Survey: Improving debt sustainability, sustaining job growth and reducing poverty, boosting investment.


Read the OECD 2018 Economic Survey for Greece

Thursday, April 26, 2018

Relief for Greece? The debt dilemma facing creditors

by Jim Brunsden, Mehreen Khan & Kerin Hope

Financial Times

April 26, 2018

Greece is approaching a momentous moment: the end of eight years of international bailouts that forced the country into unprecedented belt-tightening in exchange for a cash lifeline from eurozone governments and the International Monetary Fund.

But even as the August 20 end date for Greece’s support programme looms into view, Athens knows the next few weeks will be crucial in determining relations with its creditors and the scale of its debt repayments for years, if not decades, to come.

Eurozone finance ministers will gather in Sofia on Friday to press ahead with negotiations that are supposed to deliver a political deal by June on an “exit package” for Greece. It is intended to ensure the country can smoothly return to the sort of normal market financing that most nations enjoy.

But that will require eurozone governments to tackle something they have avoided for years: how much debt relief Athens will be allowed.


Saturday, April 21, 2018

Greece’s Creditors Close to Compromising on Debt

by Viktoria Dendrinou


April 21, 2018

Greece’s creditors are getting closer on a deal to ease the country’s debt burden, according to Eurogroup President Mario Centeno.

Greece’s 86-billion euro ($106-billion) bailout program is set to run out in August, and creditors are working on finding a compromise on debt repayments that would help to manage the country’s financing needs after it stops receiving international aid. A debt deal would also allow the International Monetary Fund to participate in the current bailout.

“The positions today are much closer than they used to be before,” Centeno, who is Portugal’s finance minister and chairs the meetings of his euro-area counterparts, said in an interview in Washington. “We still have a final mile to go but there is a positive sentiment around the table so I think that reflects a true willingness to be part of the program.”

Further easing Greek debt is a key precondition for the Washington-based IMF before it can participate in the country’s program. While the IMF has co-financed Greece’s first two bailouts it hasn’t yet activated its third one, arguing the euro area must arrange for more debt sustainability. But the participation of the fund, even a few months before the end of the bailout, is important for some countries including Germany, who see the IMF coming on board as a seal of approval that will offer credibility to the bailout.

A “committed presence” by the IMF will also help with market confidence, Centeno said.


Thursday, April 19, 2018

Greek parliament ends probe into bribery allegations

by Kerin Hope

Financial Times

April 19, 2018

Greece's parliament has ended a probe into allegations that 10 senior politicians, including two former prime ministers, the governor of the central bank and the country's current EU commissioner, accepted millions of euros in bribes from the Swiss drug producer Novartis.

An all-party parliamentary committee decided late Wednesday night that it was not competent to pursue the case.

The committee will hand back the case to a special prosecutor to investigate possible money-laundering by the 10 accused, a parliamentary spokesperson said. An anti-corruption prosecutor has already ordered bank accounts belonging to the politicians to be opened as part of the probe.

All those accused have denied wrongdoing, claiming they were targeted by the leftwing Syriza government in a drive to undermine the credibility of its political opponents.


Monday, April 16, 2018

Tsipras Fights on All Fronts as Greece Is Back in the Spotlight

by Eleni Chrepa


April 16, 2018

Consider what Greek Prime Minister Alexis Tsipras is up against.

As Greece prepares to free itself from an eight-year European bailout, its 43 year-old premier is confronting challenges at home and abroad. On the domestic front: preparations for post-bailout economic life and the first general election since the end of the program, including feuds with both allies and rivals. On the foreign-policy front: increased tensions with traditional rival Turkey and regional instability stemming from a dispute over a neighboring country’s name.

Tsipras’s ability to navigate through all this could determine just how stable the country and its region will be in coming years, experts say, and the European Union, the U.S. and the North Atlantic Treaty Organization are all watching with interest.

“The worst problem for Tsipras, for the government, but also for Greece is the evolving ‘rogueness’ of Turkey,” said Aristides Hatzis, a professor of law and economics at the University of Athens. “Diminishing American influence on the region is a destabilizing factor and the stakes are very high,” Hatzis said, adding that Greece is not a primary concern for Turkey, but a part of an overall plan by President Recep Tayyip Erdogan to establish hegemony in the region.


Thursday, April 12, 2018

How to Solve the Greek Debt Problem

by Jeromin Zettelmeyer, Emilios Avgouleas, Barry Eichengreen, Miguel Poiares Maduro, Ugo Panizza, Richard Portes, Beatrice Weder di Mauro, & Charles Wyplosz

Peterson Institute for International Economics

Policy Brief 18-10
April 2018

Greece’s debt currently stands at close to €330 billion, over 180 percent of GDP, with almost 70 percent owed to European official creditors. The fact that Greece’s public debts must be restructured is by now widely accepted. What remains controversial, however, is the extent of debt relief needed to make Greece’s debt sustainable.

This Policy Brief argues that the debt relief measures outlined by the Eurogroup will not be sufficient to restore the sustainability of Greece’s debt. At the same time it shows that Greece’s debt sustainability can in fact be restored without aggravating moral hazard—i.e., encouraging future governments in Greece and elsewhere in the euro area to take risks in the belief that they will be bailed out—and within the framework of EU law, in particular Article 125 of the Lisbon Treaty, which prohibits EU members from assuming liability for the debts of other members.

It concludes that only conditional face value debt relief, in combination with the measures already considered by the Eurogroup, would restore Greece’s debt sustainability with reasonable confidence. Furthermore, if the debt relief is structured in a way that creates incentives for additional fiscal adjustment, as proposed in this Brief, the amount of face value debt relief required could be modest—on the order of 10 to 15 percent of the outstanding official debt.

Read the PDF

Thursday, April 5, 2018

Uber to suspend service in Greece after new legislation

April 5, 2018

Ride-hailing service Uber said on Thursday it would suspend its licensed service in Greece after the approval of local legislation which imposes stricter regulation on the sector.

Uber, which operates a licensed service in the Greek capital, has faced opposition from local taxi drivers who accuse it of taking their business.

“New local regulations were voted on recently with provisions that impact ride-sharing services,” Uber said in a blog post. “We have to assess if and how we can operate within this new framework and so will be suspending uberX in Athens from next Tuesday until we can find an appropriate solution.”

Uber operates two services in Athens: UberX, which uses professional licensed drivers, and UberTAXI, which uses taxi drivers.


Friday, March 23, 2018

Lignite mining: Greece’s dirty secret - in pictures

Photographs and research by Anna Pantelia


March 23, 2018

Mining for lignite - or brown coal - in Greece is a huge industry. Together with Germany and Poland, the country accounts for more than one-third of the world’s coal production. But for residents of villages in the extraction areas of West Macedonia, it has many impacts, from displacement to health problems.

Thick dust suspended in the atmosphere makes it hard to see the sun over Ptolemaida, a city 500 kilometres north-west of Athens in the West Macedonia region, known for its brown coal (lignite) mines and power stations.

Kostas works as a guard for the state-owned Public Power Corporation (PPC), like his father before him. “My father died of cancer when I was 12,” he says. “Four other men from his shift lost their lives from cancer.”


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.