Monday, June 26, 2017

Cyprus rivals restart talks over reuniting island

by Arthur Beesley & Kerin Hope

Financial Times

June 26, 2017

Cypriot leaders are set for fresh talks to try to reunite the Mediterranean island in spite of sharp differences over new security and political arrangements.

The UN-brokered talks in Switzerland aim to settle decades of ethnic division between the Greek Cypriot and Turkish Cypriot communities.

Security remains the most serious barrier to a deal between Nicos Anastasiades, the Greek Cypriot president, and Mustafa Akinci, the Turkish Cypriot leader.

Cyprus has been split since 1974, when Turkey invaded and occupied its northern third in response to an Athens-inspired coup aimed at uniting the island with Greece. A UN buffer zone divides the Greek-Cypriot state, an EU member, from the breakaway Turkish-Cypriot state, which is recognised only by Ankara.

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Saturday, June 24, 2017

The startup culture battling the Greek brain drain

by Yannis Palaiologos

Irish Times

June 24, 2017

Greece has been in crisis now for a decade. Since sliding into recession in 2008, it has seen its annual output collapse by about a quarter. Its unemployment rate has been above 20 per cent for more than five years. Close to a half a million Greeks, mostly those with the best education and career prospects, have left the country to seek their fortunes elsewhere.

There have been few rays of hope to cling to in this dark period. One of them has been the steady emergence of the Greek start-up ecosystem. In the years since four EU-backed venture capital funds started operating in early 2013, there have been notable successes, including multimillion dollar investment rounds and buyouts by major global companies.

One active player in the Greek start-up scene has been Stavros Messinis, founder of CoLab, a co-working space in Athens, in 2009 and, in 2013, another space known as the Cube.

“We’re currently hosting around 20 companies. They are mainly software tech companies but we have one or two hardware companies, a software agency and even a company that makes trendy handbags,” Messinis says.

“We offer them facilities to work from, mentoring and other services such as legal and accounting. The fact that they’re together in a shared office means they help each other out.”

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Tuesday, June 20, 2017

The Eurogroup on Greece: Debt Relief with a Fiscal Straitjacket

by Jeromin Zettelmeyer

Peterson Institute for International Economics

June 20, 2017

Greece’s latest deal with the Eurogroup—the group of eurozone finance ministers—is bigger news than you might think from the press reactions so far. As expected, Greece got its next disbursement of funds to avoid default, the International Monetary Fund (IMF) gave a symbolic stamp of approval, no actual debt relief will transpire until the end of Greece’s EU-supported reform program, and the IMF will not be prepared to disburse until that happens (if at all). This feels like business as usual. But there is more to the story.

The June 15 statement of the Eurogroup contains at least three new and significant points. For the first time, it delivers an unequivocal commitment to debt relief. Second, it confirms that the Eurogroup (read: Germany) will accept interest deferrals as part of the package, a point that had recently been in doubt. Third, it lays out specific fiscal assumptions—not just for the next 2 or 5 years, but all the way to 2060. The first two are good news. On the third, the news is not so good, for reasons explained below. As a result, there is a high risk that the debt relief package that we will see next year—probably without endorsement by the IMF—will yet again kick the can down the road.

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EU Says Greece Needs More Debt Relief Despite Buffer

by Marcus Bensasson, Sotiris Nikas & Birgit Jennen

Bloomberg

June 20, 2017

Greece will need additional debt relief to regain the trust of investors, even though it’s likely to exit its bailout with a 9 billion euros ($10 billion) cash buffer, the European Commission said in a draft report obtained by Bloomberg.

The country’s 86 billion-euro third bailout program from the European Stability Mechanism, agreed by Prime Minister Alexis Tsipras and European creditors in 2015, will expire in August 2018 with 27.4 billion euros left unused, the commission estimates in the so-called “compliance report” dated June 16. Disbursements up to then should also “cater for the build-up of seizable cash buffer” of around 9 billion euros, according to the document.

The report contains an analysis of the country’s public debt that points to potential wrangling with the International Monetary Fund following an agreement last week to disburse bailout funds, in which the Washington-based fund only agreed to a new program “in principle.” Even as the commission’s analysis points “to serious concerns regarding the sustainability of Greek public debt,” its assumptions about the country’s future growth prospects are still more optimistic than those of the IMF.

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What Britain’s European Union negotiators can learn from the Greeks

by Chris Bickerton

Prospect

June 20, 2017

On 24th April 2015, the Greek finance minister, Yanis Varoufakis, attended a meeting of his Eurozone counterparts in the Latvian capital, Riga. Believing the gathering to be largely ceremonial, a sop to the Latvian government which held the rotating presidency of the European Union at the time, Varoufakis was expecting a short session on uncontroversial matters. Instead, the EU’s big hitters—in particular the Eurogroup’s Dutch president Jeroen Dijsselbloem and the German finance minister Wolfgang Schäuble—ambushed him. They threatened him with “plan B,” the vague term used to refer to Greece’s exit from the euro.

Journalists covering the meeting reported that Varoufakis, a radical, leather-jacketed game-theory specialist turned politician, had lost his temper. They claimed that other finance ministers had called him all manner of names, from “gambler” and “amateur” to “time-waster.” There was even talk of a scuffle, something unheard of at these usually soporifically dull meetings. As if to confirm that there was no smoke without fire, Varoufakis had declined the invitation to attend the Eurogroup dinner, preferring to enjoy beer and sausages with his Greek entourage. Stories of his growing isolation from the rest of the Eurozone tribe spread across the media.

A month later, in a long interview with the New York Times, Varoufakis dropped a bomb. All the allegations about name-calling in Riga were false, he said. The meeting had remained perfectly civil—and he could prove this because he had recorded it on his mobile phone. Though he said he could not release the transcript because of confidentiality, his message to the media—and those who had confected the story—was clear: tell the truth, or I will prove you wrong.

With that kind of material in his back pocket, and with a fondness for provocation and controversy, it was only a matter of time before Varoufakis—who was removed from his post in July 2015, after just six months—spilled the beans. The result is Adults in the Room—a whistle-blowing memoir that doubles as a penetrating analysis of the eurozone crisis, one caused in Varoufakis’s view by the stubbornness and ideological dogmatism of what he calls Europe’s “deep establishment.” As Britain prepares to enter exit negotiations with the EU, many will turn to this book for insights. Varoufakis thinks he can help—he wrote an open letter to Theresa May in the Evening Standard in which he urged her to “listen and learn from our Greek tragedy.”

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Friday, June 16, 2017

Greece Gets a Break in Its Seven-Year Drama

by Viktoria Dendrinou, Nikos Chrysoloras & Sotiris Nikas

Bloomberg

June 16, 2017

As last-minute Greek bailout deals go, this one wasn’t the worst.

The euro region’s finance ministers approved 8.5 billion euros ($9.5 billion) of aid on Thursday, and its most indebted state got a commitment that creditors will make sure it’s able to service future debt. If necessary, repayments can now be extended on emergency loans by up to 15 years.

While not perfect for anyone, it was a product of compromise. Germany agreed to come up with some figures on possible debt relief and to less ambitious budget targets. The International Monetary Fund then lent its credibility to the Greek bailout, if not its money. Greece got some cash and clarity.

Typically for these trade-offs, painful decisions were postponed and everyone will have to sit down again in a few months. But it feels like a question was answered, one that’s lingered since Prime Minister Alexis Tsipras clashed with Brussels over Greece’s crippling austerity two years ago: whether the country is a sustainable member of Europe’s single currency.

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In the Pantheon of Greek Deals, Is This One Big?: QuickTake Q&A

by Eleni Chrepa

Bloomberg

June 16, 2017

After months of wrangling, Greece’s creditors granted the struggling nation an 8.5 billion euro ($9.5 billion) aid payment and committed to debt relief if needed, putting an end to the latest round of political bickering. They also bound at least two more generations of Greeks to stringent austerity measures required to meet a new series of economic targets. Investors applauded the move as they digested what the latest deal means for stability in Athens.

1. What’s different this time?

The accord, reached by euro-area finance ministers in Luxembourg on Thursday, will cap Greece’s gross financing needs at 15 percent of gross domestic product for the medium term and at 20 percent thereafter, while extending maturities and deferring the interest payments on some bailout loans by as much as 15 years. Greece agreed to additional austerity measures -- equal to about 2 percent of GDP -- that go beyond the end of its latest bailout in 2018, including a lower threshold for tax-free income and a further cut in pensions. The steps will be offset by other measures if the country beats its ambitious budget targets.

2. What does this mean for Greek politics?

The decision will give Greek Prime Minister Alexis Tsipras some time to breathe “at least for the next six months, ’’ according to Nikos Marantzidis, a professor of political science at the University of Macedonia in Thessaloniki. Greece’s prolonged financial drama has made its citizens less sensitive to such decisions and a significant shift in opinion polls isn’t expected immediately. The payout will calm Greece’s financial markets, and the fact that it was larger than expected could mean fresh money can be directed to the economy starting in September, Marantzidis said.

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Greece Wins 8.5 Billion Euro Payout as Debt Clarity Deferred

by Viktoria Dendrinou, Nikos Chrysoloras & Alexander Weber

Bloomberg

June 15, 2017

Greece’s creditors agreed to release 8.5 billion euros ($9.5 billion) in new loans for Athens, capping a key chapter of the country’s bailout and ending months of uncertainty over whether it could meet large bond payments due in July.

The decision came after euro-area finance ministers sought to offer more clarity on Greece’s future debt path and outline possible measures they could take to ease its burden in the future. Meeting in Luxembourg on Thursday, they reinforced their commitment to extend Greece relief if needed and offered more specifics on what this could entail. But they stopped short of providing definitive steps, which they said would only come at the end of the bailout in mid-2018. The news sent the Athens Stock Exchange to a two-year high Friday.

“It’s a very constructive decision that will help Greece, also on the international market, to gradually get more credibility,” Luxembourg Finance Minister Pierre Gramegna said after the meeting. “The goal is for Greece to go back to the markets in the coming months or year.”

The compromise, nonetheless, leaves Greece with less than what it had sought, as it wasn’t enough to get the International Monetary Fund to acknowledge the country’s debt is sustainable. The Washington-based fund will consider signing off on a 14-month credit line for Greece, but only dole out fresh loans once it receives further assurances on debt relief measures. IMF Managing Director Christine Lagarde said she will propose the “approval in principle” of a new precautionary stand-by arrangement “probably in the range of $2 billion” that would depend on debt-relief measures materializing.

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Greece and creditors reach deal on next part of bailout

by Jim Brunsden

Financial Times

June 16, 2017

Greece and its international creditors have reached a deal on the next stages of Athens’ €86bn bailout, removing the risk that it could default on more than €7bn in debt repayments that fall due next month.

The deal ends months of uncertainty that have weighed on Greece’s recovery and spooked investors, allowing the country to secure money it badly needs while putting off difficult discussions on debt relief.

Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting, said the outcome was “a major step forward” that would help put Greece’s economy on a sounder footing.

Thursday’s deal resolves a stand-off between the Washington-based IMF and the EU over the conditions for the fund to take part in Greece’s bailout — a step Berlin says is essential if Greece is to receive any more aid.

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Thursday, June 15, 2017

Greece and Creditors Reach Deal

by Nektaria Stamouli

Wall Street Journal

June 15, 2017

Greece’s creditors agreed on Thursday to release the next tranche of its €86-billion ($96.5-billion) bailout but put off a final decision on relieving the country’s crushing debt burden until August of next year.

The agreement, reached in Luxembourg among the finance ministers of the eurozone, unlocks €8.5 billion of the bailout fund. While that brings Greece a small step closer to the end of an eight-year ordeal, the creditors’ refusal to address debt relief leaves the depleted country with bleak prospects for the future and at risk of needing yet another bailout down the road.

Greece’s travails remain a black mark in a eurozone that has otherwise found fresh confidence this spring, underscoring the bloc’s failure to root out the problems that threatened the single currency’s integrity five years ago.

The government of Prime Minister Alexis Tsipras enacted unpopular austerity measures whose effects extend well beyond next year’s end of the current bailout program with the aim of convincing creditors to go beyond releasing the next payment and restructure Greece’s debt.

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Greece Set for Case `Full of Money,' No Detailed Debt Relief

by Viktoria Dendrinou, Radoslav Tomek & Rainer Buergin

Bloomberg

June 15, 2017

Euro-area finance ministers meeting in Luxembourg will seek to close a key chapter in Greece’s bailout drama on Thursday, unlocking aid needed to end months of uncertainty while stopping short of a definitive deal to ease the country’s debt load.

A resolution at the so-called Eurogroup meeting would free up an expected 8.5 billion euros ($9.5 billion) in cash the Aegean state needs to repay bonds maturing next month. However, the euro-area finance chiefs, including Greece’s Euclid Tsakalotos, likely won’t finalize details on how to give Greece breathing room on the future of its debt obligations, a situation the International Monetary Fund has called unmanageable in the long term.

“The time is right to conclude the second review and give a green light for the disbursement aimed to cover Greece’s summer liquidity needs,” Slovak Finance Minister Peter Kazimir said in an interview in Bratislava before the meeting. “I expect Euclid will leave Luxembourg with a briefcase full of money.”

The IMF, which is mulling participation in the rescue program, has demanded more clarity on future relief measures to make the nation’s 315 billion euros of obligations sustainable. While all the creditors say Greece has completed the necessary economic reforms to receive the next slice of aid, euro-area nations are reluctant to further ease repayment terms on bailout loans.

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Only debt relief will end the Greek crisis

by Yiannis Mouzakis & Nick Malkoutzis

Politico

June 15, 2017

As Greece heads into another meeting of eurozone finance ministers, it finds itself in a painfully familiar position: in desperate need of more bailout funding and a dose of clarity about its future.

But the country isn’t doomed to be the eurozone’s wounded animal forever. If the bloc can agree to give its weakest member a chance of turning itself around, Athens has the means to lift itself — and the rest of the Continent — out of an excruciating cycle.

Eurozone finance ministers are likely to agree that Greece should receive more than €7 billion in fresh loans, but domestic political concerns and all-around fatigue mean Thursday’s Eurogroup meeting is unlikely to be a watershed moment.

Luckily, there is one thing on which everyone can agree. Greece will only shed its pariah status — and free its lenders to end their laborious monitoring of its economy — if it can successfully conclude its third bailout program next summer.

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Greece: A Case Study in Capital Controls

by Nektaria Stamouli

Wall Street Journal

June 15, 2017

When Greece imposed capital controls in the summer of 2015, the measures were a critical bulwark for banks left teetering after fears of a Greek exit from the European Union caused citizens to pull billions of euros in deposits.

Two years later, the country is a case study in capital controls. The measures prevented a collapse in the banking system, and predictions they would throw grit into the wheels of the economy haven’t materialized. Instead, controls have produced some surprising results, including helping Greece combat tax evasion, a perennial scourge.

As Greece’s creditors prepared to approve Thursday the final payment in the country’s up-to-€86 billion ($96.5 billion) bailout, there was no talk of lifting the measures—a reflection of the continued fragility of its battered economy.

“If we put aside the chaos created in the first couple of months, the mechanism currently in place is running smoothly,” says Nikos Manesiotis, who runs a food-import company and has had to navigate the measures to pay foreign suppliers. “But Greece remains the black sheep of Europe.”

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Wednesday, June 14, 2017

Why Greece is Germany’s ‘de facto colony’

by Matthew Karnitschnig

Politico

June 14, 2017

Poor Alexis Tsipras.

For days, the Greek leader has been working the phones, trying to secure the best possible terms for his country as it enters the last mile of its seemingly endless cycle of bailouts. So far, his efforts have won him more mockery than respect — especially in Germany.

“He keeps calling the whole time, and the chancellor says again and again, ‘Alexis, this issue is for the finance ministers,’” German Finance Minister Wolfgang Schäuble told an audience here on Tuesday, referring to the Greek prime minister’s attempts to win over Angela Merkel to his cause.

Eurozone finance ministers are set to decide at a meeting in Luxembourg on Thursday whether to release a more than €7 billion tranche of aid to Greece. No one doubts Athens will get the money. Schäuble all but committed to it on Tuesday. But Tsipras wants something even more precious: debt relief.

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Papademos bomb blast raises ‘revenge attacks’ concern

by Kerin Hope

Financial Times

June 14, 2017

From his hospital bed, with the unruffled calm of the central banker he once was, Lucas Papademos describes the moment that a booby-trapped package exploded in his lap.

“It resembled a box containing some CDs tightly wrapped in plastic as if by a machine,” recalls the former Greek prime minister, who opened the package while being driven home from his office in central Athens. “I tried to tear the plastic — then the box exploded.”

The attack on May 25 shocked Greece’s political and business elite.

Mr Papademos, a former European Central Bank vice-president, led a national unity government in Greece that in 2012 carried out the largest sovereign debt restructuring in history. It was the first time that a Greek official involved with handling the country’s seven-year economic crisis had been targeted, raising worries about a possible campaign of “revenge” attacks by radical anarchists linked to anti-austerity protests.

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Tuesday, June 13, 2017

ECB Said to Be Unlikely to Include Greece in QE in Coming Months

by Alessandro Speciale

Bloomberg

June 13, 2017

The European Central Bank is unlikely to include Greek bonds in its asset-purchase program for the foreseeable future, a person familiar with the matter said, as European creditors aren’t prepared to offer substantially easier repayment terms on bailout loans to improve the nation’s debt outlook.

Euro-area finance ministers will meet in Luxembourg on June 15 to discuss debt-relief measures that the ECB has said are needed before it will consider purchasing Greek bonds. The so-called Eurogroup is expected to complete a review of Athens’s rescue program that would allow for the disbursement of at least 7.4 billion euros ($8.3 billion) in aid needed for a similar amount of bond repayments in July.

An agreement among the ministers will likely allow the International Monetary Fund -- whose participation in the rescue program is a requirement for many nations -- to commit in principle to a conditional loan, said the person, who asked not to be named because the discussions are private. But the extent and wording of debt-relief commitments probably won’t convince the Governing Council of the ECB to buy Greek bonds.

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Monday, June 12, 2017

In Greece, Allegations of Government Kidnapping and Forced Deportation

by Morgan Baskin

Pacific Standard

June 13, 2017

In the early hours of May 24th, a Turkish journalist seeking political asylum fled his home country. He managed to cross the Evros, a river that slices through the border of Greece and Turkey.

The journalist, Murat Çapan, was in exile, attempting to escape a nearly 23-year prison sentence on charges of terrorism that stemmed from his work as an investigative reporter and editor at the now-defunct news magazine Nokta.

But his freedom was short-lived. According to an account of his story made public by the Hellenic League for Human Rights, Çapan and two friends were apprehended by police in the Greek border town Didymoteicho; there, they were reportedly denied the ability to apply for asylum and put in an unmarked white van, which they were told would take them to the United Nations High Commissioner for Refugees.

It didn't. Instead, the van reportedly dropped the group off in a deserted field adjacent to a river, where five gunmen bound their hands and placed them in an inflatable boat. Two of the men then reportedly guided the group across the river to the Turkish border, near a military outpost, and abandoned them. According to the report, a group of Turkish police officers quickly discovered them and apprehended Çapan. He's currently in prison.

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Macedonia considers using provisional name to join Nato

by Andrew Byrne & Kerin Hope

Financial Times

June 12, 2017

Macedonia will consider fresh proposals on its provisional name in an effort to unlock Greek opposition to its Nato membership, the country’s foreign minister has said.

Membership of the alliance would help calm the wider Balkan region after months of political tension that occasionally spilled into bloodshed, Nikola Dimitrov will tell senior Nato officials in Brussels on Monday.

Mr Dimitrov said it was too soon to discuss any specific name proposals but he would meet Greek ministers on Wednesday to restore trust between the two neighbours after Athens vetoed the Balkan republic’s Nato application in 2008.

“I will ask Greece to reconsider what kind of neighbour they want — do they want a stable, friendly country that offers hope for democracy and justice?” he said in an interview. “If we are a good neighbour, then hopefully political forces in Greece will realise this is a historic opportunity.”

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Friday, June 9, 2017

Greek parliament approves more reforms, paves way to unlock €7bn of aid

by Kerin Hope

Financial Times

June 9, 2017

Greece’s parliament has approved a handful of extra reforms demanded by creditors in order to unlock more than €7bn of aid and complete a much delayed second review of the country’s €86bn current bailout programme.
While the leftwing Syriza government pushed a package of 120 fiscal and structural reforms through parliament last month, another 20 measures still had to be implemented either through legislation or administrative decrees.

The five amendments voted on Friday included several measures delayed because of opposition from Syriza politicians.

Greece hopes to receive approval for the aid payment at a meeting of eurozone finance ministers on June 15. The review was due to be completed last November but dragged on amid disagreements over pension and tax reforms.

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Greek Government Accused of Deporting Turkish Asylum Seekers

by Patrick Kingsley

New York Times

June 8, 2017

In the early morning of May 24, a Turkish journalist fleeing a long prison sentence at home crossed the river dividing Greece and Turkey and claimed asylum in a police station on the other side.

A few hours later, according to two human rights organizations, the journalist, Murat Capan, was still in police custody — but back in Turkey, having been forced to return at gunpoint.

The Greek government denies that account, by the Hellenic League for Human Rights and the International Federation for Human Rights, which say that twice in the last few weeks, on May 24 and June 2, Turks fleeing persecution have been shipped back to their country.

The Hellenic League documented a total of 17 forcible deportations, or pushbacks, including those of seven children.

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Wednesday, June 7, 2017

Greece calls on Europe to offer growth incentives, help break debt impasse

Reuters
June 7, 2017

Greece urged its European lenders on Wednesday to offer incentives that will boost growth and help break an impasse between the euro zone and the International Monetary Fund on the size of relief the country needs to make its debt sustainable.

During a meeting of euro zone finance ministers last month, Greece, its euro zone lenders and the IMF failed to agree on the debt relief measures to be implemented after its current bailout expires in 2018, mainly because of different growth assumptions. They are now aiming for a deal at a June 15 Eurogroup meeting.

Government spokesman Dimitris Tzanakopoulos said growth incentives in the coming years, such as investment packages, could help bridge the differences and help "find the common ground needed for a comprehensive solution sought by all sides".

"This is an issue which has engaged the current discussions and it may be the key to reach a deal, in other words to find the common ground among all sides on growth projections," Tzanakopoulos said during a press briefing.

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Friday, June 2, 2017

Greek debt relief could mean creditors waiting for up to 123 billion euros

Reuters
June 2, 2017

A Greek debt relief scenario that put back interest payments until 2048 would mean the nation's euro zone creditors deferring receipt of up to 123 billion euros ($138.7 billion), according to a forecast by Germany's Finance Ministry.

The ministry's calculations, which were contained in a letter to a member of parliament seen by Reuters on Friday, contemplated the various restructuring scenarios laid out by the euro zone bailout fund, the European Stability Mechanism (ESM).

"With such an interest deferral, it would de facto be a new loan with a volume that depends on the development of interest rates," the document said. "The estimated volume of the deferred interest up until 2048 would be around 118-123 billion euros."

The Finance Ministry declined to comment specifically on the paper.

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