Wednesday, December 5, 2018

The ex-McKinsey consultant tipped to be next Greek PM

by Kerin Hope

Financial Times

December 5, 2018

Months before Greece’s next elections, Kyriakos Mitsotakis — the favourite to become prime minister — is already in campaign mode.

He and his shadow cabinet are out on the stump each weekend, fired up by a recent opinion poll giving Mr Mitsotakis’s centre-right New Democracy party a record 16-point lead over the ruling leftwing Syriza party of prime minister Alexis Tsipras.

Speaking to teachers and university professors at an interactive museum in a rundown district of Athens last month, his subject was Greece’s ailing education system.

“We cannot achieve strong growth rates unless we invest in our human capital,” said Mr Mitsotakis — educated at Harvard and Stanford universities — as he and Niki Kerameos, the shadow education minister, outlined plans for better IT teaching, university courses taught in English and a strict timetable for completing degrees.

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Thursday, November 29, 2018

Greece delays bond sale after Italian market turbulence

by Kerin Hope & Kate Allen

Financial Times

November 30, 2018

Greece has quietly postponed a landmark bond sale after the prolonged sell-off in Italy’s bond market pushed up its cost of raising new debt.

The nation’s leftwing Syriza government had hoped to issue a benchmark 10-year bond within a few weeks of the country’s exit from its €86bn third bailout in August, as a signal to investors that Greece had returned to normalcy.

But the rise in Italian bond yields has rippled through into Greek markets, pushing the Greek 10-year yield well above 4 per cent, double that of Portugal, to what Athens bankers called “impossible rates”.

In response, the government has allowed its bond sale to lapse.

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Wednesday, November 21, 2018

Greek central bank aims to use lenders’ tax credits to fix bad debts

by Kerin Hope

Financial Times

November 21, 2018

The Greek central bank will on Thursday unveil its plan for slashing the large pile of non-performing loans clogging up the balance sheets of the country’s banks in an effort to help them resume normal lending.

The proposal calls for Greece’s five largest banks to transfer up to €7.5bn of deferred tax assets to a special purpose vehicle, which would then issue bonds and use the proceeds to acquire about €42bn of non-performing loans (NPLs) held by the banks.

“This transaction would help restore confidence in the Greek banking system by cutting the bad debt portfolio in half,” said Spyros Pantelias, the head financial stability at the country’s central bank, who devised the scheme.

“It would also give the Greek banks full access to the capital markets and allow them to channel fresh capital into the economy,” he added.

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Wednesday, November 14, 2018

Greek civil servants stage strike over pay and pensions

by Kerin Hope

Financial Times

November 14, 2018

Greek civil servants staged a 24-hour strike on Wednesday to press for wage and pensions increases that would reverse deep cuts in incomes enacted during the country’s three international bailouts since 2010.

Construction workers and employees of the state electricity utility also joined the walkout, the first large-scale union action since Athens exited its most recent rescue programme in August.

The strike came days after Alexis Tsipras, the leftwing prime minister, pledged to add more than 35,000 new civil service jobs over the next three years, rolling back tight restrictions on hiring imposed by Greece’s creditors during eight years of austerity.

In an unexpected move that caused uproar among church authorities, the premier also announced a plan to shift 9,000 Orthodox priests off the state payroll to make room for a similar number of new civil service appointments, without first having consulted the synod of Greek bishops.

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Thursday, November 8, 2018

How a group of Athens troublemakers goes unpunished

Economist
November 8, 2018

The down-at-heel neighbourhood of Exarchia in central Athens, known for its lively bars and tavernas, has long been home to a small but disruptive community of self-described anarchists. Violent street battles take place at weekends: extremists throw Molotov cocktails at police, who respond with tear gas. Long-suffering residents say their complaints are routinely ignored by the authorities.

One anarchist group, Rouvikonas (Rubicon), uses more sophisticated tactics to make its presence felt. Based in a cinema-cum-bar close to Exarchia’s central square, populated with drug pushers and sellers of bootleg cigarettes, Rouvikonas stages nuisance attacks against embassies, government buildings and the offices of multinational companies. Its members are not usually arrested. Prosecutors dismiss their actions as “too insignificant” to justify full-fledged investigation.

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Wednesday, October 31, 2018

Greece shows Britain a maverick state can recover from disorder

by Tony Barber

Financial Times

October 31, 2018

The EU is a bully. The EU is inflexible and unjust. Our proud nation must no longer submit to the diktats of Brussels and its accomplices. These complaints of Brexiters in the UK resemble the indignation of some Greeks about their nation’s treatment during the eurozone’s sovereign debt and financial sector crises.

The British government and people, still unable to settle on a definition of Brexit, can learn from Greece’s long, painful struggle. Some lessons offer grounds for hope. It turns out that a democratic political system and society can emerge, bruised but fundamentally intact, from the most severe of peacetime challenges. Other lessons, showing how an oddball nation on the edge of Europe can rediscover a constructive role for itself, may be less musical to Brexiters’ ears.

Greece’s agony began in the closing months of 2009 when the newly elected government of George Papandreou, the centre-left prime minister, uncovered the terrible truth about the nation’s imploding public finances. In 2010 there began eight years of emergency bailouts, led by the EU and the IMF, and the transformation of Greece into a de facto protectorate of its creditors. The bailout era ended in August, but a surveillance regime is in place that requires strict adherence to fiscal discipline, ­economic reform and administrative overhaul in return for the creditors’ ­support.

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Monday, October 29, 2018

Greek coalition spat undermines hopes of Macedonia deal

by Kerin Hope

Financial Times

October 29. 2018

A stand-off between nationalists and leftwingers in Greece’s fragile coalition government is undermining prospects for settling a three-decade-long dispute over Macedonia’s name, which has blocked the Balkan country’s path towards membership of Nato and the EU.

The leftwing Syriza party of prime minister Alexis Tsipras strongly supports a deal signed with Skopje in June, which removes Athens’ concern that the term Macedonia implies a territorial claim on the Greek region of the same name.

But Syriza’s coalition partner, the rightwing Independent Greeks, has threatened to pull out of government over the Prespa agreement, named after the Balkan lake where it was signed.

Panos Kammenos, the outspoken defence minister and the party’s leader, said last week: “‘North Macedonia’ [the country’s proposed new name] for us is the last straw.”

“We will not accept the term Macedonia, we will walk out of parliament if Syriza presents the agreement [for ratification].”

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Thursday, October 25, 2018

A Political History of Modern Greece, 1821-2018

by Aristides N. Hatzis

September 2018

Modern Greece has a history of almost two centuries. During these centuries, the country managed to move from the backwaters of Europe to a prosperous liberal democracy before economic crisis hit the country hard in 2010. Greece was founded after a War of Independence from the Ottoman Empire that was based on liberal and democratic principles. This left a political legacy which led to universal male suffrage as early as 1844 and one of the longest parliamentary histories in Europe, despite the tumultuous political life and brief periods of authoritarian regimes. The 19th century was a period of a slow modernization of the country (in infrastructure and institutions) but is was also suffocated by “Megali Idea”, the irredentist dream of the enlargement of the Greek state to include all lands, under Ottoman rule, inhabited by large Greek-speaking populations. A great part of Megali Idea was realized in early 20th century but the triumphs ended with a devastating catastrophe in 1922. Greek political elites were often incompetent and corrupt, but several reformist statesmen managed gradually to achieve convergence with other western European countries. Most importantly, they were very effective in steering Greece on the right (i.e. winning) side of history during every major European or Global conflict (Balkan Wars, World Wars, Cold War). Greece, after World War II and a ferocious Civil War, enjoyed one of the strongest, almost uninterrupted growth on a global level. This led to the accession to the European Communities in 1981 and later the Eurozone. Today, after ten years of economic crisis and painful austerity, Greece must meet one of the most difficult challenges: to achieve growth by adopting inclusive institutions.

Download the Paper (PDF)

Wednesday, October 17, 2018

Kyriakos Mitsotakis Has Big Investment Plans for Greece

by Eleni Chrepa & Sotiris Nikas

Bloomberg

October 17, 2018

Kyriakos Mitsotakis says he’s a man with a mission.

The leader of New Democracy, currently Greece’s main opposition party -- who will become prime minister if his party wins general elections next year -- says what the country needs more than anything else is investment. With that in mind, he says he will issue permits for the mining project in Skouries, northern Greece, in his very first month in office and push for the development of the site of the former Athens Airport of Hellinikon.

The top priority would be to “unblock important and symbolic investment projects” the 50-year-old said in an interview in his spacious, bright office on a busy Athens street. “One way or another, Hellinikon must get off the ground in 2019. This project must not be delayed, not even for a minute longer. Hellinikon is the most emblematic of the big investments in the country. It’s all about the new Athens.”

The projects are together valued at about 11 billion euros ($12.7 billion) and have been stalled for years in legal and bureaucratic red tape in Greece, where luring investments has become critical to reviving an economy that lost about 25 percent of its gross domestic product during its almost decade-long crisis.

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Greek foreign minister resigns over Macedonia disagreement

by Kerin Hope

Financial Times

October 17, 2018

Greece’s foreign minister resigned on Wednesday following a clash with Panos Kammenos, the defence minister, over the country’s recently signed naming agreement with Macedonia.

Nikos Kotzias had earlier accused Mr Kammenos of undermining the leftwing Syriza-led government’s foreign policy at a cabinet meeting on Tuesday, according to Greek media reports.

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Greece Is Trapped

by Ferdinando Giugliano

Bloomberg

October 17, 2018

If you thought Greece’s ordeal was over, think again.

Months after exiting its international rescue program, the country faces renewed trouble in its banking system. There is no easy fix: money is short and investor patience thin. But it looks increasingly like the gradual approach pursued by Athens and the euro zone authorities is running out of steam.

Lenders still bear the scars of a decade of economic crisis. Borrowers are failing to meet payments on almost half of all loans, the highest ratio in the euro zone. A large proportion of banks’ capital is made of so-called “deferred tax assets” – future tax deductions accrued because of past losses – about which investors are skeptical.

True, there are differences in the health of the four largest lenders: Piraeus Bank SA is in the worst shape, while National Bank of Greece SA and Eurobank Ergasias SA are faring much better. But investors have little time for such subtleties: the country’s banking stocks have trailed their European equivalents by 32 percent this year. Even Eurobank trades at an unhealthy 77 percent discount to the book value of its assets.

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Friday, October 5, 2018

What's Wrong With Greek Banks and How It Can Be Fixed

by Nikos Chrysoloras & Sotiris Nikas

Bloomberg

October 4, 2018

Burdened by the highest ratio of bad loans in Europe, Greek banks have no shortage of challenges. And that was before Greece -- the continent’s most indebted state -- decided to end its bailout program in August without requesting a follow-up lifeline backed by European creditors. If doubts about the state of their balance sheets aren’t addressed, concerns about the fate of Greek banks could spiral out of control. That became clear this week when banking shares plunged, though news that the government is weighing plans to help lenders speed up bad-loan disposals arrested the declines.

1. Didn’t the world already fix Greece?

It’s tried. This summer Greece graduated from its third international rescue program and reached a landmark deal with Europe’s other governments that gives it a decade or more to start repaying most of its loans (with the understanding it won’t go back to the spending that brought its economy to the brink of collapse in 2009). The nation’s largest banks have been recapitalized three times since the start of the debt crisis -- most recently in 2015. The state, which has chipped in almost 50 billion euros to shore up capital over the past decade, says its banks are now well-capitalized and poised to gain from a nascent economic rebound. It also says that the banks have now new tools at their disposal to resolve the bad loans issue, including easier out-of-court settlement procedures and e-auctions.

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Wednesday, October 3, 2018

Sell Off Prompts Greek Banks to Spring Clean Balance Sheets

by Christos Ziotis & Sotiris Nikas

Bloomberg

October 4, 2018

Greek bank stocks reeled amid growing concerns about their need for more capital, even as the biggest lenders were said to set ambitious new targets for reducing their piles of bad debt.

The benchmark FTSE Athex banks index dropped almost 9 percent on Wednesday, after earlier in the day slipping as much as 18 percent. Piraeus Bank SA closed 21 percent lower, having slumped 30 percent to the lowest ever after Chief Executive Officer Christos Megalou told Reuters that the bank is looking for an opportunity to issue debt to boost capital. Bloomberg reported on Friday that the ECB told the lender to increase capital this year.

Piraeus must raise about 500 million euros ($577 million) by selling tier 2 bonds under a plan agreed with the ECB’s Single Supervisory Mechanism, two people with knowledge of the matter told Bloomberg. Traders say the recent deterioration in the European bond market amid political tensions between Italy and the European Union adds to worries about Piraeus’s recapitalization efforts.

The lender is monitoring debt capital markets to identify the right timing for the issuance of the bonds, according to an Athens bourse filing it issued Wednesday in response to press reports. The issuance “remains subject to market conditions,” Piraeus said.

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Greek bank shares slide on bad debt worries

by Martin Arnold & Kerin Hope

Financial Times

October 3, 2018

Some of Greece’s biggest banks suffered steep share price falls on Wednesday as investors worried they may not have enough capital to meet fresh targets on reducing their large portfolios of bad debts.

Shares in Piraeus Bank, the country’s largest lender by assets, dropped more than 20 per cent, cutting its market capitalisation to less than €600m. The bank responded by trying to reassure investors that its plan to boost capital by issuing €500m of subordinated bonds was still on track.

Piraeus was the worst performer in the European Central Bank’s stress tests of Greek lenders in April. After its capital ratio fell lower than rivals in the stressed scenario, it agreed a plan with regulators to raise €1bn of capital by issuing bonds and selling operations in central and eastern Europe.

Fears exist that Piraeus could find it hard to complete its planned bond issue because of general market jitters stemming from concern over the Italian government’s budget deficit plans and the fragility of emerging markets.

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Sunday, September 30, 2018

Tsipras Tests Greek Budget Credibility With Pitch to Voters

by Marcus Bensasson

Bloomberg

September 30, 2018

Greek politicians are gambling their post-bailout credibility with lenders and investors on voter-pleasing promises as they look to elections that may be just months away.

Prime Minister Alexis Tsipras has pitched rescinding unpopular pension cuts slated for January, while both he and opposition leader Kyriakos Mitsotakis are promising lower taxes. The government will unveil draft numbers on Monday, and the plan is the first big test of how much fiscal sovereignty Greece has regained since exiting its aid program in August.

Tsipras says he can hit fiscal targets set down by the euro area and International Monetary Fund without the planned pension cuts. They were agreed after months of back and forth negotiations, and some creditors consider them a vital structural reform. That means the government risks creating the impression of backsliding now that Greece is out of the bailout.

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Thursday, September 27, 2018

Greece’s Left-Wing Leader Builds Alliance With U.S., Europe in the Balkans

by Nektaria Stamouli & Marcus Walker

Wall Street Journal

September 27, 2018

Greece’s Prime Minister Alexis Tsipras vowed to ratify a landmark pact with neighboring Macedonia regardless of domestic political risks, as part of a strategy to stabilize the Balkan region in cooperation with the U.S. and European Union.

Macedonians are expected to back the agreement with Mr. Tsipras’s government to rename itself “North Macedonia” in a referendum on Sunday.

In return, Greece, which has long objected to its neighbor using “Macedonia”—a name that dates back to the ancient Greek kingdom of Alexander the Great—has promised to lift its veto on the small country joining the North Atlantic Treaty Organization and, eventually, the EU.

Greek nationalists, including a small party in Mr. Tsipras’s left-led coalition, object to the pact. A vote to ratify the deal in Greece’s parliament could therefore split the government, leading to speculation that Mr. Tsipras might postpone the emotionally charged decision until after Greek elections next year, which he is not expected to win. He dismissed that speculation.

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Tuesday, September 25, 2018

EU watchdog probes possible misuse of refugee funds in Greece

by Lili Bayer

Politico

September 25, 2018

The EU’s anti-fraud watchdog is investigating the potential misuse of EU funds meant to provide food for refugees in Greece, a spokesperson for the agency said Tuesday.

The news follows the detention on Saturday of three journalists from Greek newspaper Fileleftheros following a libel suit filed by the country’s defense minister about an article alleging mishandling of EU funds meant for reception centers for migrants.

A spokesperson for the European Anti-Fraud Agency (OLAF) declined to go into detail about the investigation or say whether it was related to the newspaper allegations.

The investigation into “alleged irregularities concerning the provision of EU-funded food for refugees in Greece” was launched following information submitted by the European Commission’s directorate-general for migration and home affairs in 2017, the spokesperson said.

“As the investigation is on-going, OLAF cannot issue any further comment at this stage,” the spokesperson said in an email, adding that “the fact that OLAF is examining the matter does not mean that any persons/entities involved have committed an irregularity/fraud.”

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Monday, September 24, 2018

Refugee integration starts with homes

by Kerin Hope

Financial Times

September 24, 2018

Most evenings at about 11pm, Hanan and Ismail Abbas take their four young children to play in a park near their apartment in central Athens. “Local families are out enjoying the cooler temperatures so we feel safe being out so late,” says Ismail, a 33-year-old footwear designer who fled to Greece last year from the Syrian city of Aleppo.

“We eat ice-cream and practise speaking Greek to our neighbours.”

Mr Abbas was granted refugee status after crossing from Turkey in a smuggler’s boat and spending two months in a camp on the island of Kos.

He was later able to bring his family to Athens and now has a job with a small Greek business exporting handmade shoes. He says: “I was lucky to find work in Athens, not only a house.”

The family lives in a middle-class neighbourhood in a flat rented by SolidarityNow, a Greek non-governmental organisation founded by George Soros, which is participating in a European Union-funded programme that aims to house up to 27,000 vulnerable refugees.

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Thursday, September 13, 2018

Greek Economic Recovery Has Nothing to Do With Odysseus

by Alexis Papazoglou

New Republic

September 13, 2018

In 2010, at a picturesque port on the island of Kastelorizo, then Prime Minister George Papandreou announced the start of “a new Odyssey for Greeks”: entry into an austerity-focused International Monetary Fund-European Union bailout agreement to help finance the country’s debt. “We know the route to Ithaca,” Papandreou said, “and we’ve got a map.” Eight years and $360 billion later, last month Prime Minister Alexis Tsipras announced the end of the third such bailout program. Speaking from a peaceful cove on the island of Ithaca itself—Odysseus’s home and final destination—Tsipras took full advantage of the symbolism to declare the long voyage over.

The analogy was designed to appeal to the country’s love of associating with the grandeur of Ancient Greece, and to flatter its citizens, comparing their troubles with the story of one of literature’s archetypal heroes, whom they study in school. In Homer’s epic poem, it took Odysseus ten years to return to his home island after the end of the Trojan war, making eight years of contemporary austerity a slight improvement. Greek citizens had to face pension cuts and tax hikes, and infrastructure privatization. Odysseus had to fight a Cyclops, survive storms at sea conjured up by the god Poseidon himself, navigate his ship between Scylla and Charybdis, resist the enchanting song of the Sirens, and even pay a visit to the underworld.

But beneath the superficial lure of a mythic analogy, the comparison suggests a worrying degree of confusion in Greek political discourse about what the past eight years have meant, and the lessons the country should draw from them.

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Greece has the means to help refugees on Lesbos – but does it have the will?

by Sebastian Leape

Guardian

September 13, 2018

A 10-year-old child tried to commit suicide in a Greek refugee camp. Perhaps the most shocking thing about this story is that it is not new.

Routine police beatings and squalor in Moria, the largest camp on the island of Lesbos and home to about 8,000 people, have pushed the situation to breaking point.

Moria fails to meet just about every standard set by the UN High Commissioner for Refugees (UNHCR). New arrivals are crammed into inadequate sports tents, or on to farmland where lighting has not been installed, and up to 190 refugees share one filthy toilet.

Last year, the mayor of Lesbos, Spyros Galinos, warned that the facility was starting to resemble “concentration camps, where all human dignity is denied”.

Yet Moria resides in plain sight, on a tourist island in the EU. It is full of people with the most extraordinary of life stories.

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Tuesday, September 11, 2018

Tsipras seeks to stave off cuts as election looms

by Kerin Hope

Financial Times

September 11, 2018

Alexis Tsipras, Greece’s leftwing prime minister, is seeking to stop or delay cost-cutting measures agreed as part of the exit from the country’s €86bn bailout — even though he insists Athens will retain broad budget discipline.

Mr Tsipras told the European Parliament on Tuesday that the country was “continuing on the path of fiscal stability” and “determined to avoid the mistakes and the behaviours of the past that led to the crisis”.

But he is determined to prevent a new round of pension cuts from taking effect in January — even though the measures were approved by the Greek parliament as a condition for winding up the final bailout.

Mr Tsipras argues that the cuts, which the IMF championed, will drag down the economy and are not necessary to achieve next year’s target of a primary surplus of 3.5 per cent of gross domestic product.

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Friday, September 7, 2018

Crash Time

by Kenneth Rogoff

Project Syndicate

September 7, 2018

A decade after the collapse of Lehman Brothers and the start of the global financial crisis, it is clear that many lessons have been learned, while many economic misconceptions remain embedded in the public consciousness. If economic history teaches us anything, it is to be mindful of our own limitations in a world of infinite uncertainties.

Ten years after the collapse of Lehman Brothers, Crashed, by the noted Columbia University historian Adam Tooze, offers a sweeping history of the global financial crisis up to the era of Donald Trump. Above all, it is a scathing critique of the global fiscal-policy response to the crash. To guess the punchline, all one really needs to know is that the word “austerity” appears 102 times without ever being clearly defined. Does austerity mean actually reducing government spending and debt, or simply slowing the rate at which spending and/or borrowing rise? Tooze uses the same term to describe a confusingly wide range of policies and episodes.

Such freewheeling use of a freighted term muddles the discussion at key junctures. More broadly, it is emblematic of an economic analysis that seems to be rooted in a selective reading of left-leaning commentaries rather than primary economic or historical sources, much less a balanced survey of the scholarly literature.

For example, we are told that during the eurozone crisis, Greece was subjected to “the most draconian austerity program ever proposed to a modern democracy.” This would seem to suggest that the “Troika” –the International Monetary Fund, the European Central Bank, and the European Commission – was demanding that Greece immediately pare the overall size of its debts. In fact, the opposite was true. In the years following the crisis, when Greece lost access to fresh money from private markets, the Troika gave the country enough to meet all its payment obligations, plus a significant amount of additional fresh money, thereby reducing the magnitude of austerity it inevitably faced when its borrowing binge ended.

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Wednesday, September 5, 2018

Syriza choice for justice minister sparks Greek rule of law fears

by Kerin Hope

Financial Times

August 5, 2018

The appointment of a Syriza radical to oversee Greece’s legal system has deepened opposition fears over rule of law and government meddling as Athens seeks to restore investor confidence after eight years of international bailouts.

Michalis Kalogerou, the new minister of justice, was a controversial figure even before he was appointed in a government reshuffle last week.

A lawyer and adviser to the leftwing Syriza government, and cabinet secretary since 2015, he made his name representing a member of a local anarchist group that made headlines across Europe after mailing parcel bombs to foreign politicians and diplomats.

He has also previously clashed with the judiciary he now oversees, attacking judges over the treatment of his anarchist client and over a controversial law he drafted on issuing television licences, which was seen as ill-conceived and was eventually overturned.

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Tuesday, August 28, 2018

Children 'attempting suicide' at Greek refugee camp

by Catrin Nye

BBC News

August 28, 2018

At Moria camp on the Greek island of Lesbos, there is deadly violence, overcrowding, appalling sanitary conditions and now a charity says children as young as 10 are attempting suicide. The Victoria Derbyshire programme has been given rare access inside.

"We are always ready to escape, 24 hours a day we have our children ready," says Sara Khan, originally from Afghanistan.

"The violence means our little ones don't get to sleep."

Sara explains that her family spend all day queuing for food at the camp and all night ready to run - in fear of the fights that break out constantly.

Conditions are so appalling that charities have actually left in protest.

The place smells of raw sewage, and there are around 70 people per toilet, according to medical charity Medecins Sans Frontieres (MSF).

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Wednesday, August 22, 2018

Greece is in ‘Hotel California’: Checked out but it can never leave

by Theodore Pelagidis

Brookings Institution

August 22, 2018

After eight years of painful bailout programs, this week Greece is leaving behind, at least technically, the era of bailout programs dictated by creditors. However, despite optimistic views expressed both by the Greek government—Prime Minister Alex Tsipras included—and some Eurozone officials, many believe that the country has, to paraphrase the Eagles’ “Hotel California” song, checked out but it can never leave.

From CNBC to Reuters to Politico EU to CNN Money, recent international news coverage on Greece cites the usual culprits and causes for pessimism, emphasizing weaknesses in the economy that were not tackled as part of three consecutive bail-out programs. These include: inefficient public administration, the black market economy, corruption and tax evasion, slow and inefficient justice, and numerous administrative obstacles to exports and investments. Other shortcomings of the three bailout programs include a heavy propensity toward implementing austerity measures. These are all, at least to an extent, valid flaws.

Yet rarely does the international press cite my top pick—overtaxation—a phenomenon with disastrous repercussions for Greece’s future. Let me explain why by presenting a few graphs.


Figure 1 depicts higher taxes plus higher social security contributions (SSCs). Both are higher than the OECD average and become highly progressive as wages become higher. But even low-income employees pay the high and non-rewarding SSCs. In sum, such a social welfare tax makes it extremely costly for a company or an employer to hire and so they avoid doing so. When an employer does hire, the “disposable wage” should be low to compensate for sky-high taxation and SSCs. As a consequence, domestic demand will be weak, which in turn dampens growth and employment prospects.

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Tuesday, August 21, 2018

EU celebrates an end to Greek aid as an Italian storm looms

by Desmond Lachman

The Hill

August 21, 2018

Monday marked the day that Greece finally emerged from eight years of tutelage under an International Monetary Fund (IMF)-European Union economic adjustment program.

This is giving rise to celebrations in some official quarters in Europe that finally the euro crisis is over. As an example, Klaus Regling, the managing director of the European Stability Mechanism, says that he will be drinking a glass of ouzo to celebrate this important Greek milestone.

Evidently, Regling is not paying attention to two factors. The first is the extraordinarily sorry state in which Greece has emerged from its IMF-EU program as well as the country’s still very gloomy economic prospects.

The second is a brewing Italian financial and economic crisis that could have very much more serious consequences for the euro than did the earlier Greek economic crisis.

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Tsipras warns of fresh battles after bailout ends Greek premier says country has endured an ‘odyssey’ of austerity

by Kerin Hope

Financial Times

August 21, 2018

Alexis Tsipras, prime minister of Greece, has warned of “fresh battles ahead” as the country prepares its first budget measures following the end of its international bailout.

In his first public remarks since Athens’ exit from its eight-year rescue programme, Mr Tsipras said Greece was now free to “reshape its future . . . as a normal European country”.

The premier spoke on Tuesday on the island of Ithaca — consciously comparing Greece’s travails with those of the mythological hero Odysseus, who endured an arduous 10-year journey before reaching the island, according to Homer’s epic.

“Greece has lived through its own odyssey, including €65bn of austerity measures . . . We’re starting a new era today, with a sense of responsibility that Greece won’t return to the years of deficits and bankruptcy,” he said on state television, against a backdrop of the island’s picturesque port.

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Monday, August 20, 2018

Many Greeks Struggle to Keep Their Heads Above Water as Bailout Ends

by Nektaria Stamouli

Wall Street Journal

August 20, 2018

Giorgos Fasois may never hold a full-time job again. He has come to terms with that, he said. He will just do whatever it takes to feed his three children.

Charis Karakosta Papachristou now works as a doctor in Sweden. She doesn’t intend to return.

Evelyn Karyofylli kept her swimsuit-making business going, but isn’t sure it was worth it.

“I had to let go of the whole personnel gradually: 25 people in total,” she said. “I’m now alone; I’m sewing the swimsuits in the winter, selling them in the summer.”

These three Greeks, and millions of their compatriots, won’t be celebrating when Greece’s international financial bailout ends on Aug. 20. The moment will mark the symbolic end of the eurozone’s long debt crisis, which put the survival of the single currency in doubt.

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Greece’s Bailouts End, but Its Prospects Still Look Grim

by Yannis Palaiologos

Wall Street Journal

August 19, 2018

It took three bailouts, around €290 billion in loans from its European partners and the International Monetary Fund, countless nights of knife-edge negotiations, an avalanche of austerity, a collapse in output worse than America’s in the Great Depression, and three close brushes with an exit from the euro. On Monday Greece’s third bailout will conclude, and the country will no longer have to rely on its official creditors to finance itself.

The eight-year crisis leveled Greece’s old political landscape. Four general elections between 2012 and 2015 reduced the once-mighty Pasok party, which had led the country most of the preceding 30 years, to a single-digit also-ran. Syriza, a fringe group on the hard left that barely sneaked into Parliament before the debt crisis, has swept into power. Golden Dawn, a fascist party that polled below 0.5% before 2010, won 18 seats in the last election and is now entrenched in Parliament. Despite the criminal indictment of its entire leadership, it likely will finish third in the next election, which must be held by October 2019.

At the end of it all, the government and its European Union cheerleaders now argue that Greece is once more a normal country, on course for sustainable, inclusive growth. If only that were true.

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Greece’s Bailout Is Ending. The Pain Is Far From Over.

by Liz Alderman

New York Times

August 19, 2018

When Dimitris Zafiriou landed a coveted full-time job two months ago, the salary was only half what he earned before Greece’s debt crisis. Yet after years of struggling, it was a step up.

“Now, our family has zero money left over at the end of the month,” Mr. Zafiriou, 47, a specialist in metal building infrastructure, said with a grim laugh. “But zero is better than what we had before, when we couldn’t pay the bills at all.”

Greece is reaching a milestone in one of the most ruinous financial crises to hit Europe. On Monday, the country will officially end its reliance on over 320 billion euros, or about $360 billion, of bailouts, opening a path to a new era of financial independence. The economy is slowly returning to growth, and European leaders are declaring an end to a debt crisis that nearly broke up the euro.

But the price of Greece’s apparent turnaround has been steep. A wrenching downturn, combined with nearly a decade of sharp spending cuts and tax increases to repair the nation’s finances, has left over a third of the population of 10 million near poverty, according to the Organization for Economic Cooperation and Development.

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Sunday, August 19, 2018

What Greece needs now that its bailout is ending

by Jim Brunsden & Kerin Hope

Financial Times

August 19, 2018

Greece’s exit from eight years of international bailout programmes on August 20 will be a defining moment in its emergence from the depths of austerity. But government and business acknowledge that this is just a milestone.

One government official said: “We’re not at the end of the road yet. There are still near and medium-term challenges ahead.”

Aristos Doxiadis, the manager of a fund for technology start-ups, summed up the challenges: “We’re coming from a place where domestic demand is dead. The greatest challenge now is to create an environment where investment can take place.”

EU officials speak of two main potential scenarios for the next 15 years. In one, a solvent but “stagnating” Greece is still burdened by stubbornly high debt and unemployment. The other, brighter picture, is of a reinvigorated economy as Greece shakes off legacy problems.

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Greece's bailout is finally at an end – but has been a failure

by Larry Elliott

Guardian

August 19, 2018

After eight years, Greece will on Monday be deemed strong enough to stand on its own feet. The international bailout programme that has provided Athens with emergency financial support will come to an end. Aside from the tough budget rules in place for the next decade or more, Greeks can wave goodbye to the troika – the officials from the International Monetary Fund, the European Central Bank and the European Union – that has in effect been running the country since 2010.

Beware the hype that trumpets this as a great success story, a tribute to solidarity and a commonsense approach that has restored economic stability and prevented Greece from being the first country to leave the euro. Nothing could be further from the truth.

Greece has been a colossal failure. It is a tale of incompetence, of dogma, of needless delay and of the interests of banks being put before the needs of people. And there will be long-term consequences. When Greece first received help in 2010, the plan was for it to have access to the financial markets within two years. It has taken two further rescue packages and six years for that to happen.

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End of Greek bailouts offers little hope to young

by David Molloy

BBC News

August 19, 2018

On Monday, Greece ends its third and final financial bailout programme, having received more than €300bn (£269bn; $342bn) over eight years.

The government and its European lenders are keen to paint the end of the last bailout as a good thing, having avoided a "Grexit" in which the country would have crashed out of the eurozone into unknown territory.

But for many Greeks - especially the young - the damage has already been done.

A recent poll indicates that three-quarters of the population think the country is headed down the wrong path. The same number think the bailout deals, rather than saving Greece, actually harmed the country.

Taxes remain high and more than 90% of Greeks believe the lenders will keep a close watch on the country's spending for years.

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Friday, August 17, 2018

Greece’s eight-year odyssey shows the flaws of the EU

Economist
August 18, 2018

Kastellorizo is “the end of Europe—or perhaps its beginning”. So says Yannis Doulgaroglou, co-owner of the Hotel Kastellorizo, a sunny inn on Greece’s easternmost inhabited island. A tiny rocky outpost just off the Anatolian coast, on maps of Greece Kastellorizo is often relegated to an inset. Yet it was from the island’s picturesque harbour, on April 23rd 2010, that George Papandreou, the prime minister, stared blankly into a camera and acknowledged that his troubled country had lost access to capital markets and needed a financial rescue package from its euro-zone peers. The day is etched in the memory of most Greeks. Chuckling, Mr Doulgaroglou recalls the journalists who scarpered from his hotel once they realised the prime minister was saying something momentous, leaving behind their unpaid bills.

Eight years and three bail-outs later, as Greece prepares to leave its final programme on August 20th, Mr Papandreou’s remarks seem laden with pathos. He directed his ire at the “speculators” who had sent Greek bond yields soaring, more than at the successive governments that had overspent, under-reformed and fiddled the national accounts. Yet, he vowed, with a “common effort” Greece would “reach the port safely, more confident, more righteous and more proud.” He called this the “new Odyssey”.

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Tuesday, August 14, 2018

Greece Is Back on the Grid, But Recovery Remains Elusive

by Giorgos Christides & Tobias Rapp

Spiegel

August 14, 2018

On August 20, the third aid package for Greece will end, marking the end -- for now -- of the country's debt crisis. But the country's slow economic growth and grim demographic outlook mean that even without the onerous rules attached to its repayments, it faces an uphill battle.


The school on the small Greek village of Kerasochori looks like the set of a disaster movie. Everything is still there: the black board, the math books, tables and chairs, the sports equipment, the map of Greece on the wall. Even the class registers are still in the corner. A layer of dust covers everything. About 20 boys and girls once went to school here, but 12 years ago it was closed down. That's where it began. There were no longer enough families in Kerasochori to keep it running.

Konstantina Kalli, 34, has unlocked the door and stands helplessly in the ruins of the past. "Anyone who leaves doesn't come back," she says. "The village is shrinking."

Kalli is Kerasochori's hope. She has a three-year-old daughter and is six months pregnant, with a girl. The birth will likely be difficult. There is no medical clinic nearby, and she has had to drive to Athens for every checkup, a journey of five hours by car along many winding mountain roads. Kerasochori doesn't have any child care. The nearest school is in the neighboring village, as long as there are enough children for it to remain in operation.

Kalli works for the local government, the biggest employer in Kerasochori. Together with two colleagues, a mayor, a priest and a police officer, she runs the district. About 100 people still live here in the village, most of them retirees. The average income is about 300 euros per month. There is almost no work -- the main sources of income are beekeeping and a bit of forestry. There's no tourism, even though, according to UNESCO, the air here is cleaner than almost anywhere else in Europe.

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Friday, August 10, 2018

The Human Side of Austerity: Health Spending and Outcomes During the Greek Crisis

by Roberto Perotti

National Bureau of Economic Research

NBER Working Paper No. 24909
August 2018


The Greek crisis was the most severe in postwar Europe; its budget cuts were the deepest. Among the components of the budget, health spending was hit particularly hard, declining by more than one third in just five years. This paper has two goals: establish the facts about health inputs, outputs and outcomes during the Greek crisis, and explore the connection between budget cuts and health outcomes. Health spending and inputs were very high in Greece before the crisis: in several dimensions, even after the budget cuts were implemented health spending and inputs were still at or near the top of the European countries; in other cases they merely went back to the European average. Nevertheless, budget cuts so deep and so sudden are unlikely to merely cut into inefficiencies and overcapacities. I highlight several areas in which a comparative quantitative analysis suggests that budget cuts might have had an appreciable effects on the health of the population.

Download the Paper

Thursday, August 9, 2018

What the crisis changed in Greece — and what it did not

by Kerin Hope & Jim Brunsden

Financial Times

August 9, 2018

Greece has lived through eight lost years. Since 2010, its economy has shrunk by one-quarter, the disposable income of its citizens by-one third. More than 300,000 of those people have emigrated; among those left, unemployment is at 20 per cent.

As the country prepares to draw a line under this grim period, with the international tutelage imposed after its bailout set formally to end on August 20, the question is whether the years of trauma will have acted as a purge — cleansing Greece of some of the problems that contributed to the crisis.

The reforms that Athens signed up to in exchange for bailout funds were intended to address glaring shortcomings: a ruinously spendthrift pension system, an overstaffed bureaucracy and deep-rooted problems of tax evasion.

Other measures such as liberalising labour law and new business licensing rules were aimed at promoting growth and investment in a corporate sector fenced in by outdated regulations and restrictive union practices.

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Friday, August 3, 2018

Only four economies have shrunk more than Greece’s in the last 10 years. Two of them have been hit by civil wars.

by Matt O'Brien

Washington Post

August 3, 2018

After eight years of bailouts, brinkmanship and even more bailouts, Greece’s economy is finally ready to stand on its own again. Well, what’s left of it.

The good news is that Greece really is about to wrap up its latest bailout program and won’t need any more financial assistance for now. But the bad news, as the International Monetary Fund points out, is that even with the lower interest rates and longer repayment periods that Greece has been given, it still has too much debt, too little growth and too fragile a private sector to be able to say that it won’t need more help for long.

Which brings us to the worst news of all: Europe might be celebrating this as a success story now, but Greece has been one of the biggest economic failures you’ll ever see short of a war or revolution.

Indeed, excluding microstates such as San Marino, there are only four countries that have grown less — or, more accurately, shrunk more — than Greece has in the last 10 years: Libya, Yemen, Venezuela and Equatorial Guinea. (The IMF doesn’t have numbers for Syria since the start of its conflict, otherwise it would probably be on this list as well).

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Thursday, August 2, 2018

Greece exits its bail-out programme, but its marathon has further to go

Economist
August 2, 2018

“No one buys furniture in a crisis,” laments Konstantinos Vourvoulakis. He and his father used to sell handmade furniture, but as customers became strapped for cash, they shut up shop in 2014. A chatty man with a sunny disposition, he started driving a taxi instead, ferrying tourists around Athens and offering travel tips. But he doubts he will be able to afford a holiday himself any time soon.

Greece’s public-debt woes triggered an economic collapse that lasted longer than the Great Depression in America. In 2009 the new prime minister admitted that budget-deficit figures had been understated for years, and were perhaps double those originally reported. Ratings agencies downgraded its debt. Interest rates surged. In 2010 the government turned to the euro zone and the IMF for help. Their loans had strings attached: that Greece implement deep spending cuts and structural reforms.

On August 20th Greece exits the last of three bail-out packages. Both its creditors and its government think its public finances have improved enough for it to borrow from the markets again. Debt relief agreed on in June helps cushion its return. The maturity of some loans has been extended, and interest-rate relief offered on others. A cash buffer of €24bn, enough to cover nearly two years of Greece’s funding needs, should also reassure investors.

But the public finances and economy have miles to go before they reach normality. Public spending is still severely restrained. The Greek government has signed up to exceedingly ambitious targets: primary surpluses (that is, excluding interest payments) of 3.5% of GDP until 2022—which only a few non-oil-producing countries have achieved in the past 30 years—and an average of 2.2% until 2060. In the early years, creditors will monitor progress every quarter.

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Tuesday, July 31, 2018

Greece: Much Progress, but Action Needed to Address Crisis Legacies, Boost Inclusive Growth

International Monetary Fund
IMF Country Focus
July 31, 2018

Greece has successfully eliminated its extraordinarily high fiscal and current account deficits, and restored growth. It must now take action to address crisis legacies and boost inclusive growth, says the IMF in its annual health check of the country’s economy.

As the Fund publishes its annual report on the state of the Greek economy, IMF Country Focus sat down with Peter Dohlman, the country’s mission chief, to discuss the report’s overall findings, key recommendations that could help lift the country’s growth prospects and living standards, and the Fund’s future relationship with Greece.

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Read the Report

Read the Press Release

Athens told to stick to reforms or risk losing investment

by Jim Brunsden & Kerin Hope

Financial Times

July 31, 2018

Greece’s central bank governor has warned that any backsliding by the country on economic reforms could shatter fragile investor confidence, as Athens prepares to exit eight years of international bailout programmes next month.

Yannis Stournaras told the Financial Times that “markets are waiting” to see if Greece will stick to its commitment to implement additional measures after the formal bailout ends on August 20. He said it would be a mistake to assume that a debt relief deal agreed with the eurozone in June would be enough to reassure investors that Greek bonds were a sound investment.

“As soon as we are out on our own, the markets will take a tough approach. They want to see how we are going to behave after August 20,” he said.

“They [investors] will be monitoring every move by the government as far as economic policies are concerned. If they feel that we’re backtracking, they’ll be off. If they feel we’re honouring our commitments, they’ll give us a chance”.

His comments come as Greece prepares to live without handouts from international creditors and once again raise its own money from investors, closing an unprecedented period of economic intervention that began after it was frozen out of bond markets in 2010.

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Friday, July 27, 2018

The Fires in Greece

by Nikos Konstandaras

New York Times

July 27, 2018

Four days after the wildfire that raced down from the mountains, incinerating all before it, cars were once again tangled up in traffic jams in this seaside resort’s narrow streets. Search parties combed ruined homes for bodies; volunteers sought out injured and frightened pets. The nation was in mourning, shocked by the magnitude of the disaster, shaken by the stories of victims and the missing.

In a V-shaped bend where on Monday desperate residents and visitors found themselves trapped, unable to escape the heat that melted even the metal of their cars, vehicles carrying survivors who had returned to salvage some possessions, volunteers, journalists and the simply curious edged carefully past one another as they sought a way out of Mati. The only reason they did not run the risk of being burned alive was that pretty much anything in the vicinity that could burn had already burned — pine trees, houses, people, pets and cars — even a wooden umbrella on a beach where people had fled into the water. Black dust and liquefied aluminum lay on the road when the incinerated hulks were removed.

By Friday, the death toll had reached 87, with scores still missing. It was unclear how many of the bodies had been identified, a daunting task because of the intense heat most had been exposed to.

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Wednesday, July 25, 2018

As Greek Wildfire Closed In, a Desperate Dash Ended in Death

by Jason Horowitz

New York Times

July 24, 2018

They nearly reached the water.

As wind-fueled wildfires that killed at least 76 people in vacation areas outside Athens bore down on their seaside resort, 26 men, women and children gathered in the hope that they could find the narrow path leading to a small staircase down to the water.

The gated entrance stood only a dozen paces away, but with smoke blotting their vision and choking their lungs, they appear to have lost their way. Officials found their bodies the next day, Tuesday; several were still clinging to one another.

At sundown, an eyeglass case, a belt buckle, the carcasses of dogs and the shells of cellphones dotted the still-smoldering field where they fell. Amid the burned pine cones and the naked trees, leaning as if slammed by a nuclear wind, lay a large leather sandal and a small blue one with a Velcro strap.

All around were the discarded blue rubber gloves of the emergency workers who carried the bodies away.

Greece, a country that understands tragedy all too well, woke Tuesday morning to its worst one in a decade. In addition to those killed by smoke or fire, or who drowned in the sea while trying to flee, 187 people were hospitalized, more than 20 of them children. Ten people remained in serious condition, the government said Tuesday night.

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Tuesday, July 24, 2018

At least 74 killed by Greek forest fires

by Kerin Hope

Financial Times

July 25, 2018

The devastating forest fires that have swept through crowded resorts on the Greek coast near Athens have killed at least 74 people.

The blaze, fanned by strong winds, raged out of control for a second day in eastern Attica, where more than 700 people were evacuated overnight in small boats. The fire service has also asked people to evacuate the area around Kineta, west of Athens.

Almost 50 wild fires have broken out across Greece in the past two days, with 10 still burning on Tuesday — including blazes in Corinth, Crete, and in central and northern Greece — after a weekend heatwave sent temperatures above 40C.

The number of fatalities makes this the highest death toll from forest fires in recent times and it looks set to rise further after a fire service spokeswoman said about 100 people were missing. More than 170 people have been injured. In 2007 more than 60 people were killed when a blaze devastated the southern Peloponnese peninsula.

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Monday, July 23, 2018

Athens and Moscow’s Stunning Falling-Out

by Nikos Konstandaras

New York Times

July 23, 2018

For centuries, even when Athens was a bastion of the West during the Cold War, Greece and Russia have seen themselves as natural allies. Both are Christian Orthodox nations on Islam’s western frontiers; even as a NATO member, Greece tried to maintain channels of communication with the Soviet Union. Yet a sudden dispute over alleged Russian meddling in Greek affairs has escalated rapidly. This could have long-term consequences for Greek-Russian ties and for the Western Balkans.

This month, Athens informed Moscow that it was expelling two Russian diplomats and refusing entry to two others. Among the accusations: the four were trying to stoke opposition to a recent agreement signed by Greece and a northern neighbor, the Former Yugoslav Republic of Macedonia, ending a 27-year dispute over the latter’s name.

Ratification by both countries would open the way for a renamed the Republic of North Macedonia to join NATO and the European Union. Greek opponents of the deal object to their neighbors’ use of “Macedonia” in any form, saying this implies claims on the Greek province of the same name; Macedonian nationalists object to adding a qualifier to their country’s name.

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Thursday, July 19, 2018

A Greek Bearing Grifts

by Alexander Clapp

American Interest

July 19, 2018

It is hard to understand how the Greek state works without grasping the power held by a small circle of industrialists and financiers in Athens. These are the oligarchs. Many inherited their fortunes or first accumulated them at sea; their fleets collectively comprise the largest merchant marine in the world. Then they moved into new spheres. Some went into construction. Others set up banks. Many own a line of hotels or collect blocs of real estate. Those with ships pay the minimal tax rate in Greece owing to legislation passed by the 1967-74 military junta that allows their capital to be assessed in vessel tonnage rather than profits. Sometimes tying their holdings through Cypriot or Liberian shell companies, oligarchs nevertheless stay based in Greece, where they compound additional advantages—bailouts courtesy of Greek taxpayers, lucrative state contracts—through blackmail.

With every new government that takes power in Athens, the oligarchs threaten to take away the jobs they provide and the cash they flush into the political system should any attempt be made to audit their assets or tax them more effectively. In the past three decades not a single major party in Greece has run for election without vowing to break the power of these men; not a single party has seriously attempted to do so once in office. What is more, oligarchs are able to control the narratives told about them because there hardly exists a newspaper, television channel, or magazine in Greece that is not owned by one of them. Their power is such that press outfits within—and outside—the country have many legal and financial incentives not to call them out by name.

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Russia’s Lavrov scraps Greek visit in row over Macedonia

by Kerin Hope

Financial Times

July 19, 2018

The Russian foreign minister, Sergei Lavrov, has called off a visit to Athens following the expulsion from Greece of two Russian diplomats accused of trying to step up nationalist protests against the country’s recent naming deal with Macedonia.

The Russian ambassador to Athens, Andrei Maslov, said on Thursday the timing of the trip was “no longer suitable,” according to the Tass news agency.

The leftwing Syriza-led government last month issued an invitation to Mr Lavrov to visit Greece in September.

Under Alexis Tsipras, the prime minister, Greece has maintained close ties with Russia. But a strong backlash against last month’s naming agreement has sent the government’s popularity plunging in opinion polls.

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Saturday, July 14, 2018

Russia meddles in Greek town to push back the west

by Kerin Hope

Financial Times

July 14, 2018

The sleepy Aegean port of Alexandroupolis in northern Greece has become a new focus for Russian efforts to extend its influence in south-eastern Europe and thwart the enlargement of Nato and the EU.

The town is home to a small community of Russian citizens with Greek connections. Two Russian diplomats, expelled this week for activities that allegedly violated Greek law, were well known in the port, according to two people with knowledge of their activities.

The diplomats were accused of working with businesspeople to bribe local government officials, Orthodox clergymen, and members of cultural associations and far-right groups across the north of the country in order to fan a popular backlash against the naming agreement signed last month between the leaders of Greece and Macedonia.

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Wednesday, July 11, 2018

Greece to expel 2 Russian diplomats

by Kerin Hope

Financial Times

July 11, 2018

Greece has decided to expel two Russian diplomats and block two others from entering the country in a spat prompted by last month’s deal on a new name for Macedonia, according to two people briefed on the issue.

Zoran Zaev, the Macedonian prime minister, expects to receive a formal invitation to join Nato at the alliance summit opening today in Brussels after agreeing with his Greek counterpart Alexis Tsipras to change the country’s official name to North Macedonia. Moscow is strongly opposed to Nato expanding further in the Balkans, warning that Macedonian membership of the alliance “might have negative consequences for regional security and bilateral relations.”

The Russian diplomats are suspected of bribing Greek officials — including a member of the armed forces — as part of an attempt to undermine negotiations on the name earlier this year. The deal triggered a fierce backlash, including dozens of street protests organised by nationalist Greeks.

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Saturday, June 30, 2018

Greece offers a glimpse of life after populism

by Anne Applebaum

Washington Post

June 29, 2018

There was a moment, at the height of the Greek debt crisis in July 2015, when many Athenians went to sleep expecting to wake up in a different country. One Greek academic told me he feared Greece would crash out of the euro currency overnight, that there would be no money in the banks in the morning, that there would be food shortages and then riots: “Greece is a middle-class country,” he told me. “I didn’t think we would be able to cope with the shock.” Several others told me that they had genuinely expected the arrival of a Venezuelan-style dictatorship, perhaps with tanks on the street.

These fears were not far-fetched. Greece was governed then — as it still is now — by a strange coalition of far-left and far-right extreme populists. At the time it was formed, this coalition seemed just as weird and jarring as the new Italian far-left and far-right government does today. Syriza, the larger party, had originated as a faction of the Greek Communist Party. The junior partner, the “Independent Greeks,” believes that Greece’s massive debt is the result of an international conspiracy. Both parties have at times voiced disdain for the institutions of what Lenin dismissively referred to as “bourgeois democracy.”

But the Venezuela-style dictatorship never emerged. Depending on who tells the story, Syriza’s leader, Greek Prime Minister Alexis Tsipras, was scared off by fear of a military counter-coup; feared the economic consequences of crashing out of the euro zone; or never really meant all that stuff anyway. Although he had stoked up his followers with angry, anti-European rhetoric and promises to enrich “the people” at the expense of the elites, the banks and the Germans, he wound up following the rules set by the international institutions who had taken charge of Greece’s finances. Greece remained inside the euro and inside the international financial and legal systems its leaders claimed to abhor.

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