Greece recession eases but not enough to boost tax revenue

Reuters in Athens The Guardian, Tuesday 13 August 2013

Greek government in danger of missing bailout targets unless tax revenues improve

Greeks are facing a sixth consecutive year of recession as austerity measures bite into private consumption. Photograph: Orestis Panagiotou/EPA

Greece's recession eased slightly in the second quarter of 2013 but not nearly enough to boost tax revenues to levels the government needs to meet its bailout targets, figures showed on Monday.

The news followed a magazine report that said Germany's central bank saw risks to the rescue package aimed at keeping Greece afloat and expected Athens to need more aid in 2014 after it scraped through the last aid review.

As Europe's largest economy Germany has funded a large proportion of the Greek bailout but there has been resistance from German voters, who are also facing tight budgets. The subject of Greek aid has played into the campaign for elections next month.

The Greek data showed the economy shrank at an annual pace of 4.6% in the second quarter, according to the country's statistics agency Elstat.

The economy has slumped 23% in real terms since 2008, hurting tax revenues and making it hard to meet targets agreed with international lenders who backed the 2010 bailout.

The figure was slightly better than economists' average forecast for a 5% contraction, but that will be cold comfort for Greeks, who are facing a sixth consecutive year of recession in 2013, as austerity measures have crippled private consumption, the main engine of its economy.

The slump, one of the biggest peace-time recessions recorded in history, is undermining the ability of firms and households to pay taxes, separate budget figures showed on Monday.

Gross tax revenues lagged behind targets by about €1.5bn (£1.3bn) in the first seven months of the year, hit by record unemployment of nearly 28%and a wave of corporate bankruptcies.

The government managed to plug the budget hole by cutting spending, withholding tax refunds, freezing public investment and cashing in a much higher amount of European Union subsidies than initially planned. But Athens will not sustainably fix its finances unless it boosts tax revenue, the EU and the International Monetary Fund have said.

Greece may fall short of its budget targets this year because a large part of planned tax revenues has not been cashed in yet, lenders warned last month. Athens aims to have a primary budget surplus, before interest payments, in 2013, to qualify next year for additional debt relief promised by its euro zone partners.

However, economists said the second-quarter GDP figures may show that the worst of the recession may be over. "Recession will decelerate in the third quarter, helped by tourism, and in the fourth, helped by base effects," said Dimitris Maroulis, an Athens-based economist with Alpha Bank.

Manufacturing expanded at its fastest pace in five years in June and tourism revenues in May also jumped more than expected.

"That means that recession will not exceed 4.2% this year," Maroulis added. That would be in line with a current forecast by the government and its lenders, who have provided Athens with about €240bn in bailout funds since mid-2010.

The Greek economy is expected to recover at an anaemic pace of 0.6% next year and accelerate after 2015. The forecasts help determine the country's future finance needs and whether Athens might need even stricter austerity to meet its bailout targets.

Greece, the EU and the IMF will update growth forecasts when they meet for a round of bailout talks in September and October. The outcome of these talks will determine whether Athens will needs to adopt harsher austerity measures to keep receiving bailout funds – a prospect which its fragile coalition government has repeatedly ruled out.

Positive growth rates and a potential primary surplus would allow Athens to return to bond markets, from which it has been excluded for four years, Greece's finance minister Yannis Stournaras has said. The Greek statistics service does not provide seasonally adjusted figures or data on quarter-on-quarter changes.

Greece recession eases but not enough to boost tax revenue | World news | The Guardian

Greece's food crisis: families face going hungry during summer shutdown

 

Helena Smith in Athens The Guardian, Tuesday 6 August 2013

Frontline charities report that up to 90% of families in the poorest neighbourhoods rely on food banks and soup kitchens. But, with no end to austerity in sight, even the volunteers are flagging

Constantinos Polychronopoulos ladels out food at a soup kitchen in Athens, Unicef estimates that nearly 600,000 children now live under the poverty line in Greece. Photograph: John Kolesidis/Reuters

Hunger is not a word that comes easily to Antonis Antakis. And at 28 Veikou Street, in the cramped confines of the Solidarity Club, it is not a word that is ever mentioned. But the fear of not having enough to eat is the force that propels those who stop here – and what keeps the tireless volunteers stacking rice, pasta and other dry goods that Greeks like Antakis take home.

"The truth is, if I didn't come here I wouldn't have the means to feed my children," said the recently widowed father-of-three, his eyes fixed on the floor. "Three years ago, when I was the boss and had two employees, the idea of going anywhere to collect food would have been inconceivable. Back then, I was earning €3,000 (£2,600) a month and the fridge was always full."

The task of ensuring that families like Antakis's are fed throughout the summer became more stark at the weekend as Greeks prepared to take their traditional summer break, affecting the provision of basic services like food distribution to the poor.

Ordinarily, the prospect of the Orthodox church – or any other charitable organisation – scaling back duties in August would have gone unnoticed. But in debt-stricken Greece it is impossible to ignore. Against a backdrop of record unemployment, and with the country ensnared in its worst crisis in modern times, hardship is surfacing in ways that few would ever have foreseen. Hunger and undernourishment are part of that spectre.

For Antakis and the growing number dependent on soup kitchens, who will now be bereft of outside support, August has become the cruellest month.

"I really worry that one day I won't be able to feed my kids at all," lamented the 39-year-old former floor layer turned taxi driver. "From being the boss, I am now lucky if I earn €500 a month. You can't live on that and pay the bills and all your debts and every tax they throw at you, and still survive."

With its dedicated staff and can-do spirit, the Solidarity Club is similar to many other groups established by concerned citizens appalled by austerity's corrosive effects. It is run from, although not backed by, the local branch of the radical leftist opposition party, Syriza.

In a telltale sign of Greece's unravelling social fabric, the Veikou Street headquarters sit not on the decrepit outer edge of a capital entrapped in a sixth year of recession but in its centre, streets away from Athens' most expensive boulevard and within view of the ancient Acropolis.

"I had no idea and was shocked to learn that people in this neighbourhood, on these streets, in all the buildings that I pass every day, were suffering so," said Panaghiota Mourtidou, 54, the organisation's co-founder, busily packing food boxes. "After all, we're talking about the middle class, people who for a long time were too ashamed to admit they had such problems."

Malnourished children eventually gave the secret away amid reports nationwide of pupils fainting in schools. "Teachers were reporting cases of kids who had turned up at school with nothing more than rice or stale rusks for months," Mourtidou recalled. "That's when we decided to work with parents' associations and trace families. Through food collections at the supermarket up the road we now feed around 130 people twice a month."

As the country lurches from one aid handout to the next, a climate of quiet desperation is growing in Greece. The politics of poverty – brought about by the relentless cuts, tax rises and job losses demanded in return for EU and IMF rescue funds – has left wreckage in its wake.

The Greek Orthodox church alone feeds an estimated 55,000 people a day; municipal authorities distribute another 7,000 meals at soup kitchens around Athens. "Normally we wouldn't close but the women volunteers who cook in church kitchens all over Athens need to have a rest," said Father Timotheos, spokesman of the Holy Synod, the church's ruling body.

"At all levels, people are finding it very difficult. Demand for food has gone up extraordinarily," he told the Guardian, conceding that if the needy couldn't travel to the church's central soup kitchen they were likely to face immense difficulty.

Across town in Neos Kosmos, a working-class district where locals are often spotted scavenging for food at the weekly fruit and veg market, Christos Provezis put it more bluntly. "It used to be that one in 10 went to soup kitchens," said the unemployed civil engineer, who started his own solidarity group in the area last year. "Today it's more like nine out of 10.

"They said the crisis would pass in 2012 and now, in 2013, they say we'll see the light at the end of the tunnel in 2014. The truth is, its only getting worse. Greeks have spent their savings, there's no more fat."

In a withering report this year, Unicef estimated that nearly 600,000 children lived under the poverty line in Greece, and more than half that number lacked basic daily nutritional needs. "In poorer families we are seeing an inability to cope with children's health, social and educational needs," said Lambros Kanellopoulos, who heads Unicef's Greek branch. "Social exclusion is growing. I am seeing it in the middle class where incomes have been hard hit by all the cuts."

In Greece's increasingly tense political environment the politics of food is delicate. In recent months the unapologetically far-right Golden Dawn party has turned to staging "Greek only" food handouts as a means of winning support.

The politicking has helped cloud what many fear could be the makings of a humanitarian crisis in the coming months. Like malnutrition – the most pernicious byproduct of austerity to date – homelessness is also on the rise. "It's going to get worse before it gets better," said Xenia Papastavrou, who runs the country's pre-eminent food rescue organisation, Boroume.

"Social services in municipalities can't keep up recording the sheer numbers of those in need," said Papastavrou, whose programme distributes surplus food donated by chain stores, restaurants, bakeries and hotels to 700 soup kitchens across Greece.

"In traditional middle class neighbourhoods like Zographou the number of those requiring support has gone up from 50 to 500 since 2011. Everywhere we go it's the same story, which is why we need all the help we can get."

Greece's food crisis: families face going hungry during summer shutdown | World news | The Guardian

Greece arrests German man on suspicion of spying for Turkey

Reuters in Athens theguardian.com, Monday 5 August 2013 02.45 AEST

Police say 72-year-old admits photographing military buildings on island of Chios for people he believes are Turkish nationals

Greek coastguard officers watch over a harbour in Chios. Last Tuesday a boat containing guns and explosives was intercepted close to the island. Photograph: AP

A 72-year-old German man has been arrested on a Greek island on suspicion of spying for Turkey, police said.

The man told police he had photographed barracks and other military-related buildings on the island of Chios for five people he believed were Turkish nationals who paid him up to €1,500 ($2,000) for each assignment.

Police suspect the individuals worked for the Turkish secret services, a Greek police official, who spoke on condition of anonymity said on Saturday, adding that investigations were ongoing.

The man has been living on the island near the Turkish coast for the past four years and had been taking photos of military bases for at least three, police said.

He was arrested on Friday and will appear before a prosecutor to face espionage charges.

A German foreign ministry spokesman said the embassy in Athens was aware of the case and was trying to contact the man. The Turkish embassy was not immediately available for comment.

Police said they had found in the man's possession cameras, laptops, maps and glasses with an embedded camera, and an email he had sent last week to an unidentified recipient with details on Greek warships and army vehicles on Chios.

The email also mentioned a widely reported incident last Tuesday in which Greek coastguards intercepted a boat containing guns and explosives in the waters near Turkey, close to the island. Turkey said two of six people arrested were members of a Turkish militant group.

.

Turkey and Greece have a history of enmity and have come to the brink of war on several occasions, most recently in 1996 over an uninhabited Aegean islet.

Greece arrests German man on suspicion of spying for Turkey | World news | theguardian.com

Encouraging signs from Athens shelters

Source: kathimerini.gr 2 Aug 2013

A new Welfare Program run by the City of Athens aims to help people and to improve the image of the capital

A homeless man in Athens. Photo: ORESTIS PANAGIOTOU.

The first people to make use of the recently launched homeless shelter run by the City of Athens in central Nikiforou Street arrived at the facility in early June and are currently part of a social rehabilitation program launched by the municipal authority in May. The program is aiming to change the philosophy behind social welfare policies as well as improving the image of the Greek capital.

The issue of Athens's growing homeless problem came back to the forefront last week when New Democracy MP Fotini Pipili addressed a question to Health Minister Adonis Georgiadis regarding the presence of numerous homeless people sleeping at the entrance of the Monastiraki metro station, in one of the city's busiest tourist spots. Georgiadis told Parliament that the ministry is in the process of drafting a map of the city's homeless population.

Residents of the capital have become accustomed to the sight of homeless people huddled on flattened cardboard boxes and wrapped up in blankets in the entrances and in the arcades of buildings all around the city center. But for the 25 social workers and health and safety inspectors employed nearly two months ago by the City of Athens in order to address the problem, homelessness in Athens is a much more complex issue.

"It is not just about homelessness," explains Dimitra Nousi of the City of Athens's Social Services Department. "This is probably the smallest part of the problem. We are talking about drug addicts, people without rudimentary means of communication, people with psychiatric problems, professional beggars and so on."

Since May, a team of five specialists have been making two daily rounds - morning and evening - in parts of the city that are most frequented by homeless people, providing basic healthcare to those who need it and explaining the benefits of the Municipality's welfare programs. "What a lot of us fail to understand is that these people do not have a very high opinion of the state and are often uncooperative. We try to earn their trust and to convince them to do something good for themselves," says Nousi. "Even if it means just sleeping in a bed for a night and taking a shower."

The first five homeless people to be convinced have already moved into the Nikiforou Street shelter and are currently receiving help so that they can gradually re-enter mainstream society. According to the shelter's social workers, many categories of people living in the streets become isolated and invisible to society, even though they are constantly in view. Until recently, the first state representatives that homeless people would come into contact with would be the police, normally telling them to move on following complaints from residents. Now that the City of Athens is beginning to get a clearer picture of who the city's street people are, why they are in their current predicament and where they sleep, it is also trying to build a relationship of trust and provide shelter.

"We already have 100 beds at the Nikiforou Street shelter, but we have just opened up two additional floors and will be adding another 40 beds," says Nikolaos Kokkinos, the deputy
mayor in charge of the City of Athens welfare programs. "Now we are trying to start working with other services, and especially the drug rehabilitation centres OKANA and KETHEA, as drug abuse is a big part of the problem in Athens," Kokkinos adds.

Authorities at the City of Athens claim that there are 600 homeless people in the center of the Greek capital. "The people who are living in the streets have given up. Our aim is to convince them that they can
rise above the defeatism and to mobilize the state services that can help them," says Kokkinos.

 

Encouraging signs from Athens shelters | Neos Kosmos

The European Dream Fading Away

By Roberto Savio* | IDN-InDepth NewsAnalysis

ROME (IDN | Other News) - The European Union has asked its citizens to brace for further economic misery. In a report on European economic prospects released on May 3, the European Commission said that further deterioration is expected to last at least until 2015. But, as every such report says, things will then get better!

Unemployment in the euro area is expected to climb to 12.2 percent this year, up from 11.4 percent last year. In Spain, unemployment will rise to 27 percent, up from the 25 percent of last year; in Portugal it will rise from 15.9 to 18.9 percent; and after three brutal years of suffering, in Greece it will climb by 2.7 percent to 27 percent. The trend will become devastating for young people: in Spain alone, it is estimated that 52 percent of young people will be without a job. We are creating a generation that will probably never get back on track.

The same trend is happening also in the rich countries of northern Europe, which are being brought down by the reaction of imports from impoverished southern Europe. The German economy is expected to grow this year by a mere 0.4 percent, and from Austria to the Netherlands, the picture is one of decline.

This crisis is sapping the foundations and the identity of Europe. Since the end of the Second World War, Europeans have come to expect a social safety net which would cushion the less fortunate until they were able to spring back to work and dignity. Compared with the American dream, in which anybody could achieve the highest economic and social status through individual effort, without meddling by the state, this European dream was very different.

Now, however, most economists agree that this dream has become very distant because there is no way that the economy can lift many people any longer. In Europe, austerity is eliminating the social safety net. It is indicative that in Spain, for example, saving the banking system has cost more than all the cuts that the government has made in the country’s education and health sectors.

But while United States and Japan have taken the road of economic stimulus, injecting massive quantities of money into their systems every month, and already with some visible results, Europe has taken the opposite direction. The European policy is to cut public spending and raise taxes simultaneously as the recipe for eliminating deficits. And, despite clearly available facts and despite the declarations of some accepting the need for growth, this policy is not changing.

During the visit of newly-elected Italian Prime Minister Enrico Letta to Berlin on April 30, German Chancellor Angela Merkel said: “I think budget consolidation is now interestingly labelled with the word austerity, which is otherwise not used in Germany. We did not even know this word before the crisis.” And her Calvinist Minister of Finance, Wolfgang Schauble, echoed: “Growth and austerity are perfectly compatible.”

Losing the gloss

Besides losing its gloss, the European Union is fostering a growing resentment. On the same day the European Commission report was released, the strongly anti-Europe United Kingdom Independence Party (UKIP) registered a major success by taking 25 percent of the votes cast in local elections in the United Kingdom. Similar parties are now growing everywhere, from Belgium to the Netherlands, from Austria to Finland. And, for the first time, a similar party – Alternative für Deutschland (Alternative for Germany) – is now running in Germany with a platform to leave the Euro.

The lack of effective leaders who are up to the task is allowing the cracks in Europe’s foundations to grow. Southern Europe has an elusive leader in Spain, Prime Minister Mariano Rajoy, who enjoys a comfortable majority in parliament but is vilified every day by demonstrators throughout the country. In France, President François Hollande also enjoys a solid majority but he now has the approval rate of only 25 percent of the electorate. Portugal has an almost identical situation. Greece has Syriza, the anti-austerity and anti-Europe party that is moving closer to the country’s traditional parties. And Italy now has a government with an uncertain future, with a young prime minister for an old policy.

Symbolic of the decline of the image of the EU is the announcement from the Government of Switzerland that its labour market is not open any longer to European citizens, who will need to apply for a permit.

Few realise that Italy is a special case of malfunctioning and lack of synchronism with Europe. The end of the Cold War led to the death of the modern Italian political parties, which were created and fuelled by the Cold War: the Communist Party and the Christian Democratic Party, But, in the creation of a new political system, an unparalleled event took place: Silvio Berlusconi, the richest man of Italy, with a powerful media empire, decided to enter politics to escape personal economic and judicial problems. He became a deft politician and ever since Italy has been split between pro-Berlusconians and anti-Berlusconians. This latter camp has brought together the entire centre left and left, and is unlike other European left-wing parties such as the Labour Party in England, the Social Democrats in Germany and the Socialist Party in France.

Those parties predate the end of the Cold War, and were not built to counteract a one-person party like Berlusconi’s People of Freedom Party in Italy. Out of this anomaly has emerged a new Italian political “party”, the 5 Stars Movement, again led very personally by a comedian-turned-politician, Beppe Grillo (who is against the system and is also anti-euro), which is also totally asynchronous with Europe. Until Berlusconi retires, Italy will remain split over him, and all elections will be inconclusive and bring no real political agenda to the centre of debate. Argentineans would probably understand this best, with their country still polarised between Peronism and anti-Peronism.

Values of Europe for Germany

If the old generation of German pro-European leaders, like Helmut Kohl and Helmut Schmidt, were still there, it would probably try to educate the Germans on the values of Europe for Germany. Germans are deeply convinced that they should not put their wallets at the disposal of southern Europeans who work less, try to avoid paying taxes, have spent beyond their means and, instead of swallowing the bitter medicine, expect Germans taxpayers to bail them out.

But a study last year by the Kiel Institute for the World Economy found that, in 2011 alone, Germany was able to save the equivalent of 11.1 billion US dollars. This was because it could borrow money at much cheaper rates than southern Europe. And last month, a study by Germany’s Bertelsmann Foundation claimed that to leave the euro would cost Germany the equivalent of some 1.6 trillion US dollars over 13 years, cutting Germany’s gross domestic product by an average of 0.5 percent between 2013 and 2025.

The whole of Europe is waiting to see what will happen in the September elections in Germany. The Social Democrats are less pro-austerity than Merkel, but in all probability she is going to win. Will she then change her stand against everybody, including even the International Monetary Fund, which is decrying the excesses of austerity? Nobody knows, but many hope.

Meanwhile, the world is not stopping to give Europe time to solve its internal weaknesses. Just read the Report of the US National Intelligence Council on global trends until 2030. Among others, the US, European and Japanese share of global income is projected to fall from 56 percent to 26 percent in 2030. In 2008, China overtook the United States as the world’s largest saver (and it is close to overtaking Europe), and by 2020 emerging markets’ share of financial assets is projected to almost double. Any further European decline would hasten those projections. So, time is not on Europe’s side.

*Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency, publisher of Other News and editorial adviser to IDN-InDepthNews. This article is being posted by arrangement with the writer. [IDN-InDepthNews – May 20, 2013]

The European Dream Fading Away | IDN-InDepthNews | Analysis That Matters