Saturday, February 28, 2015

You will get nothing unless you honour our deal, Germany warns Greece

By Justin Huggler, in Berlin 26 February 2015

Germany expected to approve new Eurozone bail-out deal for Greece on Friday

German Chancellor Angela Merkel attends a session of the Bundestag (German lower house of parliament) in Berlin January 29, 2015

The Bundestag is expected to pass the deal as Angela Merkel's coalition has a huge majority of 377 Photo: AFP

Germany is expected to approve the new Eurozone bail-out deal for Greece in a parliamentary vote on Friday but has warned that Athens will receive nothing unless it honours its commitments under the deal.

Wolfgang Schaeuble, the German finance minister, said he was “stunned” after his Greek counterpart, Yanis Varoufakis, spoke again of a debt restructuring on Greek radio, and the Athens government indicated it would block plans to privatise strategic assets.

“If the Greeks violate the agreements, then they have become obsolete," a visibly angry Mr Schaeuble said at a meeting to persuade German MPs to support the deal in today’s vote. The meeting in Berlin came after Germany’s biggest-selling newspaper launched a campaign against the Greece deal, printing “NEIN!” across an entire inside page, and encouraging readers to take selfies holding the page up and send them in for publication.

“No more billions for greedy Greeks,” the newspaper added, in only slightly smaller print. The page was printed in the blue and white of the Greek flag, instead of Bild’s more usual red and white.

Earlier, Mr Varoufakis said in an interview with Charlie Hebdo: “If you think you would do well to bring down progressive governments like our then prepare for the worst."

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"Mr Varoufakis had not done anything to make our lives easier," Mr Schaeuble said ahead of the meeting in Berlin, at which he had to persuade German MPs to support the deal.

Despite his efforts, 22 MPs from Angela Merkel’s Christian Democrat party indicated that they intended to defy the party whip and vote against the deal.

The Bundestag is expected to pass the deal – Mrs Merkel’s coalition has a huge majority of 377 – but such a large rebellion would be an indication of the scale of resentment in Germany.

There is concern in Germany that the Greek government agreed on the terms of the new deal in Brussels only to renege on them at home.

The Syriza government has said that it will cancel the privatisation of Piraeus port and block the sale of Greek airports in its current form. It has also indicated that it will not privatise its 51pc stake in the country’s power utilities.

“What’s the bet the Greeks will be back in four months?” Die Welt newspaper asked.

“The Greeks themselves seem to have absolutely no intention of repaying the money,” Bild said in an editorial launching its “Nein!” campaign against the new bail-out deal.

You will get nothing unless you honour our deal, Germany warns Greece - Telegraph

Friday, February 27, 2015

Tsipras Reversal Draws Greek Sympathy as Party Rumblings Rise

by Maria Petrakis February 27, 2015


Alexis Tsipras, Greece's prime minister, sits and waits ahead of the swearing-in ceremony for the new government held at the Greek Parliament building in Athens on Feb. 5. Photographer: Yannis Behrakis/Pool via Bloomberg

(Bloomberg) -- “A Day with Yanis Varoufakis,” a satirical post doing the rounds on social media, shows the Greek finance minister spending his waking hours feted by adoring fans. He goes to sleep and is jolted awake by a nightmare of German Finance Minister Wolfgang Schaeuble cackling.

In what’s turning that nightmare into reality, Greece’s month-old anti-austerity government led by Prime Minister Alexis Tsipras had a rude awakening last Friday when German-led pressure forced it to pedal back on most election pledges in the face of national insolvency. On the streets of Athens, Greeks used to political flip-flops in the five years of their odyssey to financial health are taking what has been a capitulation in their stride.

“When you have your hand outstretched and they say there’s no money, that’s when you put your hands up in the air,” said Alexandra Dimopulos, 60, a retired civil servant. “You may have all the good intentions in the world but that means nothing when you have no money for them.”

Tsipras huddled with his lawmakers in the parliament on Feb. 25 for more than 10 hours after euro-area partners signed off on a Greek commitment to a four-month loan extension based on promises the government would stick closely to the bailout plan it had promised the country’s citizens it would tear up.

While ordinary Greeks say they appreciate the government’s efforts to argue their case, albeit unsuccessfully, the reversal may test the unity of the ruling party, which teamed up with a smaller anti-austerity group to win the majority it needed to govern. Manolis Glezos, a 92-year-old Syriza European Parliament lawmaker and World War II resistance veteran, has already criticized the agreement.

Challenge Within

“The biggest challenge for the government right now is not the rather tame opposition in parliament, it is the opposition inside the senior party Syriza itself,” said Jens Bastian, a former member of the European Commission’s Greek task force, in a Bloomberg TV interview. “How you manage expectations among that constituency, that will be the real challenge.”

Varoufakis evoked the Odyssey, the ancient Greek poem by Homer that former Prime Minister George Papandreou referred to in 2010 when he accepted cuts to wages and pensions in return for what would become 240 billion euros ($269 billion) in loans from euro-area partners and the International Monetary Fund.

“Sometimes like Ulysses you need to tie yourself to a mast in order to get to where you’re going and to avoid the sirens,” said Varoufakis. “We intend to do this.”

Papandreou’s support and ability to pass austerity measures demanded by the country’s creditors was whittled down one seat at a time amid violence and riots and protests by tens of thousands of Athenians camped in front of Parliament until he lost power at the end of 2011.

Greeks don’t want to see a return to those days.

‘Good Easter’

“There are always reactions within parties, in all parties when things don’t go according to plan,” Paraskevi Psyhidou, 50, who owns a souvenir store in the old neighbourhood of Plaka. “I am hoping for a good Easter, no problems, no upheaval.”

Polls show support for Tsipras surging since he won elections, providing a wellspring of support among the public even amid rumblings from his party cadres.

A Feb. 22 Public Issue survey of 1,008 people questioned between Feb. 12 and Feb. 17, before the agreement was reached in Brussels, showed 64 per cent believed the country to be on the right path, a finding that was the highest in at least 20 years, according to the pollster. Three times as many people supported the direction the country was taking after the election as did before the vote.

Feelings of hope and optimism soared to 29 per cent from 10 per cent before the election. Tsipras has a personal approval rating of 87 per cent, climbing 42 percentage points after his election.

Not Over

“At least they’re trying to negotiate,” said Konstantinos Velounakis, 55, who owns a jewellery store in central Athens, and didn’t vote for Tsipras. “I hadn’t seen that before. They’ve put the word out that we’re not all in the same boat, north and south, and that’s good.”

The public support may be critical to Tsipras’s ability to stick to the agreement reached with euro-area partners.

While the main sentiment in Greece is hope, in Brussels the word being bandied about is “trust”. The euro-area finance ministers had barely approved the Greek outline of plans to appease creditors, when European Central Bank President Mario Draghi and IMF Managing Director Christine Lagarde heaped on more pressure.

Draghi said the key to Greece winning more funding were “commitments” on legislation. Lagarde pressed for specifics and “clear assurances” that reforms will happen.

For some Greeks, that kind of pressure means the government will be forced to put in place measures they have been opposed to.

“They said one thing and are doing something different -- this is to be expected,” said Psyhidou. “We don’t have the money. The Odyssey is not finished yet. We have a way to go.”

Tsipras Reversal Draws Greek Sympathy as Party Rumblings Rise - Bloomberg Business

Greek Clashes: Protesters In Syriza Backlash

Friday, 27th February 2015

Protesters have clashed with riot police in Greece in the first display of anti-government sentiment since the leftist Syriza party took power a month ago.

Around 450 people took to the streets of Athens on Friday to demonstrate against the newly elected left-right coalition government of Prime Minister Alexis Tsipras, which agreed a deal with EU partners last week to extend an EU aid programme to Athens.

The deal has triggered dissent within Mr Tsipras' own party and accusations by some on the hard left that the government is going back on pre-election promises.

After the march, around 50 activists in hooded tops hurled petrol bombs and stones at police in the city's Exarchia district.

A small number of shop windows and bus stops were also smashed or damaged during the violence.

The leftist government was elected on 25 January on a promise to write off a chunk of the country's debt and end tough austerity measures which are blamed for pushing one in four Greeks out of work.

Meanwhile, Greece's four-month bailout extension is expected to get wide support in the German Parliament after a large majority of lawmakers in Chancellor Angela Merkel's conservative bloc signalled their backing on Thursday.

Parliament will vote today on the deal hammered out by Eurozone finance ministers.

Volker Kauder, caucus leader of Mrs Merkel's bloc, said an "overwhelming majority" of his lawmakers will back the agreement.

In a test vote among the 311 conservative lawmakers, 22 opposed the bailout extension and five abstained. A minority of conservative lawmakers has consistently voted against bailouts over the five years of Europe's debt crisis.

Greek Clashes: Protesters In Syriza Backlash | LBC

Will Greece win Europe's economic war?

By John Quiggin Friday 27 February 2015

Greeks rally in support of new anti-austerity government Photo: Views of the Greece compromise differ, mostly depending on pre-existing views on the topic. (Reuters: Yannis Behrakis)

The compromise deal reached between Greece and European finance officials last week hasn't resolved the euro debate, but it has paved the way for at least moderate fiscal expansion and a shift away from austerity, writes John Quiggin.

At the end of last week, it seemed that the great European economic crisis might finally come to a head, with the enforced exit of Greece from the Eurozone, the repudiation of Greek debt and the emergence of open economic warfare within Europe, including the threat of deliberate attempts to destroy the Greek economy.

In reality, as nearly always happens in modern European politics, a temporary compromise was reached, allowing the problems to be kicked down the road for another four months.

But how did things come to this? On the official view of the European bureaucracy, dominated for all practical purposes by the German government, the problem is one of profligate spending by successive Greek governments, who evaded the Maastricht rules meant to constrain government debt. Their folly having caught up with them, the Greeks are now seeking to shift the burden to the long-suffering taxpayers of Northern Europe, and, in particular, Germany. The only solution is to get debt and deficits under control through deep cuts in public spending.

There is a grain of truth in this, as in the parallel view that the the mortgage crisis in the United States, which kicked off the global financial crisis (GFC), was due to the irresponsibility of borrowers who took on loans they could not realistically hope to service. But in reality the financial tsunami that engulfed the world in 2008 did not discriminate between the prodigal and the prudent.

Countries like Spain, which were running budget surpluses before the crisis were hit just as hard as Greece. The only consistent outcome was that the banks and bankers responsible for the crisis were not only protected, but given even more wealth and power than before.

The GFC, and the subsequent recession and banking crisis made it impossible for Greece and other national governments to service their debts, given reduced revenue and the need to rescue domestic banks. They were therefore forced to accept bailouts on conditions imposed by a "Troika" comprising the European Central Bank (ECB), the European Commission (EC) and the International Monetary Fund (IMF).

The core condition was the acceptance of a program of "austerity", that is, deep cuts in public spending. The underlying theory, based on some sketchy research and a lot of wishful thinking was that such cuts would allow room for the private sector to grow, thereby generating tax revenue and assisting in the "financial consolidation" needed to reduce debt and deficits.

Austerity proved a disastrous failure in practice, to the point where the IMF concluded that it did not work as intended and was in fact highly contractionary. Even the ECB, by adopting a massive quantitative easing program in January, has effectively admitted the failure of the policies it has pursued since the GFC.

But that didn't affect the position of the Troika that, in effect, followed the line dictated by the German government.

Despite its disastrous effects, national governments in the peripheral European countries saw no alternative but to accept austerity. In Greece, the program was pushed through by the centre-right New Democracy (ND) party, which had been responsible for the most egregious pieces of irresponsible borrowing. ND was supported by its historic rival, the social-democratic PASOK party, which entered coalition with ND after 2012.

After five years of disastrous austerity, Greek voters had had enough, and threw the coalition out. ND lost ground to more radical right-wing parties, notably the Independent Greeks (ANEL) and the neo-fascist Golden Dawn. But the real disaster befell PASOK, seen as having betrayed its working-class constituency. PASOK received 4.7 per cent of the vote, less even than the Greek Communist Party.

The winner, displacing PASOK as the representative of the Greek left, was Syriza. The name is an acronym for "Coalition of the Radical Left", the operative word being "coalition" rather than "radical". Syriza's program called for Greece to remain within the Eurozone, but demanded an end to the austerity program imposed by the Troika. The German government, represented by finance minister Wolfgang Schauble was unimpressed, saying that the elections didn't change anything and that no change in the austerity program could be considered.

As negotiations reached a critical point last Friday, it seemed that the only alternatives were a humiliating climb-down by Syriza or the expulsion of Greece from the Eurozone. Instead, there was a compromise in which the current bailout was extended for four months, but under conditions that enabled Syriza to propose an alternative reform program to the austerity regime previously imposed by the Troika.

It remains to be seen how the compromise deal will play out. Opinions differ, largely in line with pre-existing views. Supporters of continued austerity see the deal as a climb-down by Syriza, sugar-coated with some softer language. This view is shared by those on the left who favour an immediate exit from the euro and repudiation of "odious" debt.

Syriza supporters (of whom I am one) see it as a back down by the Troika, paving the way for at least moderate fiscal expansion and a shift away from austerity. Only time will tell.

Professor John Quiggin is an ARC Laureate Fellow in economics at the University of Queensland.

Will Greece win Europe's economic war? - The Drum (Australian Broadcasting Corporation)

Thursday, February 26, 2015

Greece to stop privatisations as Syriza faces backlash on deal

Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard, in Athens 25 February 2015

The Syriza leadership risks falling between two stools as it tries chip away at the austerity regime without triggering Greece's ejection from the euro


Greece's economy minister said the country will cancel the privatisation of Piraeus Port Photo: EPA

Greece's Left-wing Syriza government has vowed to block plans to privatise strategic assets and called for sweeping changes to past deals, risking a fresh clash with the Eurozone's creditor powers just days after a tense deal in Brussels.

"We will cancel the privatisation of the Piraeus Port," said George Stathakis, the economy minister. "It will remain permanently under state majority holding. There is no good reason to turn it into a private monopoly, as we made clear from the first day.

"The deal for the sale of the Greek airports will have to be drastically revised. It all goes to one company. There is no way it will get through the Greek parliament."

The new energy minister, Panagiotis Lafazanis, warned that Syriza will not sell the Greek state's 51pc holding of the electricity utility PPC, power grid ADMIE or state gas company DEPA. "There will be no energy privatisations," he said.

It is already becoming clear that Syriza's leadership does not accept a strict, minimalist reading of the Euro group text, and is relying on quiet assurances from Brussels and Paris that it has friends in the EU.

The defiant signals are making it harder for the German government to dampen criticism over the deal in the Bundestag before it votes on Friday. "Greece will not get a single penny until it complies with its obligations," said Germany's finance minister, Wolfgang Schauble.

Both the International Monetary Fund and the European Central Bank say the deal is too loose to pin down Syriza, allowing it to unpick elements of the EU-IMF Troika Memorandum. Mr Stathakis gave strong hints that this is indeed Syriza's intention. "The Euro group meetings went very well," he said, with a conspiratorial smile.

Yet the Syriza leadership risks falling between two stools as it tries chip away at the austerity regime without triggering Greece's ejection from the euro. A closed-door crisis meeting of the party at the Greek parliament erupted in an emotional storm, running for 12 hours as the group's Left Platform voiced their anger over the retreat in Brussels.

"A lot of Syriza MPs are very troubled by the deal and they are being pretty open about it. The fault lines are clear," said one MP, emerging for a shot of caffeine.

"We're in uncharted territory and we don't know how this is going to end. But there is a very strong sense that we should hold together come what may. We are not going to split," he told The Telegraph.

Premier Alexis Tsipras sought to rally the troops, assuring them that Syriza had not abandoned its "Thessaloniki Programme" for radical change or capitulated to EMU demands under threat of bankruptcy. Insisting that the document signed in Brussels gives Syriza scope to carry out its democratic revolution, he demanded that rebels stand up and "be counted" if they really mean to vote against the deal.

Syriza has already caused the Euro group to drop its demands for a bigger primary budget surplus, opening the way for its anti-poverty programmes. "The original 3pc goal for this year was catastrophic. It cannot be higher than 1.5pc of GDP," said finance minister Yanis Varoufakis after the meeting.

Mr Stathakis, a Marxist economist with a PhD from Newcastle University, denied claims by London banks that the Greek government could run out of cash within 15 days, saying the "institutions" - the euphemism for the defunct Troika - will let Greece tap some forms of funding long before any crunch.

"We have various buffers, including €3bn or €4bn at the Bank of Greece. We expect to be able to issue €2bn to €3bn in T-bills soon," he said. The ECB's support for Greek banks - curtailed two weeks ago - should be "back to normal" by mid-March.

Choosing his words carefully, he said that the airport privatisation deal could be reopened because it was "not completed", making it clear that Syriza may rewrite the terms of any state sale in the pipeline. An existing investment deal with the Chinese shipping group Cosco in Piraeus will be protected.

Diplomats in Athens have some sympathy for the Syriza view, confirming that many of the past deals were corrupt or tailored to the interests of powerful oligarchs. "These people 'own' the energy industry. The property sales and airports are a stitch-up, all going to the same small circle," said one veteran.

"We know exactly who the biggest smuggler of shipping fuel is, and why nothing has been done. He is very close to the previous government. Syriza are not part of this system and don't have 'cheques to pay back'."

Critics say there is no necessary reason why privatisation should boost the Greek economy or help to balance the budget, deeming it Troika ideology. The Piraeus Port, the lottery and other state holdings generate an income stream for the government.

It is clear that Syriza aims to test how much freedom of action it has. This guarantees a fresh fight at the end of April, when EMU inspectors will demand proof that reform legislation is being enacted and enforced, and an almost certain showdown in June when Syriza's four-month reprieve expires. It must then negotiate a third bail-out or face hostile markets alone.

"We're going to have four months of constant bickering and fighting with the EU institutions, and when we get to June we're going to face exactly the same blackmail over liquidity support, if not worse," said Costas Lapavitsas, a Syriza MP and an economist at London University.

"The deal was a partial victory, in that it bought time. Any other outcome last Friday would have been catastrophic. But there is no doubt in my mind that the Troika is setting the parameters, even if most of the party is still reluctant to learn this harsh lesson. We're wet behind the ears," he said.

Greece to stop privatisations as Syriza faces backlash on deal - Telegraph

Troika raises fresh concerns over Greece's last-ditch debt deal

By Bruno Waterfiel in Brussels and Mehreen Khan 24 February 2015

Creditors warn they will require more from Athens if it is to be granted a €7.2bn bail-out extension before the end of the month

Greece's long-term future in the Eurozone still hangs in the balance Photo: AFP

The International Monetary Fund and European Central Bank have warned that Greek government reforms are not enough to unlock the vital funding needed to keep the country afloat.

In order to prevent a bankruptcy and default on March 1, Eurozone finance ministers approved a six-page list of proposals from Athens as a “valid starting point” for negotiations to take place over the next five weeks.

The “Troika” of the European Commission, ECB and IMF will now begin a review of Greece’s implementation of austerity measures, which is due to conclude in April.

“The institutions provided us with their first view that they consider this list of measures to be sufficiently comprehensive to be a valid starting point for a successful conclusion of the review,” said a Eurozone statement.

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Greece’s Syriza-led government appears to have conceded many of its Leftist election promises in order to daw up the 66-point plan billed by Yanis Varoufakis, the Greek finance minister, as “a first comprehensive list of reform measures”.

But in a blow to the government, which faces a potential domestic backlash for bowing to Eurozone conditions, both the IMF and the ECB reminded Athens they held a veto over providing further cash and could yet demand more concessions.

Christine Lagarde, the director of the IMF, warned the Greek plan lacked “clear assurances that the government intends to undertake the reforms envisaged in the memorandum on economic and financial policies”. The Memorandum was signed by Athens in return for loans to prop up its banks and public finances.

Writing to the Euro group, Ms Lagarde said the IMF would still require “clear commitments” on tough pensions, VAT, privatisation and labour reforms - measures Syriza pledged to scrap or oppose during elections that swept them into power last month.

“We consider such commitments and undertakings to be critical for Greece’s ability to meet the basic objectives of its fund-supported programme,” she wrote.


Mario Draghi, the ECB’s president, added his voice to the IMF's doubts. He said Greece still faced a series of difficult negotiations before the central bank would restore normal borrowing rights for Greek lenders - a right it took away earlier this month.

“We note that the commitments outlined by the authorities differ from existing programme commitments in a number of areas,” wrote Mr Draghi in a letter to Eurozone finance ministers.

“In such cases, we will have to assess whether measures are replaced with measures of equal or better quality in terms of achieving the objectives of the programme.”

Tracked changes on documents submitted by Athens at midnight on Monday showed the Commission had worked closely with Mr Varoufakis in drafting the plans. Syriza's proposals to overhaul its tax system and state revenue measures now closely resemble promises made by past Greek governments.

While pledging a “thorough spending review” for the public sector, the blueprint did not include any estimates on the costs, savings or added revenues the Eurozone is likely to demand Athens finds in order to offset spending on pensions and raising the minimum wage.

Troika officials will also demand much more detail on promises to carry out labour market reforms and commitments not to “roll back privatisations that have been completed”.

Conservative German MPs will also seek assurances on the measures when the Bundestag votes to extend the EU-IMF programme on Friday.

As well as pressure from its creditors, Greece’s Syriza-led coalition faces internal dissent from Left-wing MPs who accuse Prime Minister Alexis Tsipras of betraying voters opposed to Eurozone austerity.

Costas Lapavitsas, a Syriza MP and former professor of economics at London’s School of Oriental and African Studies, accused Mr Tsipras of reneging on promises made in his party’s election manifesto and dropped in the latest reform plan.

“Those who have been elected on the basis of the Syriza programme, and believe the promise as our commitment to the Greek people, have deep concerns,” he wrote on his blog.

Troika raises fresh concerns over Greece's last-ditch debt deal - Telegraph

Wednesday, February 25, 2015

EU partners approve Greek bailout extension

Jan Strupczewski and Matthias Sobolewski  February 25, 2015

IMF Managing Director Christine Lagarde said the reform plan was "not very specific", and much clearer assurances would be needed on key reforms of pensions, taxation and privatisation.

IMF Managing Director Christine Lagarde said the reform plan was "not very specific", and much clearer assurances would be needed on key reforms of pensions, taxation and privatisation. Photo: Reuters

Greece secured a four-month extension of its financial rescue when its euro zone partners approved a reform plan that backed down on key leftist measures and promised that spending to alleviate social distress would not derail its budget.

Finance ministers sealed the decision in a telephone conference convened by Euro group chairman Jeroen Dijsselbloem after the new leftist-led Athens government sent him a detailed list of reforms it plans to implement by the end of June.

The respite, to be ratified by some national parliaments in the coming days, averted an imminent banking meltdown and a potential state bankruptcy for now, but tough negotiations lie ahead soon over the country's longer-term economic future.

A Greek finance ministry official said the euro zone's most heavily indebted nation would start discussions immediately with its EU and IMF partners on meeting this year's financing shortfall.

"The discussions on Greece's funding gap will begin tonight, tomorrow morning," the official said, speaking on condition of anonymity. Options included allowing Athens to issue more short-term t-bills and using ECB profits on Greek bonds, he said.

As required by the creditors, Marxist Finance Minister Yanis Varoufakis had sent Brussels a six-page document late on Monday that watered down campaign promises to end privatisations, boost welfare spending and raise the minimum wage, vowing to consult partners before key reforms and to keep them budget-neutral.

In a statement, the 19-nation Euro group urged Greece to develop and broaden the list of reform measures, based on "the current arrangement" - a euphemism for the bailout agreement which leftist Prime Minister Alexis Tsipras had vowed to scrap.

IMF Managing Director Christine Lagarde said the reform plan was "not very specific", and much clearer assurances would be needed on key reforms of pensions, taxation and privatisation.

ECB president Mario Draghi gave the list a guarded welcome and said he would keep a close watch on ideas that depart from previous pledges. He warned the radical new government in coded central banker language against plans to help Greeks walk away from their private tax and mortgage debts.

"I would also again urge the Greek authorities to act swiftly to stabilise the payment culture and refrain from any unilateral action to the contrary," Draghi wrote.

Financial markets surged even before confirmation of the extension of the €240 billion EU/IMF bailout, saving Greece from a potential disorderly exit from the euro zone.

However, Dijsselbloem told the European Parliament the euro zone's most heavily indebted member was likely to need further assistance after two bailouts since 2010.

The Greek letter pledged not to reverse ongoing or completed privatisations, and to ensure that the fight against what the government calls the humanitarian crisis caused by bailout-driven austerity "has no negative fiscal effects".

Dijsselbloem, who is also Dutch finance minister, told EU lawmakers the euro zone could consider further debt relief if Athens met all the criteria specified in its November 2012 second bailout, "which hasn't happened yet".

EU partners approve Greek bailout extension

Tuesday, February 24, 2015

Tensions high as Greece scrambles to keep rescue deal alive

Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard, in Athens 23 February 2015

The radical Syriza government submitted a five-page list of measures to EMU officials in Brussels in time for a deadline on Monday

Protestors, wearing white masks, sit outside the Greek Parliament in the center of Athens on May 9, 2010

Anti-austerity protestors in Athens. The most contentious elements of Greece's 'second pillar' for economic policy have been shelved or toned down Photo: AFP

Greece has vowed to shake up labour markets and push through far-reaching reforms to avert a fresh showdown with Eurozone creditors this week, hoping to stave off bankruptcy within days as cash runs dry.

The radical Syriza government submitted a five-page list of measures to EMU officials in Brussels in time for a deadline on Monday, including an assault on trade union powers that risks setting off a revolt by the movement's Communist and hard-left factions.

Failure to reach an agreement would lead to yet another round of crisis talks, backed by the threat that the European Central Bank could at any time cut off emergency liquidity support for Greek lenders and effectively force the country out of the euro.

European officials said the Greek list had run into reservations at its first hurdle with technocrats in Brussels, causing a delay. This is even before it goes to Eurozone finance ministers on Tuesday, where the reception may be frigid. There is pervasive concern that any deal will unravel within weeks even if there a reprieve now.

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A Greek  and EU flag flies in front of the ancient Parthenon temple atop the Acropolis hill on January 21, 2015 in Athens, Greece

The deal aims to give Greece four months breathing room to flesh out its plans. It requires the approval of all the EMU parliaments, including the German Bundestag, where Chancellor Angela Merkel faces her own headaches if the terms are not tough enough.

Bavaria's Social Christians (CSU), her coalition allies, reacted angrily to claims by Greek premier Alexis Tsipras that Athens had scored a major victory over European creditors last Friday. "If Mr Tsipras is now saying that austerity is over in Greece, and if he is saying he has won the battle, all the alarms must go off," said Gerda Hasselfeldt, the CSU's parliamentary leader.

The neuralgic issue for the Greek left is a proposal in the list for "smart" rules on collective bargaining that hint at the firm-level and factory-level wage deals implemented in Germany under the Hartz IV reforms. Syriza had campaigned to restore full union powers that were rolled back by the Troika.

Panagiotis Lafazanis, head of the Left Platform and now the production minister, said his grouping cannot accept any departure from a "radical left orientation". He vowed to press ahead with new laws freezing foreclosures on primary homes and stretching out payments on €74bn of tax arrears. The Left Platform controls 30pc of the seats on Syriza's central committee.

Syriza leaders are alarmed by a cri de coeur on Sunday by Euro MP Manolis Glezos, the legendary resister who tore down the Swastika flying over the Acropolis under Nazi occupation.

He apologised to voters for selling the "illusion" that Syriza could overthrow the EU-IMF Troika. "There can be no compromise between oppressor and oppressed. Freedom is the only solution for the slave," he said.

Syriza sources expect party discipline to hold despite "kicking and screaming" from the Left. The labour reforms are to be carried out with the worker-friendly International Labour Federation instead of accepting the harsher variant of the IMF under the Troika. The OECD will "mentor" measures to boost productivity.

Greek officials say the package will uphold the "first pillar" of Syriza's Thessaloniki Programme for humanitarian needs, costing €1.8bn. This includes free electricity and food stamps for 300,000 for the indigent, and a pension boost for the less well-off.

The most contentious elements of the "second pillar" for economic policy have been shelved or toned down, such as plans to scrap a new tax on first homes (ENFIA) and boost income tax thresholds to €12,000.

Privatisations under way will be respected. New sales will be reviewed. The state will keep control of strategic companies and utilities.

There will be a new regime for state procurements, which gobble up 15pc of GDP. The financial crimes squad will be revamped, with a crackdown on smuggling for shipping fuel. Fuel tankers will have to carry GPS devices. Tax loopholes preserved by Greece's ruling dynasties until now will be attacked.

"This is a fresh start for us. The Greek people will have the opportunity to co-author our 'contract' with Europe," said the finance minister, Yanis Varoufakis, in an interview with CNN.

Syriza will press ahead with a rise in the minimum wage, though the list does not specify the figure of €750 a month in the manifesto. The International Monetary Fund warned that any rise will make it even harder to combat unemployment stuck at 24pc. It says the current level is already on the high side, given Greek productivity.

The package is just a starting point. It will face fresh hurdles, amid a mood of zero-tolerance in northern Europe. Walter Bosbach, interior spokesman for Germany's Christian Democrats, said the terms are far too vague to pin down Syriza, and accused the Greeks of promising anything to get more money. "Billions more are going to be flowing to Greece. It is highly unclear whether we will get anything back from this," he said.

Germany may be right to suspect that Syriza has slipped the austerity leash. The deal scraps Troika demands for a rise in the primary budget surplus from 1.5pc of GDP in 2014 - in reality nearer 0.6pc - to 3pc this year, and 4.5pc next year. The surplus will now be "appropriate" to economic circumstances.

Dimitris Drakopoulos, from Nomura, said relations between Athens and EMU creditors could go wrong at any time. Syriza will have to deliver on pledges with actual legislation to meet a deadline in April before it receives the next €7.2bn of bailout money. In the meantime, Greece may face "cash flow problems" within 15 days. Syriza will need to raise €4bn to €5bn by the end of March in a hostile market. "The risk of capital controls remains elevated," he said.

Mr Drakopoulos warned that there will be a constant risk of a "new stand-off" until the political landscape changes again, perhaps with a national unity government. There may yet be a referendum on the bailout package. "Very soon the Syriza-led government will be forced to face its own contradictions," he said.

Tensions high as Greece scrambles to keep rescue deal alive - Telegraph

BBC News - Greece bailout: Government unveils reform summary after press leaks

24 February 2015

ATHENS, GREECE - FEBRUARY 11: Members of the public take part in an anti-austerity demonstration in front of the parliament on February 11, 2015 in Athens, Greece. Greece is trying to balance the demands of creditors with those of austerity-weary voters


Greek bailout

Greece has unveiled an outline summary of reforms demanded by Eurozone leaders in order to secure a bailout extension.

The measures include plans to combat tax evasion and tackling fuel and tobacco smuggling.

Government officials said they were releasing the summary before formally submitting it to guard against leaks to the press.

The list must be approved by international creditors on Tuesday to secure a four-month loan extension.

Greece had previously delayed presenting the reforms by 24 hours after initially agreeing to deliver its proposals to creditors on Monday.

Analysts say the deal's collapse would revive fears Greece will exit the euro.

The summary released on Monday evening contains measures that had been widely anticipated.

It outlined proposals to trim the civil service and combat corruption.

In addition, it included a commitment to address what Syriza has called Greece's "humanitarian crisis".

Street vendors in Athens, 23 February Greek voters have experienced years of austerity

The far-left party has vowed to spend nearly 60m euros (£44m) on free electricity for the poor and more than 750m euros on a program of meal subsidies.

Such policies are aimed at fulfilling pre-election pledges to help those hit by years of economic crisis.

The main points of the summary of the proposals include:

  • Creating a fairer tax system
  • Combating tax evasion
  • Tackling corruption
  • Targeting fuel and tobacco smugglers
  • Implementing labour reforms on collective contracts and bargaining agreements.
  • Tackling Greece's "humanitarian crisis" with housing guarantees and free medical care for the uninsured unemployed.

Greece's creditors - the European Central Bank, the European Commission and the International Monetary Fund - are expected to deliver their verdict on the proposals later on Tuesday, before the reforms are discussed in a conference call with Eurozone finance ministers.

Graphic showing how much Greece owes to whom

Greece agreed an extension to its financial rescue programme with Eurozone countries on Friday.

The four-month extension deal is widely regarded as a major climb-down for Prime Minister Alexis Tsipras, who won power in January vowing to reverse budget cuts.


Analysis: Mark Lowen, BBC News, Athens

Greek Finance Minister Yanis Varoufakis (right) and German Finance Minister Wolfgang Schaeuble address a news conference following talks at the finance ministry in Berlin, 5 February Greek Finance Minister Yanis Varoufakis (right) will have to convince his German counterpart, Wolfgang Schaeuble, pictured here earlier this month in Berlin

Greece hasn't disclosed why the infamous list was delayed but insists it will arrive in Brussels on Tuesday. Drafts leaked to the Greek media suggest proposals broadly fall into three categories: tackling tax evasion, structural reforms and social measures that help the poor with healthcare or electricity bills and prevent those in debt from losing their homes.

It's not clear which will make the final list or whether the reforms will be accepted by Greece's creditors. If there's a fundamental disagreement, the deal to extend Greece's loan could collapse.

The government is likely to be forced into U-turns on some promises made before the election, such as raising the minimum wage or rehiring public sector workers.

The hard left of the governing party is opposed. But the majority of Syriza's supporters appear to be behind it, relieved at least that Athens is proposing reforms for the first time rather than being handed a fait accompli by its creditors.


'Long road ahead'

A spokesman for the German finance ministry, Martin Jaeger, was quoted by Reuters news agency as saying that Berlin expected the Greek plan to be "coherent and plausible".

Greek Finance Minister Yanis Varoufakis has said the bailout agreement will be "dead" if the list of reforms his government is drafting is not approved.

Greek PM Tsipras attends a cabinet meeting at the parliament building in Athens in February. The new Greek government, led by Prime Minister Tsipras, was elected by promising to reverse austerity

In effect, the deal has kicked down the road some of the more difficult issues, like the future sustainability of Greek debt, the BBC's Chris Morris reports from Brussels.

For now the focus is on steadying the ship, and trying to produce an interim plan, he adds.

On Friday, German Finance Minister Wolfgang Schaeuble stressed that there would be no payment of new funds to Greece until the conditions of the deal had been met.

Mr Tsipras said in a televised address the following day that his government had "won a battle, not the war".

He called the deal an "important negotiating success" but warned that there was a "long and difficult road ahead".

BBC News - Greece bailout: Government unveils reform summary after press leaks

Greece will not be given a free lunch by creditor nations

Suzanne Lynch Tuesday, February 24, 2015

Greek finance minister Yanis Varoufakis said Europe and Greece had “turned a page” with the agreement

Greek finance minister Yanis Varoufakis said Europe and Greece had “turned a page” with the agreement. Photograph: Yves Herman

Greek finance minister Yanis Varoufakis said Europe and Greece had “turned a page” with the agreement. Photograph: Yves Herman

Greece has signed up to a provisional agreement that will pave way for an extension of its bailout programme until June, breaking weeks of deadlock between the government of Alexis Tsipras and Greece’s international lenders.

For hard-line creditor countries such as Germany, the requirement that Greece submit a list of reform proposals and agree to a further substantive review in April was enough to assure a sceptical public that Greece will not be given a free lunch in its bid for loan extensions. Greek finance minister Yanis Varoufakis said Europe and Greece had “turned a page” with the agreement. Through bargaining, his government had managed to combine things that are “usually imagined to be contradictory”, he said, “logic and ideology” and “respect for the rules and respect for democracy”. While many were struck by the glaring lack of specifics in the agreement, Mr Varoufakis welcomed the stylistic nuances of the document as “constructive ambiguity”.

While attention today will be on the euro group's response to the reform plan which appeared last night to have already been delayed, the other pressing matter is how Syriza plans to sell the plan to the Greek public.

Syriza’s support has remained high since the election a month ago, but the Greek prime minister will need to convince the hard left wing within his own party and his coalition partner, the Independent Greeks, that his government’s decision to seek an extension of its programme is not a capitulation to Brussels. This week’s events will be crucial.

Today, the euro group of finance ministers are expected to hold a conference call to consider the reform proposal, with five countries required to secure the sign-off of their national parliaments this week – though this will, in some cases, involve securing the support of relevant parliamentary committees rather than the full parliament.

Parliamentary approval must be secured before Friday, with the Greek bailout due to expire on Saturday.

The ECB is also watching matters closely. With Greek banks due to reopen today after yesterday’s public holiday, known as “clean Monday”, all eyes will be on possible signs of deposit outflows as the banks open their doors for the first time since the provisional agreement was signed.

ECB sources indicated on Friday that capital controls were not on the table, though the bank declined to comment on reports that the dangerous funding situation of Greek banks was used in the negotiating room in Brussels on Friday night to coerce Greece into signing the agreement.

On a positive note, ECB sources have suggested that the bank could be open to readmitting Greek government bonds as collateral, reversing the move of February 4th, when Frankfurt stopped accepting the junk-rated bond as collateral.

The exchequer’s immediate financial position remains precarious. Against a background of falling tax revenues, a €1.5 billion bond repayment is due to the IMF in mid-March. The country then faces a substantial repayment cliff of about €7 billion in the summer, when bonds fall due to the ECB.

Worryingly for Greece, German finance minister Wolfgang Schäuble indicated on Friday that the outstanding €7 billion or so due to Greece under its programme would only be available as long as the programme is “successfully completed”.

To this end, the devil will be in the detail of Greece’s proposed reforms, and whether any changes to austerity measures prescribed by the Troika are deemed to be of “equivalent fiscal value” to the original measures proposed, as was suggested by Minister for Finance Michael Noonan on Friday.

Greece will not be given a free lunch by creditor nations

Greece readies list of reforms to dodge bankruptcy

By Mehreen Khan 23 February 2015

Athens will now submit a list of economic reforms to its creditors on Tuesday in return for a bail-out extension

Finding a fix: Greece's creditors will decide whether to extend its bail-out for four months this week Photo: Reuters

The Greek government will submit plans to root out tax evasion and tackle corruption in the country, in a bid to be granted a vital extension of its bail-out programme tomorrow.

Athens was due to present a series of proposals to its international lenders in return for a four-month bail-out reprieve by midnight tonight.

But a Greek government spokesman has now said the letter will be sent to creditors on Tuesday morning, when Eurozone finance ministers are due to discuss the measures in a telephone conference.

The European Central Bank, International Monetary Fund and the European Commission will need to rubber-stamp the proposals to ensure Greece receives the €7.2bn in financial aid that would allow the embattled country to complete the rest of its bail-out programme.

Euro group president Jeroen Dijsselbloem said he was "optimistic" the plans would be strong enough to ensure a bail-out extension before the February 28 expiry date.

Related Articles

Graffiti outside the European Central Bank in Frankfurt

Rumours about the content of the proposals began to circulate on Monday.

It could include measures to implement a collective wage bargaining system to raise the country's minimum wage, and the privatisation of state assets - a policy that has been fiercely opposed by the left-wing within Syriza's ranks.

The European Commission denied they had received the letter by mid-afternoon, saying they were continuing their talks with Greek authorities.

The reasons for Athens delay are not yet clear. Greek markets were closed on Monday to mark Lent.

 A Evans-Pritchard ✔ @AmbroseEP


Am reliably informed that Greek reform list is 5 pages, including labour reform with ILO, and minimum wage (which will irk Berlin)

11:15 PM - 23 Feb 2015

 A Evans-Pritchard ✔ @AmbroseEP


Greek reform plan will include firm-level "smart" collective bargaining. Syriza's Left Platform not happy, but won't kibosh (apparently)

11:25 PM - 23 Feb 2015

However even if approved, the first tranches of the bail-out are not expected to be released before April, squeezing the Greece's public finances and likely putting on hold Syriza's pre-election promises to reforms its pensions and re-hire government workers.

The extension, which was agreed in principle at deadline day talks on Friday evening, will also need to be ratified by the parliaments of the 18 other member states of the Eurozone, including the German Bundestag, if Greece is to remain solvent.

A failure to extend the programme could see the country run out of money before the end of next month, as it faces repayments of over €1.5bn to the IMF in March.

Data from January showed tax revenues had collapsed, while Greek banks suffered deposit flight of more than €1bn a day at the end of last week.

Yanis Varoufakis, the country's finance minister, said a failure to rubber stamp the proposals would mean the agreement would be "dead and buried."

In a tweet on Sunday night, Mr Varoufakis said the reform list was "ready" but had not yet been sent for review.

 Yannis Koutsomitis @YanniKouts                                                     22 Feb

Greek gov't sends draft reform list to the 'institutions' … /via @tagesschau #Greece #Euro group

 Yanis Varoufakis @yanisvaroufakis


@YanniKouts @tagesschau Our reform list is almost ready. But rumours that we have dispatched it already to the Commission are false.

8:38 AM - 23 Feb 2015

Eurozone finance ministers could convene an emergency meeting on Tuesday if the institutions reject the reforms.

The Syriza-led government also faces a domestic battle to convince voters they have not gone back on their pre-election pledges to reflate the economy.

"The road ahead remains long, and it remains unclear how the current government can navigate between the commitments it has made to Europe with competing domestic political demands," said George Saravelos at Deutsche Bank.

In a defiant address on Greek television over the weekend, Prime Minister Alexis Tsipras said his country would no longer be "asphyxiated" by austerity.

"Yesterday's agreement with the Euro group cancels the commitments of the previous government for cuts to wages and pensions, for firings in the public sector, for VAT rises on food, medicine," the prime minister said on Saturday.

"We averted plans by blind conservative powers, within and outside the country, to asphyxiate Greece on February 28," he said.

But dissent within Syriza's party ranks began to emerge over the weekend.

Veteran Leftist politician and hero of the Greek resistance in the Second World War, Manolis Glezos said the government was "renaming fish as meat” in failing to throw out the existing bail-out deal.

"I apologise to the Greek people for participating in this illusion," the 92-year-old Mr Glezos wrote on his blog.

However, Mr Tsipras still commands a 70pc-80pc approval rate among the Greek public, according to the latest polls.

A bail-out extension will still not secure Greece's future in the monetary union.

Athens will likely require a third bail-out programme in June as it faces more than €6.7bn of bond redemptions to the ECB in July and August.


Progress on reaching a temporary reprieve could see the ECB resume its ordinary lending to Greek banks and alleviate the pressure on the country's lenders.

The ECB banned the acceptance of Greek bonds as collateral for loans earlier this month, forcing banks to rely on more expensive emergency liquidity help which has been stretched to its limits over the past week.

At the current rate of deposit flight, Greek banks will have run out of money in less two months, according to JP Morgan.

The prospect of a bank run means the option of capital controls cannot be ruled out in Greece, according to Deutsche Bank.


Greece readies list of reforms to dodge bankruptcy - Telegraph

Monday, February 23, 2015

50 Shades of Greece

By Raúl Ilargi Meijer February 23, 2015

The Automatic Earth

When it comes to the ongoing Greek question, I see a lot of people eagerly jump to conclusions, after the ‘debt deal’, that I don’t think are justified; certainly not yet. The overall conviction in the press seems to be that Syriza has given in on just about all fronts, and Germany and Dijsselbloem are the big winners.

But since that may well be the exact position Syriza wants ‘the other side’ to be in, where they think they have prevailed, one will have to try and think a few steps ahead before judging the situation. There’s far more grey area here than many pundits seem to assume, easily 50 shades of it.

If Greece wouldn’t have given Germany the idea that it was winning, Athens would have already come very close to an exit from the Eurozone. The problem with that is that it is not part of the mandate Syriza has been given by Greek voters. Who have spoken out for an end to austerity, but within the existing euro framework.

Varoufakis et al. may long have concluded that such a set-up is simply not realistic, but they would still have to work up to a situation where, at some point, they can present this to the people. And that can only be done after they can convincingly show that Germany and Holland refuse to honour the democratically decided mandate Syriza brings to the table.

They would have to make absolutely sure that the other side gets the blame for the failed negotiations. They have to do that anyway, even if a Grexit is not their preferred outcome. They need to be able to prove that they bent over backwards and Germany still wouldn’t play ball.

The 4-month extension debt deal agreed on this week is still contingent on a set of measures Varoufakis is due to hand to his various European ‘partners’ on Monday. If the ‘partners’ throw out the package, or too much of it, then Tsipras can go to the Greek people and say:

“Look, they’re not acting in good faith, they refuse to honour your democratic vote, and the mandate you handed us with that vote. So what are we going to do now? Do you want to stay in the Eurozone and the austerity programs it forces upon you, or are we going to try to find out what would happen if we leave the euro?”

Even if Tsipras et al had been relatively sure, before the recent elections that brought them to power, what the negotiations with the ‘partners’ would lead to, it couldn’t have those negotiations and show the results to the voters. Perhaps as early as this Monday, it may be able to. It was simply always going to be a necessary step in the process.

Over the past week, Syriza has shown its ample willingness to negotiate, to do concessions, so much so that it’s being accused of betraying its voters. Also a necessary step. But if Schäuble and Dijsselbloem overplay their hand the coming week in reacting to Varoufakis’ proposals for getting the 4-month extension, the trapdoor may fall shut, and Greece may start preparing to leave the euro. Either after getting the people’s mandate first, or after being thrown out by Brussels and Frankfurt.

Would that be such a bad thing for Greece? Nobody really knows, even if everyone is more than ready to opinionate about it. One must not forget that things are already very bad in Greece, so threats of Armageddon could easily ring hollow.

An interesting perspective comes from a Bloomberg interview with Gordon Kerr, co-founder of Cobden Partners, a firm I know Varoufakis was urged to consider as financial advisors, before Syriza chose to go with Lazard (I can’t seem to embed the video, so please click the link and watch it on Bloomberg, it’s only 5 minutes and worth every second):

Euro Is One of the Worst Designed Currencies

Q: Why should they bail? Why should Greece go: you know what: we’re going it alone?

A: Because that’s probably the best alternative for them in the medium term, if not the very short term. I suspect the reason why Greece is clearly trying to do something with the European Central Bank in the next couple days is maybe they have no contingency plan ready to go.

Q: Is Europe ready for Greece to leave? Are the contingency plans in place?

A: I don’t think Europe has any contingency plans.

And a few more points from the conversation:

• Even Citibank are saying that if the ELA’s (=ECB emergency loans) are not extended, Greece would be perfectly within its rights to repudiate up to €300 billion of debt.

• So the day after this happens, Greece will be €300 billion better off than it is right now.

• Bulgaria’s currency collapsed in 1996; within a weekend it was restructured..

• They [Greece] don’t have systemically important financial institutions dragging down their economy ..

I find it hard to believe Syriza wouldn’t know at least a good chunk of what Kerr says. And that would give them a lot more room to move than is generally assumed. Thing is, they need to get that mandate from their voters.

The long and short of it is there are a lot of possibilities, lots of shades of grey area, both when it comes to what people involved are thinking and in what they are doing. It doesn’t seem very wise to draw conclusions before having thought through the possibilities, like a strategist, like an army general or a chess player would.

Perhaps Syriza is just playing for time, perhaps that is their no. 1 priority, just so they create the space to come up with a contingency plan in case they leave the euro. But also perhaps they already have such a plan, and what is happening now is simply part of that plan.

And then there’s the option they’ve already been defeated and they’ll have to get ready for more humiliation next week. It’s just that that would make them look very short sighted, and awfully bad strategists.

Reprinted with permission from The Automatic Earth.

50 Shades of Greece

Why Greece will never repay its debt

Nyshka Chandran

European officials should accept that Greece may never repay its $366 billion debt, analysts told CNBC, even if the troubled economy secures a bailout extension.

Greek debt is not repayable in this life, Kingsley Jones, founder and CIO of Jevons Global, told CNBC on Monday: "We have to be realistic here. Greek debt is now 175 per cent of gross domestic product (GDP); it's higher than it was when this whole business first started."

"Just look at Japan. It has government debt rapidly approaching 300 per cent of GDP. One day, that debt pile simply implodes. It is not ever going to be repaid, nor will the Greek debt. There is no use standing on the high moral ground," Jones said.

Athens' current bailout program with European creditors requires Greece to reduce its debt to below 110 per cent of GDP by 2022. The program was extended for another four months in a last-minute deal on Friday, failing to meet ruling party Syriza's request for an official haircut, or reduction, on outstanding debt – a promise that brought the leftist party to power last year. However, final confirmation of Friday's bailout extension hinges on the list of reforms Prime Minister Alexis Tsipras submits on Monday.

"The terms of the current agreement pretty much require Greece to attempt to run a primary budget surplus over 4 per cent for well over a decade...No country with an unhealthy economy has ever managed to do that. So, we think that the current terms that are required of Greece are frankly pretty unrealistic," Jones added.

The case for haircuts

While Tsipras is no longer demanding a haircut given his limited bargaining power, experts say European creditors must realize there's no other solution if they want Greece to remain in the euro zone given the country's weak finances.

"What the Euro group should accept is that Greece is insolvent and needs a material haircut. They should have done that in 2010, but they chose to extend Greece more credit and push out the problem," said Nicholas Ferres, investment director of global asset allocation at Eastspring Investments.

"Greece has had a 30 per cent cut in output from peak levels, which is equivalent to the Great Depression in the 1930s, it's [austerity] just not sustainable," he added.

Yorgos Karahalis | Bloomberg | Getty Images

However, European institutions will likely continue to reject the option of a haircut since they want Greece to get its fiscal house in order, explained Evan Lucas, market strategist at IG, adding that officials would willing to consider any other Greek concession except for a haircut.

Grexit risks grow

While Friday's eleventh-hour deal did spark optimism for a permanent solution, calls for a Greek exit, or 'Grexit,' from the euro zone are still high.

"If you actually look at [Friday's] deal, Greece got nothing and Germany got everything and we are now edging towards a Greek exit from the EMU [European Economic and Monetary Union], said IG's Lucas.

Read More: Greece will stay in euro zone, say finance chiefs

He expects that any bailout deal will jeopardize Syriza's political mandate and increase the prospect of snap elections, which would likely endanger any existing bailout deal with European institutions.

Barclays voiced a similar outlook, stating the likelihood of Greece leaving the monetary union is higher now than it ever has been: "Greek authorities might start feeling the pressure of domestic public opinion, leading them to relax policy implementation while international creditors may not be willing to tolerate any further program slippage," the bank said in a note on Monday.

Morgan Stanley meanwhile puts the near-term chances of a 'Grexit' at 25 per cent in the next three to six months.

Nyshka Chandran Assistant Producer, CNBC Asia-Pacific

Why Greece will never repay its debt

Greece draws up €7.3bn tax hit list aimed at oligarchs and criminals - report

Agence France-Presse Monday 23 February 2015

Crackdown on tycoons and the smuggling industry is part of fiscal reforms to be presented to creditors on Monday, German tabloid Bild says

Analysis: why Greece has its work cut out


Tourists on Acropolis hill in Athens on Sunday. Photograph: Kostas Tsironis/REUTERS

Greece has drawn up a €7.3bn tax hit list aimed at the country’s oligarchs and lucrative smuggling industry, a German newspaper said, as part of reform proposals due to its creditors.

European finance ministers on Friday gave Athens just over three days to draw up a list acceptable to its international creditors in exchange for a four-month extension of its debt bailout.

The German tabloid Bild reported that the Greek government hopes to garner €2.5bn in tax receipts from the fortunes of powerful Greek tycoons, citing sources close to the hard-left Syriza government.


Greece scrambles to finalise fiscal reform list

Minister of state Nikos Pappas said the government was drafting list of reforms including making the civil service more effective and laws to combat tax evasion

Read more

A similar amount would be drawn from back taxes owed to the state by individuals and businesses, Bild said.

The report said an additional crackdown on illegal smuggling of petrol and cigarettes would yield another €2.3bn for the government coffers.

Greece’s government is walking a tightrope between its commitments to European creditors and its electoral pledges to end austerity in a country struggling to recover from severe economic crisis.

Two previous rounds of talks ended in acrimony with Greece accusing Germany and other hard-line EU member states of sabotaging a deal.

To win Friday’s hard-fought deal, Athens pledged to refrain from one-sided measures that could compromise its fiscal targets and had to abandon plans to use some €11bn in leftover European bank support funds to help restart the Greek economy.

“Europe has some breathing space, nothing more, and certainly not a resolution. Now it’s up to Athens,” German foreign minister Frank-Walter Steinmeier told Bild.

“The fundamentals – namely assistance in exchange for reform – must remain the same.”

On Tuesday, Greece’s creditors will decide whether to proceed with Friday’s agreement after considering the proposals, with the chance that the compromise could be scrapped if they are not satisfied.

If Athens sticks to its commitments, it stands to receive up to €7.2bn in funds still left in its €240bn bailout from the EU and the International Monetary Fund.

Greece draws up €7.3bn tax hit list aimed at oligarchs and criminals - report | World news | The Guardian

Sunday, February 22, 2015

Greece Eurozone Deal a Setback or Tactical Win for Syriza?

Heiner Flassbeck says Germany is asserting a destructive agenda proven to be driving Europe into recession -   February 21, 2015

Video: Greece Eurozone Deal a Setback or Tactical Win for Syriza?

Dr Heiner Flassbeck Graduated in April 1976 in economics from Saarland University, Germany, concentrating on money and credit, business cycle theory and general philosophy of science; obtained a Ph.D. in Economics from the Free University, Berlin, Germany in July 1987. 2005 he was appointed honorary professor at the University of Hamburg. Employment started at the German Council of Economic Experts, Wiesbaden between 1976 and 1980, followed by the Federal Ministry of Economics, Bonn until January 1986; chief macroeconomist in the German Institute for Economic Research (DIW) in Berlin between 1988 and 1998, and State Secretary (Vice Minister) from October 1998 to April 1999 at the Federal Ministry of Finance, Bonn, responsible for international affairs, the EU and IMF. Worked at UNCTAD since 2000; from 2003 to December 2012 he was Director of the Division on Globalisation and Development Strategies. He was the principal author of the team preparing UNCTAD's Trade and Development Report, with specialization in macroeconomics, exchange rate policies, and international finance. Since January 2013 he is Director of Flassbeck-Economics, a consultancy for global macroeconomic questions ( ). Co-authored ACT NOW! The Global Manifesto for Economic Policy published 2013 in Germany.

Greece Eurozone Deal a Setback or Tactical Win for Syriza?PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay.

As we record this, talks between Greece and the Eurozone officials appear to be reaching some kind of agreement. There'll be some kind sort of extension on Greeks' death and the bailout agreement.

Now joining us to talk about this is Heiner Flassbeck, who joins us from Geneva.

Thanks for joining us, Heiner.


JAY: So, as everybody knows who watches The Real News, Heiner used to be the director of UNCTAD. He's the author of the book Against the Troika. And he's--also can be found, his writings and blog, at

Thanks for joining us.

So we don't know the details yet, and I guess the devil will be in the detail. But what so far do we know about this agreement, assuming there is one?

FLASSBECK: Well, what we know is that it seems there is the compromise between the Euro group on the one hand and the Greek government on the other hand, which means that in one way or the other they have agreed on extending the bailout and they have agreed on conditions. Unfortunately, we do not know about the conditions. This is the crucial point, because the Greek government said, we want new conditions, we want new conditionality for the bailout, because we cannot continue with the old neoliberal conditions that were imposed on them by the troika.

JAY: Give some examples of some of the more outstanding of these conditions.

FLASSBECK: Well, for example, there was privatization. They said, you have to collect 50 billion by privatizing the Port of Piraeus and another things. And this is absolutely unreasonable, because if an investor knows where these guys have to sell the thing, that the price goes down and you sell it for nothing. So this is one of the things.

The other thing's where to keep a primary surplus in the government budget, which means a surplus except for interest payments of 4.5 per cent, which is extremely high, so all these things should be relaxed. But the conditionality hasn't changed. Greek economy, the Greek economy is in a very bad shape. They have gone through a Great Depression. Unemployment is extremely high. Poverty is spreading. And so what the country, what the economy needs is stimulation, is positive effects from--coming from government investment and government consumption. And this is the only way out for the country to recover. And so far the SYRIZA government is absolutely right. It's just reasonable what they're asking for.

JAY: Now, there's--people call and the press here, they can't say SYRIZA in the newspapers here without saying radical, the radical left SYRIZA. But, in fact, in Greek politics there is a radical left left of SYRIZA, and they've been critical of SYRIZA, that they say there's already a kind of secret agreement, they're suggesting, to give in on the conditionality issues and so on. I mean, what do you know about this?

FLASSBECK: Well, it's absolutely clear that the situation for the SYRIZA government is extremely difficult. They're running out of money. First of all, they need a bailout. That's not too urgent. But the more urgent thing is that people are taking money from their bank accounts. The banks are in very bad shape. The banks need emergency liquidity assistance from the European Central Bank. And this is only given step by step, in very small steps, meanwhile, because there is no bailout. The ECB has not said it absolutely clear, but the ECB has hinted to the point that without a bailout the emergency liquidity system could run out. And then, as in Cyprus--we have seen it two years ago--the situation would deteriorate dramatically, because then the banks would be in danger of going bankrupt day by day, so to say.

JAY: If there's a straight extension with no change on conditionality, say, four months or six months, it seems to be what they're talking about, is that just a stalemate? Is it--the fact that the Greek government might agree to four, six months more of this conditionality, is that a setback for SYRIZA? I mean, how would you analyse this?

FLASSBECK: Yeah, that would be, clearly, a big setback for SYRIZA. They have promised not to accept the old conditionality. And so far they have defined a road somewhere in the middle where the SYRIZA that can keep their face and also the German government, and particularly on the northern governments, can say, well, we have still imposed conditions on them.

So I think in the end there will be a compromise. The rumours came from Paris and from Rome that the governments there were sympathetic with the SYRIZA approach. And I think once the Germans realized that they are rather isolated or they only have coalition friends, so to say, from Finland and the Baltics, then they will give in and they will say, well, then let's give them a little bit of money for a couple of months, and then, meanwhile, we're going to renegotiate again, and that we're imposing the old conditionality. That's very clear afterwards.

JAY: And I guess for SYRIZA they'll call it a victory of the other side agrees to even discuss conditionality.

FLASSBECK: Yeah, that would be a victory, definitely.

JAY: Now, apparently, something like a billion euros are leaving the Greek banks, and a lot of--real currency run. But SYRIZA says there's not going to be currency controls. Why don't they want controls? Cyprus eventually had to do it.

FLASSBECK: Well, I'm not quite clear about this. Obviously, they do not want to spread more panic. They want to give the impression that things are going rather normal. Money is flowing out, but at the moment the quantities seem to be controlled [incompr.] seem not to be dramatic. And so far this is a very dangerous, dangerous, right on the sword's edge, because at any time, any time, panic can come up and the people are rushing out. But capital controls would be clearly, so to say, the admittance that things go out of hand.

JAY: Now, Germany's position, they're projecting this kind of confidence that even if Greece was to leave the Eurozone, it wouldn't be such a disaster, they can live with it, and so on. I mean, is that a bargaining position? Or are they in fact actually more concerned about it than they appear?

FLASSBECK: Well, the first thing I think they're concerned about: their own members of Parliament, because they have to vote next week then about the bailout extension. And the conservative circles in Germany, there is really a lot of--well, you can call it hatred for Greece and all this [incompr.] And so if for them a left-wing what they call a radical left-wing government fails, well, it would be nice. They think it's a good thing to happen. But it could really spell chaos in Greece. It could lead to disaster. And it could lead to a totally uncontrollable situation insofar exit is easily said. But it's a very difficult process, a very complex process, and it can lead anytime, anytime into an avalanche of panic reactions with the people, and then into a real situation where you could talk of a failed state or on ungoverned state, which would be a disaster in the rest of Europe.

JAY: Alright. Thanks very much for joining us, Heiner.

FLASSBECK: Thank you.

JAY: And thank you for joining us on The Real News Network.

Greece Eurozone Deal a Setback or Tactical Win for Syriza?

Time for Alexis Tsipras to keep his nerve

By Hugo Dixon

Alexis Tsipras must keep his nerve. The new Greek prime minister has crossed a Rubicon in asking for an extension to the country’s hated bailout programme while abandoning many election promises. Tsipras should realise there is now no turning back. But he can snatch victory from defeat if he embraces radical reforms with vigour.

Tsipras blinked on Friday night when it became clear that a bank run was gathering pace and capital controls would need to be imposed within days unless he did a deal with his euro zone creditors. The government itself would have gone bust in weeks. The misery inflicted on an already suffering people would have been terrible.

The Greek prime minister has had to accept virtually everything his creditors, led by Germany, demanded. However, Athens did secure a potentially important concession: it will be able to propose its own list of reforms.

On the other hand, Tsipras has had to swallow much bitter medicine. Not only has he had to ask for an extension of the programme with monitoring by the unpopular European Commission, European Central Bank and International Monetary Fund. He has had to promise not to roll back the reforms introduced by previous governments or introduce any controversial measures of his own during the four-month period when he will conduct negotiations on a new long-term deal.

The U-turn will infuriate the powerful hard-left faction of Tsipras’ own Syriza party. But it is in the interests of the Greek people.

Tsipras now has to present his own list of reforms by Monday evening. He must resist any temptation to come up with half-hearted proposals that might appease his extremist colleagues.

Instead, Athens should propose radical reforms that the previous conservative-led government was too conflicted to embrace. It should surprise its euro zone partners with its zeal and so help to restore their trust, which has been shot to bits as a result of Syriza’s bizarre negotiating tactics over the past month.

Tsipras has long said he wants to combat tax evasion, corruption and special privileges, as well as rein in the oligarchs who control swaths of the economy and stifle enterprise. Now is his chance to prove he means business.

Top of Athens’ list should be creating a genuinely independent tax authority. The last government, led by Antonis Samaras, sacked the authority’s boss. Buttressing it with strong legal safeguards would show that Tsipras was serious about tackling evasion, one of Greece’s deepest problems.

This reform could be accompanied by offering a tax amnesty: anybody who owned up to undeclared income would pay a lower tax rate; but those who failed to and were subsequently found out would be hit with the full tax plus penalties.

The prime minister should also promise to remove tax and social security privileges enjoyed by the rich. For example, judges, generals and senior civil servants should have to wait for their pensions as long as ordinary people.

Similarly, the Greek Orthodox church should lose its exemptions from the country’s unpopular property tax. Nor should the government continue to pay for priests’ pensions and salaries. The church should offer to fund them itself.

Tsipras should also revive an idea, nixed by Samaras, to tax the country’s super-rich ship owners. It is astonishing they still slip through the tax net.

Next on Athens’ list should be liberalising markets, such as auditing, retailing and telecoms, which are still gummed up by restrictive practices. This would attract investment and give consumers a better deal. One measure that could grab the headlines would be to free up milk prices.

Tsipras should also set up a “bad bank” along the lines of what Spain and Ireland have done successfully. Hiving off non-performing loans wouldn’t just free the banks to provide credit to the economy. It could also help clear up corruption, as many of the bad loans are provided to oligarchs who are clever at pressuring the banks not to foreclose on them.

There is understandably some fear that a bad bank could end up as a back-door way to help corrupt businesses, by writing down their loans while letting their current owners stay in control. But if the organisation was set up with strong and independent governance, this should not be a risk. On such a basis, the euro zone should be willing to release some of the money it has just clawed back from the country’s bank bailout fund to finance a bad bank.

Greece’s creditors have the country on a short leash. They haven’t said how they will provide Athens with the money to stop it going bust next month. They have also dangled the possibility of relaxing the punishing fiscal austerity, but haven’t said by how much.

If Tsipras can surprise his euro zone partners with radical reforms, they will be more willing to find Athens the cash to avoid bankruptcy – probably by letting it sell more short-term treasury bills to its banks. They will be more likely to relax the fiscal squeeze, so allowing the government to fund some of its more pressing anti-poverty policies. They will also be more amenable to relieving Greece’s vast debt burden, an idea currently on the back burner.

It won’t be easy for Tsipras to do all this, both because of his far-left colleagues and vested interests that support his party. But he is popular enough to do this especially if he secures a new mandate with a referendum or a second election. Now is the time to break with factions and side decisively with the Greek people.

[Reuters] | Time for Alexis Tsipras to keep his nerve