Tuesday, March 31, 2015

Greece in talks with Eurozone as Angela Merkel says reform plan must 'add up'

Nick Fletcher Tuesday 31 March 2015

Officials attempt to secure bailout funds from creditors amid suggestions that proposals from Alexis Tsipras’s government are not detailed enough

Alexis Tsipras

Greece’s prime minister Alexis Tsipras is to give a briefing to the country’s parliament late on Monday. Photograph: Wassilios Aswestopoulos/NurPhoto/Corbis

Greek officials were locked in talks with Eurozone creditors on Monday amid signs that the country’s list of reforms might not be detailed enough to allow a much needed tranche of bailout funds to be released.

The Greek government presented the reforms demanded by its lenders on Friday, but despite talks over the weekend, the two sides seemed no closer to an agreement. Without more aid, Greece could run out of cash before the end of next month, while a €450m (£329m) payment needs to be made to the International Monetary Fund on 9 April.

Margaritis Schinas, a spokesman for the European commission, said on Monday that the list of reforms still “required a lot of technical work” but the continuing discussions were “a positive sign that shows willingness and seriousness of all sides to constructively engage”.

The German chancellor, Angela Merkel, warned that Greece’s reform programme must “add up” as she insisted that Germany wants to avoid the country leaving the Eurozone. Speaking in Finland, Merkel said there could be some flexibility in the Greek government’s proposals, but added: “In the end, the overall framework must add up. We saw this in Ireland when a new government changed parts of the programme. But in the end the financial stability of the country must be restored. Greece is talking with the institutions now. We are waiting on these talks. And we will wait for the evaluation of the institution.”

Meanwhile, ahead of a briefing to the Greek parliament by the prime minister, Alexis Tsipras, late on Monday, more details of the reforms emerged. Greece is proposing to raise around €3bn (£2.2bn) of new tax revenue, including measures to fight tax evasion and VAT fraud, as well as higher taxes on alcohol and cigarettes. However, its lenders are concerned that it has not agreed to deliver reforms to pensions and the labour market.

Privatisations, including the Piraeus Port Authority, are designed to bring in €1.5bn (£1.1bn), about €700m (£510m) lower that the original target. But this plan has already caused friction among elements of the governing Syriza party, who want to stick to the original pledge to cancel any state sell-offs. Tsipras needs to tread a difficult path between the lenders and his own supporters, not least because Germany has insisted that the proposals be passed by the Athens parliament before any bailout money can be released.

In a further blow, the ratings agency Fitch cut Greece’s default ratings and unsecured currency bonds from B to CCC late on Friday, ahead of its next scheduled review on 15 May. It said: “Fitch believes that developments in Greece warrant such a deviation from the calendar. Lack of market access, uncertain prospects of timely disbursement from official institutions, and tight liquidity conditions in the domestic banking sector have put extreme pressure on Greek government funding.

“We expect that the government will survive the current liquidity squeeze without running arrears on debt obligations, but the heightened risks have led us to downgrade the ratings.”

The Greek situation continued to put pressure on the euro, which fell 0.65% to $1.08, while Greek 10-year bond yields rose from 11.04% on Friday to 11.16%. However, the Athens stock market edged 0.53% higher.

On the Eurozone economic front, the picture was brighter, with business and consumer confidence both picking up in March. Howard Archer, of IHS Global Insight, said: “A third successive, and markedly, increased rise in overall Eurozone economic sentiment to a 44-month high in March indicates that a more favourable growth environment in the Eurozone is increasingly being fostered by the much more competitive euro, low oil prices and major ECB stimulus. Consumer confidence across the Eurozone rose to a near eight-year high in March, while sentiment improved in most business sectors.”

Greece in talks with Eurozone as Angela Merkel says reform plan must 'add up' | World news | The Guardian

Monday, March 30, 2015

The great responsibility of Mr Tsipras

Sunday, March 29, 2015

The common belief is that things are not working out in the best way for Greece. It has been two months since the election and everything is uncertain and up in the air. 

The negotiations are never-ending, without any results, the state funds are empty, the people are insecure, the economy is ready to re-enter a recession and the government is constantly balancing between an “honest compromise” and a “rupture”.

The Prime Minister gave it all in the so-called political negotiations, without adequately estimating the technical and financial aspect, nor, of course, the threat of liquidity suffocation.

At the eleventh-hour he called a meeting with European leaders in Brussels and then travelled to Berlin in order to get the negotiations in order.

This new effort of his however is being undermined by this exact lack of preparation on a technical and financial level.

Without adequate technical preparation this new negotiation effort is at risk of failing.

Though this negotiation the Minister of Finances aspires to complete the review of the current program, which in turn will release funding resources, but he never gave the so-called technical teams a chance.

The likeliest scenario is that he will face up against the serious doubts cast by the very same technical groups that mediate and prepare the Euro Working Group and Euro group sessions.

Perhaps the latest references of Greek officials for a clash and rupture were prompted by the early estimations of European experts on the reform list being inadequate.

In any case, the government continues to walk on a tightrope. With empty state coffers empty, a difficult negotiation, everyone agitated by the threats and the people concerned about the near future, nothing guarantees stability, progress and growth.

On the contrary, we have a revival of the worst case scenarios. Without an agreement the State will run out of money, possibly before Easter. And when it runs out, we will either not pay the creditors – as the government threatens to do – or the civil servants and pensioners will get less.

If the creditors are not paid we will have a credit event, which in turn will affect the country's position in the world and if the State suspends payments domestically then nothing guarantees a safe future.

Both solutions are problematic and undesirable.

The “honest compromise” which the Prime Minister proposed himself is obviously the best.

He should therefore serve it without hesitation or reservations. He must also assume whatever the cost will be, because he is simple not allowed to sail Greece into the rocks. And that is the great responsibility of Mr Tsipras.

Antonis Karakousis

Originally published in the Sunday print edition

The great responsibility of Mr Tsipras - Το Βήμα Online

Thursday, March 26, 2015

Greek ex-finance minister guilty of tampering with tax list


FILE - In this Jan. 17, 2013 file photo, former finance minister George Papaconstantinou addresses lawmakers during a Parliament session in Athens. A special court acquitted Papaconstantinou of felony charges of breach of faith and doctoring a document on Tuesday, March 24, 2015, in a case concerning Greeks with bank accounts in Geneva, and found him guilty of a lesser misdemeanour charge. Papaconstantinou, 53, received a one-year suspended prison sentence. (AP Photo/Petros Giannakouris, File)

FILE - In this Feb. 25, 2015 file photo former Greek finance minister George Papaconstantinou arrives in court at the start of a criminal trial against him on allegations he removed relatives' names from a list of Greeks holding Swiss bank accounts in HSBC. A special court acquitted Greece's former finance minister George Papaconstantinou of felony charges of breach of faith and doctoring a document on Tuesday, March 24, 2015, in a case concerning Greeks with bank accounts in Geneva, and found him guilty of a lesser misdemeanour charge. Papaconstantinou, 53, received a one-year suspended prison sentence. (AP Photo/Petros Giannakouris, File)

ATHENS, Greece (AP) — A special court acquitted Greece's former finance minister George Papaconstantinou of felony charges of breach of faith and doctoring a document Tuesday in a case concerning Greeks with bank accounts in Geneva, and found him guilty of a lesser misdemeanour charge.

Papaconstantinou, 53, received a one-year suspended prison sentence.

He had faced a possible sentence of 10 years to life imprisonment over the felony charges after being accused of removing the names of three of his relatives from a list of Greeks with accounts at HSBC bank in Geneva.

The former minister had vehemently denied the charges against him. In a majority ruling, the panel of 13 judges found him guilty of doctoring a document but reduced the count to a misdemeanour.

"After a very thorough and detailed procedure ... was clearly demonstrated in court was that Mr Papaconstantinou had no intention of harming the Greek state and of course did not harm it," his lawyer Vassilis Dimakopoulos told reporters after the trial ended.

"This lack of damage and any self-interest confirms my client's reputation, which the defence was proud to uphold."

A special court acquitted Papaconstantinou of felony charges of breach of faith and doctoring a document. Photo: AP

The bank account list became known as the Lagarde List, named after Christine Lagarde who was France's finance minister at the time and who sent the information to Papaconstantinou in 2010. It was an extract of a list of HSBC Geneva account holders leaked by former bank employee Herve Falciani.

Successive Greek governments have come under criticism for not investigating all the names on the list to determine whether those on it had evaded taxes.

Papaconstantinou served as finance minister from late 2009 to mid-2011 and was the minister who negotiated Greece's original international bailout, under which the country in May 2010 began receiving rescue loans from other Eurozone nations and the International Monetary Fund in return for pushing through reforms to overhaul its economy.

The case was heard by a special court set up to handle trials against politicians. Of the 13 judges, eight called for a guilty verdict on the document- tampering charge, with three of them calling for a felony count and the other five a misdemeanour.

The remaining five judges had called for an acquittal.

Former Greek finance minister George Papaconstantinou, second left, sits in court next to his lawyers. Photo: AP

Copyright © 2015 AP. All rights reserved. Disclaimer.

Greek ex-finance minister guilty of tampering with tax list | AustraliaNews.com.au

Wednesday, March 25, 2015

ECB hits out at Greek 'blackmail' claims as Merkel holds steady in debt demands

By Mehreen Khan 24 March 2015

Mario Draghi denies asphyxiating the cash-strapped government after Athens promises to meet reform deadline on Monday

Angela Merkel maintained Greece had to commit to a reform programme in return for vital bail-out cash Photo: 2015 Getty Images

The European Central Bank has hit back at claims it is “blackmailing” Greece over its protracted bail-out, as Athens has vowed to submit a crucial list of economic reforms to its creditors by next week.

Greek Prime Minister Alexis Tsipras is in Berlin for his first formal bilateral talks with Europe's largest creditor this week. At a meeting with counterpart Angela Merkel on Monday, Mr Tsipras promised to “avoid division and find a common solution” with his European partners after weeks of acrimonious mud-slinging between the two sides.

But in a letter sent to Ms Merkel and ECB chief Mario Draghi in anticipation of the talks, the Greek premier chastised the central bank for making it “impossible” for his government to meet its basic obligations to pay wages and pensions.

"I am urging you not to allow a small cash flow issue, and a certain ‘institutional inertia’, to turn into a large problem for Greece and for Europe,” wrote a pleading Mr Tsipras.

The ECB has tightened the squeeze on the Leftist government since it came to power in January.

Greek banks are being kept afloat through an expensive form of emergency assistance (ELA) after the ECB removed its ordinary lending operations to the country.

But Mr Draghi shot back at claims the institution was acting unilaterally, claiming any accusations of blackmail were “a bit rich when you look at our exposure to Greece.”

“We haven’t created any rule for Greece, rules were in place and they’ve been applied,” Mr Draghi told an audience of the European Parliament.

Total ECB funding for Greek banks has now topped €100bn, as the central bank has been progressively drip-feeding ELA to stricken lenders in small increments that have dissatisfied Athens.

Although they remain solvent for now, banks have suffered from accelerated capital flight as bail-out negotiations have frayed. An estimated €1.5bn is thought to have left the country in the last week alone.

The Greek government, whose procrastination on implementing reforms has isolated many of its fellow members states, estimates it could run out of money by the end of April if a vital €7.2bn in bail-out funds is not released.

But less than 12 hours after the talks in Berlin, Athens vowed to send a list of its planned measures to finance ministers by next week at the very latest, according to government spokesman Gabriel Sakellaridis.

A steadfast Mr Draghi reiterated that the collateral waiver on Greek sovereign bonds would also only be reinstated when the Leftist government had proven its commitment to raising revenues through privatisations and carrying out austerity measures.

Following a red carpet welcome in Berlin, the Mr Tsipras sought to rebuild trust with Europe's largest creditor nation.

He told reporters it was not his job to come to come cap in hand to “ask for money to pay next month's salaries from Germany - that is not the institutional process of the European Union.”

Mr Tsipras enjoyed a military-style greeting before Monday's talks

In a press conference dominated by talk of the validity of Nazi war reparations claims, Mr Tsipras dismissed threats to confiscate German property in Greece as compensation for the victims of the country's brutal Third Reich occupation.

However, he repeated that the question of Second World War reparations was a “moral and ethical” matter for his country.

"Today's democratic Germany has nothing to do with the Germany of the Third Reich that took such a toll of blood," insisted Mr Tsipras.

Chancellor Merkel reiterated her stance that any question of further compensation for events of 1941 remained firmly off the table.

Despite the regalia of the greeting, both leaders made little progress on securing Greece’s future in the bloc, with Ms Merkel insisting any questions about Greece’s cash-flow problems remained the purview of the Eurozone's finance ministers.

“Today we can only discuss, rather than make any promises. I cannot make promises on liquidity for Greece,” said the Chancellor.

View image on Twitter

Mr Tsipras met with the German foreign minister on Tuesday.

ECB hits out at Greek 'blackmail' claims as Merkel holds steady in debt demands - Telegraph

Tsipras raises Nazi war reparations claim at press conference with Merkel

Ian Traynor Europe editor Tuesday 24 March 2015

Left-wing Greek leader makes call for damages at press conference with Angela Merkel as deadlock remains over bailout funds

Greece’s left-wing prime minister Alexis Tsipras stood beside German leader Angela Merkel and demanded war reparations over Nazi atrocities in Greece on Monday night, even as the two leaders sought to bury the hatchet following weeks of worsening friction and mud-slinging.

“It’s not a material matter, it’s a moral issue,” said Tsipras, unusually insisting on raising the “shadows of the past” at the heart of German power in the gleaming new chancellery in Berlin. It was believed to be the first time a foreign leader had gone to the capital of the reunified Germany to make such a demand.

Merkel was uncompromising, while appearing uncomfortable and irritated. “In the view of the German government, the issue of reparations is politically and legally closed,” she said.

While the two leaders clashed over the second world war, there was no sign of any meeting of minds on the substance of their dispute over Greece’s bailout and what Tsipras has to deliver to secure fresh funding and avoid state insolvency within weeks.

Two months after winning the election by promising to abolish “Merkelism” – the harsh austerity ordained by the Eurozone and other creditors in return for €240bn (£175bn) in bailout loans over the past five years – Tsipras held to the view that Greece’s crisis was not of his making. He delivered a lengthy diagnosis of what had gone wrong in the last five years, but had next to nothing to say about his own policies except vague references to fighting corruption. And when he raised the corruption issue, he singled out a German company, Siemens, because of its alleged activities in Greece.

A stony-faced Merkel reiterated what she had said in Brussels on Friday after a late-night session with Tsipras – that a 20 February agreement with the Eurozone extending Greece’s bailout until the end of June remained the yardstick. That agreement obliges Tsipras to deliver a persuasive menu of detailed fiscal and structural reforms which need to be vetted by the Eurozone before any further bailout funding can be released.

Asked if she had reached any agreements with Tsipras, Merkel avoided the question and stressed she was only one of 19 Eurozone national leaders.

Tsipras was believed to have told the German leader that Greece faced insolvency within weeks without the release of more funds, which are being held up because he has failed to produce a coherent policy package.

“The medium-term liquidity problem is well known,” he said. “We inherited it.”

While neither side wants Greece to leave the euro, the lack of agreement in Berlin signalled a digging in of hard-line positions on both sides that could result in a major negotiating failure.

Support for the Greek government remains strong at home, in inverse proportion to the lack of trust in Tsipras among his main creditors. A growing majority of Germans do not believe Greece will do what it must to stay in the euro and would prefer to see it leave. The Eurasia group risk consultancy on Monday raised its assessment of the chance of Greece having to quit the euro to 30%, up from a previous 20%.

“The prospects of a deal over Greece are diminishing, as Germany, the euro group and Greece continue to posture,” said Mujtaba Rahman, its Eurozone analyst. “The chances of capital controls, and ultimately, Greece’s exit from the euro, are also increasing. While Berlin still wants to keep Greece in the Eurozone, it can and will not be flexible regarding the conditions attached to more financial aid.”

Late on Thursday and into Friday morning last week, Tsipras met Merkel and the leaders of other key creditors on the fringes of an EU summit in Brussels. He told them that waiting until the end of April for the €7.2bn remaining to be tapped from the bailout would be too late for Greece. In letters to Berlin and other EU power centres a few days earlier, Tsipras also threatened to default on Greece’s debts without some relief from the Eurozone and the European Central Bank.

A unilateral default would press the button on Greece leaving the single currency.

Facing a cash flow crisis with large loans to repay and running out of funds to service them, Tsipras argued for agreement on a “political framework” with Merkel and other national leaders, bypassing the Eurozone technocrats and the euro group finance ministers.

Merkel is determined to avoid precisely this, pledging that there can be no further release of loans until the Greeks draw up a credible menu of fiscal and structural reforms and prove they are serious about acting on them. In his two months in office, Tsipras has signally failed to do this. His creditors think he is wasting everyone’s time.

Tsipras raises Nazi war reparations claim at press conference with Merkel | Business | The Guardian

Thursday, March 19, 2015

Could Europe lose Greece to Russia?

By Giorgos Christides Greece

Man walks past graffiti of Acropolis collapsing in Thessaloniki (5 March) Greece may need new loans to avoid bankruptcy when its bailout extension expires at the end of June

Greek bailout

Deepening ties between Greece's new government and Russia have set off alarm bells across Europe, as the leaders in Athens wrangle with international creditors over reforms needed to avoid bankruptcy.

While Greece may be eyeing Moscow as a bargaining chip, some fear it is inexorably moving away from the West, towards a more benevolent ally, a potential investor and a creditor.

Europe is not pleased. Should it also be worried?

Worst kept secret

A drove of Greek cabinet members will be heading to Moscow.

Prime Minister Alexis Tsipras will be hosted by Russian President Vladimir Putin in May, accompanied by coalition partner Panos Kammenos, defence minister and leader of the populist right-wing Independent Greeks party.

The timing has not escaped analysts.

Greece's bailout extension expires at the end of June and the worst kept secret in Brussels is that Athens will need new loans to stay afloat.

Greek Foreign Minister Foreign Minister Nikos Kotzias (L) with Sergei Lavrov Open arms: Foreign Minister Nikos Kotzias (L) had a warm welcome in Moscow in February

Officially, Greece is not searching for alternative sources of funding.

But a loan from Russia, or perhaps China, could seem a more favourable alternative - or at least supplement - to any new Eurozone bailout with all its unpopular measures and reforms attached.

Greece could look forward to cheaper gas for struggling households, increased Russian investment and tourism to provide a much needed economic boost.

Moscow, in return, would be rewarded with a friendly ally with veto power inside the EU at a time of heightened tensions over the Ukraine crisis.

'Russian card'

The new government's intention to forge closer ties with Moscow became evident as soon as the leftist Syriza party won the 25 January election.

Within 24 hours, the first official to visit the newly-elected prime minister was the Russian ambassador, whereas it took German Chancellor Angela Merkel two days to congratulate him with a rather frosty telegram.

On becoming foreign minister, Nikos Kotzias questioned the rationale and effectiveness of EU sanctions against Russia over Ukraine and, from day one, the defence minister advocated stronger relations with Moscow.

Like most members of the Syriza cadre, Mr Tsipras and Mr Kotzias descend politically from the pro-Russian Greek Communist Party.

Mr Kammenos, in common with other hard-right European politicians, also has longstanding ties to Russia.

Alexis Tsipras (10 March 2015) The Greek prime minister, whose party's roots stem from the Communist party, visits Moscow in May

"My feeling is that the Greek government is playing the 'Russian card' in order to improve its bargaining position in the current negotiations," says Manos Karagiannis, a Greece-born specialist on Russian foreign policy at King's College, London.

"But it will be very difficult for Athens to distance itself from the EU and NATO."

It may be premature to say the new government is breaking with the dictum of conservative statesman Constantinos Karamanlis, who declared in 1976 that "Greece belongs to the West".

But this main pillar of Greek foreign policy has been shaken by a deep disgruntlement caused by a financial crisis raging for a sixth year, which has cost Greece a quarter of its GDP, one million jobs and, for many Greeks, the dignity of a proud nation.

And there are some who do not view the new approach as a fleeting convergence of interests.

Especially since a pro-Russian policy plays well with the Greek public.

'Turn to Moscow'

Samuel Huntington's controversial thesis on "the clash of civilisations," which places Greece squarely in the Russian-led Orthodox axis, is rejected by many scholars, but widely accepted by Greeks.

A global survey by the Pew Research Centre from September 2013 found that 63% of Greeks held favourable views of Russia.

Only 23% of Greeks had a positive view of the EU last autumn, in the latest Euro barometer survey.

A man walks past a shop window in Athens, with a display of the Acropolis Greece's historical ties to Russia are not just religious and go back to the birth of the modern state

"It is clear that Germany wants to impoverish our people," says Kostas Iliadis, a supermarket worker in Thessaloniki. "Our response should be to turn to Moscow, even if this means that they kick us out of the EU."

This positive image of Russia has deep roots in history:

  • When Greece was still part of the Ottoman Empire, Greeks often looked to fellow Orthodox Russians for help
  • Greece's War of Independence was initiated in 1821 by a secret group formed in Odessa known as Society of Friends (Filiki Eteria)
  • Ioannis Kapodistrias, a Greek foreign minister of the Russian Empire, was elected first governor of the fledgling independent Greece in 1827
  • The "Russian party" was a dominant political force in the new state

More recently, the 2004-09 conservative government of Costas Karamanlis, nephew of the veteran pro-Western statesman, pursued a "diplomacy of the pipelines", envisaging Greece as a gateway for Russian oil and gas to Europe.

It was a policy that enraged Greece's Western allies.

Costas Karamanlis with Vladimir Putin in Moscow in April 2008 Mr Karamanlis was rejected by voters a year after signing a gas deal with President Putin

After he lost elections in 2009, it emerged that Russia's FSB security agency had warned its Greek counterpart, EYP, of a 2008 plot to assassinate Mr Karamanlis to halt his pro-Moscow energy alliance.

'No crime or sin'

All this makes Europe, and especially Germany, uneasy.

"Who is more dangerous for us? The Greek or the Russian?" pondered mass-circulation German tabloid Bild.

Greek foreign ministry spokesman Constantinos Koutras says there is no need for alarm.

"Pursuing a multi-dimensional foreign policy is not forbidden, and it is neither a crime nor a sin," he told the BBC.

Cyprus President Nicos Anastasiades signed a military cooperation deal with Mr Putin on 25 Feb Cyprus President Nicos Anastasiades signed a military cooperation deal with Mr Putin last month

Critics say it would be unwise for Greece to place too many hopes on Russia anyway, arguing that Russia has a long track record of frustrating Greek aspirations.

After all, Moscow did nothing to help Cyprus, also an Orthodox country, when its tiny economy was on the point of collapse in 2013.

President Putin did offer Cyprus more investment and better repayment terms for a €2.5bn (£1.7m; $2.6m) loan last month, but only after President Nicos Anastasiades agreed to give Russian military ships access to Cypriot ports.

For Prof Karagiannis, what matters is that Greece is fully integrated into the West, but he warns against underestimating the risks of a Greek exit from the euro.

"A Grexit could certainly fuel anti-EU sentiments among the Greek population. And an isolated and weak Greece could jeopardise the stability of the entire region," he says.

A weakened country, cast out of the Eurozone and possibly the EU, would then be far more open to closer ties with Russia.

BBC News - Could Europe lose Greece to Russia?

Greek PM demands EU stop 'unilateral actions' as tensions flare

By By Costas Pitas and Caroline Copley |Reuters Thursday 19 March 2015

ATHENS/BERLIN (Reuters) - Greek Prime Minister Alexis Tsipras lambasted European partners on Wednesday for criticising a new anti-poverty law hours before it was voted on, saying it was the euro zone rather than Athens that must stop "unilateral actions" and keep its word.

Tsipras's impassioned speech to parliament ahead of the vote on his government's first bill marked the latest escalation in a war of words between Athens and its creditors that has raised the risk of a Greek bankruptcy and euro zone exit.

European Council President Donald Tusk called a meeting on Greece for Thursday evening at Tsipras' request on the sidelines of an EU summit with the leaders of Germany, France, the European Central Bank, the European Commission and the chairman of euro zone finance ministers.

The leftist Greek leader is pressing for a political decision to break Greece's cash crunch, while the creditors have insisted Athens must first start implementing previously agreed economic reforms and hold detailed talks on its financial plans.

Most Greeks, nearly 60 per cent, are satisfied with their government's negotiations, according to the latest survey by Marc carried out on March 15-17 and published on Thursday.

Tensions over Greek flip-flopping on the terms of a bailout extension agreed last month flared again after an EU official wrote to Athens urging more talks with lenders on the bill before the vote.

The letter told Tsipras's leftist government to hold further talks with the EU on the bill or risk "proceeding unilaterally" against the terms of a Feb. 20 accord that extended the bailout and staved off a Greek banking collapse.

European Economics Commissioner Pierre Moscovici denied the EU was trying to stop Athens from passing the law but that the official had been correct to remind the Greek government to consult with lenders first.

"The European Union as a whole wants Greece in the Eurozone," Moscovici said, but added that the February deal must be respected. "Greece must stay in the euro zone... but at these conditions."

An indignant Tsipras defended the so-called "humanitarian crisis" law - which offers food stamps and free electricity to the poor - as the first bill in five years drawn up in Athens rather than ordered by EU technocrats.

"If they're doing it to frighten us, the answer is: we will not be frightened," Tsipras told parliament. "The Greek government is determined to stick to the Feb. 20 agreement. However, we demand the same from our partners. Let them stop unilateral actions, respecting the agreement they signed."

The bill was approved by a majority of lawmakers in the early hours of Thursday, with support from the opposition as well.

Members of the governing Syriza party said the remarks by the head of EU delegation to Greece Declan Costello were "an intervention in the legislative process that is an insult to all of us," in a letter of complaint read out in parliament.

Tsipras continued his attack against "EU technocrats" over the letter.

"The behaviour of some, not all, of our partners and especially some of the technocrats and technocrat teams only confirms the arguments of the Greek side," Tsipras said.

"What else can one say to those who have the audacity to say that dealing with a humanitarian crisis is a unilateral action?"

European Commission President Jean-Claude Juncker said he was concerned about the pace of progress on resolving Greece's debt crisis and urged those involved to "get a grip".

"I'm still worried. I'm not satisfied," he told a news conference. "I'd like everyone to get a grip on themselves."


The latest comments come as Greece risks running out of cash in weeks amid a widening rift with its creditors.

Technical teams from Greece and its international lenders started talks last week to try to agree details of reforms, but have made little progress so far.

"We have the impression, and everyone who is dealing with the question shares the impression, that time is running out for Greece," German Finance Minister Wolfgang Schaeuble, said in Berlin, noting that Athens was refusing a third bailout package.

Shut out of debt markets and with financial aid frozen by irate lenders, Athens needs to quickly find new funding.

"We haven't received any (bailout) tranches since August 2014 but we have been meeting all of our obligations," Greek Deputy Prime Minister Yannis Dragasakis told Greek TV on Thursday. "Of course we have a liquidity problem ... We have obligations which, in order for us to meet, we need the good cooperation of the European institutions."

Tsipras will raise the funding problem in talks with EU leaders at this week's summit, his government said.

But EU officials said they did not understand what Greece hoped to achieve by bringing the issue to the summit, where it is not on the formal agenda and could only be discussed on the sidelines and only in broad political terms.

In a small boost for the government, Greece sold 1.3 billion euros ($1.38 billion) of three-month Treasury bills on Wednesday in its third successful auction this month. The sum covered the amount it sought to raise to refinance a maturing issue.

France appealed for restraint to avoid accidentally triggering a Greek euro zone exit.

"France will be do everything it can to avoid an accident and I believe that what we will do will avoid it," Finance Minister Michel Sapin said. "But no one can be categorical on this and this is why, on both sides, people must control their language."

(Additional reporting by George Georgiopoulos, Renee Maltezou, Karolina Tagaris and Angeliki Koutantou in Athens, Alastair Macdonald and Jan Strupczewski in Brussels, Yann Le Guernigou in Paris, Writing by Deepa Babington; Editing by Dominic Evans, Paul Taylor and Ken Wills)

Greek PM demands EU stop 'unilateral actions' as tensions flare - Yahoo News India

Tuesday, March 17, 2015

Merkel invites Tsipras to Berlin as tensions mount


The 'Varoufakis finger'. Zerohedge.com

German Chancellor Angela Merkel has invited Greek Prime Minister Alexis Tsipras to Berlin for talks next week. But tensions simmered, as Germany's finance minister accused the new Athens government of destroying all trust in Greece.

The hard-line comments from the conservative Wolfgang Schäuble laid bear the fraying relations between the two countries, with Tsipras struggling to find EU allies in his push to end austerity in Greece and renegotiate the terms of a mammoth bailout programme.

Merkel spoke to Tsipras by phone on Monday and invited him to Germany for talks on 23 March, their respective offices said.

They will face a difficult task in trying to smooth ties after a tumultuous few weeks. Germany is clearly alarmed at the prospect of Greece not honouring past financial pledges and triggering a crisis that could force it out of the Eurozone.

"They have destroyed all trust once again," Schäuble told a panel discussion in Berlin on Monday, saying he had no clue as to how Athens intended to solve its problems. "Among my colleagues at the international institutions I can find no one who can tell me how that might actually work," he said.

Highlighting a persistent problem that has exasperated officials, Greece announced a large revision of its 2014 budget surplus on Monday, saying it came in at just 0.3 per cent of output compared with a previous estimate of 1.5 per cent.

The unexpectedly low figure means Greece looks set to miss a key target of its bailout programme.

Although Greece secured in February a four-month extension to its bailout, the accord did not give Athens access to funds already pledged to it from the euro zone and the International Monetary Fund, leaving it facing a cash crunch.

No debt relief

To obtain that money, it must agree on economic reforms with its creditors, but discussions have got off to a slow start and EU officials have expressed dismay at the sluggish progress.

"Whatever obstacles we may encounter in our negotiating effort, we will not return to the policies of austerity," Tsipras told daily Ethnos in an interview published on Monday, blaming budget rigour for Greece's record high unemployment.

Presenting a united front with Germany, EU financial affairs chief Pierre Moscovici said on Monday that Greece could not expect to see any of its loans written off.

"Debt has to be repaid, that's clear. Debt cannot be wiped out. There will be no haircut, no debt relief," Moscovici said in Berlin, urging Greece to implement economic reforms.

Asked whether he had an alternative plan if his partners continued to refuse Greece leeway, Tsipras said he was confident the matter would be settled this week ahead of a European Union summit in Brussels on March 19-20.

"I don't believe we will need to apply alternative plans because the issue will be solved at a political level by the end of the week in the run up to the EU summit, or, if necessary, at the EU summit (itself)," he told the paper.

Hinting at a possible compromise, Greek Finance Minister Yanis Varoufakis said on Friday the government was prepared to delay some promised anti-austerity measures to win EU backing.

Asked whether such a delay was possible, Tsipras said: "This programme has a four-year time span, and will be implemented fully. The way in which we spread out our work over time depends to a certain extent on the course of the negotiations."

Tsipras has already travelled to Cyprus, Rome, Paris and Brussels to see various leaders, but his meeting with Merkel in Germany, Europe's economic powerhouse, might prove decisive.

His leftist government has clashed repeatedly with Germany since winning election in January, and Tsipras himself angered Berlin last week by accusing previous German governments of using "legal tricks" to avoid paying World War Two reparations.

Varoufakis tangled yet again with Berlin on Monday after German television aired a 2013 video purportedly showing him making a rude gesture towards Germany. He said the video was fake, but a senior German politician said he was lying.

EurActiv.com with Reuters

Merkel invites Tsipras to Berlin as tensions mount | EurActiv

German finance minister accuses Athens of destroying trust

Helena Smith in Athens Tuesday 17 March 2015

Tensions between two countries wound tighter after Wolfgang Schäuble launches verbal attack on Alexis Tsipras’s government

Wolfgang Schäuble, German finance minister

Wolfgang Schäuble, German finance minister, reiterated that Greece’s debt problems were caused by its living beyond its means. Photograph: Wiktor Dabkowski/Wiktor Dabkowski/dpa/Corbis

The war of words between Athens and Berlin intensified on Monday when the German finance minister Wolfgang Schäuble said Athens’s left-led administration had ruined the trust the country had regained with its European partners.

Schäuble also accused the prime minister, Alexis Tsipras, of mendacity and reiterated that Greece’s debt problems lay squarely with the fact that the Mediterranean nation had lived far beyond its means.

Alexis Tsipras invited to Berlin as Yanis Varoufakis denies giving Germany the finger

“The new Greek government has totally destroyed the trust of its European partners … this is a serious setback,” the veteran politician, widely seen as the architect of austerity, told a panel in Berlin. “Until November, Athens was on a road that could have lead it to exit the crisis. This has gone. I don’t know what to do now with Greece.”

The remarks, immediately decried as insults by the Greek media, came hours after the German chancellor Angela Merkel extended a personal invitation to her Greek counterpart to visit Berlin on 23 March. Tsipras, who she once derided as a troublemaker, immediately accepted with aides saying he would seek to strike a political solution at the talks.

Analysts described the meeting – hotly anticipated by a government catapulted to power barely two months ago on an agenda to dismantle “Merkelism” – as a potential “moment of truth” that could break the impasse in Greece’s ongoing battle to keep bankruptcy at bay.

Berlin, the biggest contributor to the €240bn (£160bn) bailout programme propping up the Greek economy, has said a further €7.2bn tranche of aid will only be released once Athens implements credible reforms.

With the cash-strapped government running on near-empty and facing debt repayments of €1.5bn by the end of the month fears of a credit crunch are mounting.

Greece's finance minister, Yanis Varoufakis, speaking in Italy on 14 March.

Greece’s finance minister, Yanis Varoufakis, speaking in Italy on 14 March. Photograph: Luca Bruno/AP

Tensions between the two countries have reached unparalleled heights in recent weeks with officials in both capitals lobbing rhetorical grenades.

Last week, Schäuble said the possibility of Greece exiting the euro could no longer “be ruled out” despite Merkel’s spokesman insisting that Athens’ place is in the Eurozone.

Surveys have shown Germans growing increasingly frustrated with Greeks. A poll published on March 13 by the public broadcaster ZDF found 52% of respondents (up from 41% a month earlier) no longer wanted Greece to remain in the single currency.

About 80% said they did not think the new Greek government was “behaving seriously toward its European partners”. Athens’s flamboyant finance minister, Yanis Varoufakis, raised tensions further when he was forced to publicly deny he had “given the finger” to Germany during a videoed talk given more than two years ago.

German anger over Greek demand for war reparations

Berlin incredulous at justice minister’s threat to seize German property and repatriate antiquities unless €341bn compensation is paid

Late on Monday, the Greek defence minister, Panos Kammenos, added to the pressure, claiming that German politicians were “against Athens” because it had raised the uncomfortable issue of reparations for Nazi atrocities committed during the second world war. Kammenos, who heads the coalition government’s junior partner, the right-wing Independent Greeks party, has said Berlin is waging a “psychological war” against Greece with the purpose of ejecting it from the Eurozone.

The bitter exchanges were exacerbated by enraged international inspectors from the EU and IMF complaining that the Tsipras government was failing to provide adequate protection as they visited Athens to audit public finances.

The anti-austerity coalition has refused to allow the technical teams to visit state buildings, instead insisting that they carry out the audit in hotels. Local media have photographed the inspectors – part of the deeply unpopular “troika” now rebranded the Brussels Group – being driven to subterranean garages in hotels where Greek officials have reportedly handed them government accounts.

German finance minister accuses Athens of destroying trust | Business | The Guardian

Monday, March 16, 2015

Germany and Greece should look to Goethe to resolve their standoff

Paul Mason Monday 16 March 2015

Two hundred years ago Germany’s great poet and statesman performed a U-turn that some would like to see Angela Merkel copy

A statue of Goethe.

A statue of Goethe. Photograph: Alamy

On a quiet street in central Athens stands the bronze, modernist facade of the Goethe Institut, which has been teaching German and spreading enlightenment about German culture since 1952. Last week, the Greek government threatened to seize the building, together with holiday homes and other German assets. Greece is claiming €341bn (£240bn) in second world war reparations from Germany – and if the government does not confiscate the Goethe Institut, there are numerous people in Athens ready to do it “from below”.

With Germany on the brink of vetoing any further debt forgiveness for Greece, the logic of angering Berlin more does not look obvious. To the uninitiated, the two countries’ animosity towards each other can seem inexplicable. Yet fascination with Greece is deep in the German psyche. And the way out of the standoff may lie in the example of Johann Wolfgang von Goethe himself: Germany’s great poet and statesman underwent his own U-turn on the issue of Greece, under the pressure of geopolitical events very similar to today’s.

Though we think of Greece as an economic crisis, it is also on a geopolitical fault line. To the north-east is Putin’s Russia. The Greek cultural affinity with Russia goes back centuries; the Greek left’s sympathies with Moscow are more recent, but very strong. The second world war resistance anthem belted out at Syriza rallies is actually the Soviet marching song Katyusha, with Greek words.

But on coming to power, Alexis Tsipras appointed a hard-right conservative to the defence ministry and pledged not to leave NATO. When that defence minister took to a military helicopter to oversee manoeuvres, Tsipras made sure a key Syriza politician was alongside him, wearing (to the amusement of some on the left) a Greek air force flying jacket. It was a signal, above all, to the Americans: Syriza’s commitment to NATO is real.

To the south-east lies the threat of Isis. The terrorist quasi-state is separated from Greece by a single, buffer country: Turkey – whose lack of resolution in fighting Isis was demonstrated during the battle for Kobani. In response, Tsipras has quietly positioned Greece as the first reliable country in the defence line against Isis. He has also pledged to maintain the old government’s alliance with Israel, and to honour a three-way gas exploitation deal signed with Israel and Cyprus.

But Greece has other options. Pro-Russian feeling among the population, combined with exasperation at the effects of Russia-EU sanctions on Greek agriculture, mean that, if Tsipras were to look to Moscow for financial support, it would be a wildly popular move. Meanwhile Greece has become the new likely route for Russian gas into Europe, after Putin abruptly cancelled a pipeline project to Bulgaria and announced a new one, running under the Black Sea to a hub on the Greek-Turkish border. So there is quiet US pressure on Germany to avoid pushing Greece away from Europe. According to one source, the words “our boys didn’t die on the beaches of Normandy for this” have been used in conversations between the State Department and the German foreign ministry.

The US is worried that Germany’s stance risks simultaneously pushing Greece into the Russian sphere of influence, and crippling its state as a military and intelligence partner against Isis. This, with supreme irony, looks almost exactly like the problem that confronted Goethe and a generation of German intellectuals in the 1820s.

The Greek rebellion against Turkish rule, which began in 1821, threatened to upset the entire diplomatic balance of the western world. It flew in the face of the treaty signed by the so-called Holy Alliance (Russia, Austria and Prussia) to suppress revolutionary movements in Europe. Plus it violated the German enlightenment’s ideal of freedom, which was understood as deriving from the rule of law. Under the influence of the philosopher Kant, the Germans who built central Berlin as an off-white replica of Athens believed all freedom came from obeying authority.

The Greeks fighting the Turks in a dirty war, revelling in their image as brigands and urging revolt across Europe, were seen in the Germany of the 1820s much as the German electorate views hordes of radical Greek youth punching the air and singing Katyusha – with distaste.

So Goethe, initially, opposed the Greek revolt. He feared Russian power would fill the vacuum if the Turks were beaten. And beyond that he feared it would spark further outbreak of revolution in Europe. What changed Goethe’s mind was the death of Lord Byron, fighting on the Greek side in 1824. In a sudden surge of creativity Goethe set to work on his unfinished drama Faust, modelling the central character now on Byron himself, and turning the second half of the work into a meditation on the nature of freedom.

His U-turn reframed the Greek “rule breaking” problem within a broader set of rules: the Christian west versus the Ottoman Empire. Goethe declared his support for the Greeks, in opposition to the will of his political masters in Germany.

Today, there are a growing number of diplomats in the Anglo-Saxon world who wish Angela Merkel would do a similar volte-face. The Germans’ intransigence on the Greek debt crisis is rooted in the same philosophical stance that initially guided Goethe’s generation: namely, that freedom derives from conformity to authority and the rules. But there was always another idea of freedom in the west – the one espoused by republican France, radical Britain and revolutionary America: that freedom exists in opposition to authority, and that the ultimate human right is to destroy the established order.

It’s strange to see a 200-year-old philosophical debate played out in the diplomatic backchannels of Nato, but that’s what is happening. If Germany’s cultural centre in Athens does end up draped in the banners of the anarchist left, then – in a way – it will be a fine testimony to the relevance of Goethe himself. And yet another example of the troubled psyche of this place called Europe.

Paul Mason is economics editor of Channel 4 News

Germany and Greece should look to Goethe to resolve their standoff | Comment is free | The Guardian

Saturday, March 14, 2015

Grexit would be 'beginning of the end' for Europe, warns EU chief

By Mehreen Khan Friday 13 March 2015

Greek prime minister insists on solidarity after Pierre Moscovici says "catastrophe" could emerge from strained debt negotiations

Alexis Tsipras called on Germany to repay Nazi war debts to Greece earlier this week

Alexis Tsipras called on Germany to repay Nazi war debts to Greece earlier this week Photo: EPA

A disorderly Greek exit from the Eurozone would mark "beginning of the end" for the currency union and spark a dangerous domino effect of market contagion across the continent, according to the EU's top finance commissioner.

Seeking to soothe talk of an "accidental" Grexit, Pierre Moscovici said any move to eject Greece from the bloc "would be a catastrophe - for the Greek economy, but also for the Eurozone as a whole."

"If one country leaves this (monetary) union, the markets will immediately ask which country is next, and that could be the beginning of the end," the former French finance minister told Der Spiegel magazine.

Mr Moscovici's comments come after days of fractious exchanges between Greece and its international creditors.

In the latest round of hostile words from Europe's largest debtor country, Germany's Wolfgang Schaeuble warned Athens' brinkmanship over implementing economic reforms could result in a "Grexident".

"To the extent that Greece is solely responsible and decides what is to happen, and we don't know exactly what Greek leaders are doing, we can't exclude it," said Mr Schaeuble.


The difference in tone from the European Commission and Berlin reflects a schism between Greece's creditors who have been split over the level of demands they wish to extract from the country.

Responding to the German rhetoric, Prime Minister Alexis Tsipras urged Europe to show solidarity with his country as it awaits the approval of a vital bail-out extension.

Striking a more optimistic tone, Mr Tsipras said: "we will find a solution because I strongly believe that this is our common interest.

"I believe that there is no Greek problem, there is a European problem."

Relations between the Leftist country and Germany have deteriorated after Mr Tsipras demanded the repayment of Nazi war reparations earlier this week.

Mr Schaeuble has also been the subject of an official complaint from Athens who accused the finance minister of making derogatory comments about his Greek counterpart Yanis Varoufakis.

But there were tentative signs of a thawing between the two sides, with reports suggesting Berlin was willing to stand down over its opposition to Greek plans to issue short-term debt to alleviate its funding crisis.

The European Central Bank has so far rebuffed Athens' requests to raise the ceiling on the issuance of Treasury bonds.

Instead the ECB has been drip feeding its emergency assistance (ELA) to Greece's banks which have suffered from rising deposit flight since Syriza came into power.

Wolfgang Schaeuble has been the subject of Greek complaints

In a further sign of stress among the country's lenders, Greece's Euro system funding reached a 13-month high of €104bn in February as banks became increasingly reliant on the ECB's emergency funds.

Bail-out funds worth €7.2bn have yet to be released to the cash-strapped government as creditors are pushing for further commitments to austerity and revenue raising measures in return for the cash.

Greece's central bank governor Yannis Stournaras warned the uncertainty risked "wasting the hard sacrifices" made by the country since it began implementing painful austerity in 2012.

Grexit would be 'beginning of the end' for Europe, warns EU chief - Telegraph

Friday, March 13, 2015

A German king, a Greek crown - historic roots of troubled ties

Friday, March 13, 2015 From Print Edition

BERLIN: Greece has railed against what it sees as German dominance since the 2010 start of the Eurozone financial crisis, but antagonism between the two countries can be traced back to the 19th century.

Historians point to the mid-1800s for spurring resentment in a newly-independent Greece, when a king from the southern German region of Bavaria ascended to the Greek throne.

His reign led to a prevalence of all things German that today may be the stuff of nightmares for Greece’s anti-austerity Prime Minister Alexis Tsipras — with the German language then used in state affairs as well as in the official newspaper.

In 1830, after 400 years under Ottoman Empire domination, Greece had become a sovereign state under the guardianship of colonial powers France, Britain and Russia, who “imposed on it a German king and an absolute king”, historian Olivier Delorme told AFP.

Otto became the first modern king of Greece but he knew “nothing of Greece”, Delorme said, explaining: “He arrives surrounded by Bavarians, who will run the country by treating the Greeks like flunkies.”

At the royal court, he said, it was the language of Goethe and Schiller that dominated, while Greek ministers were reduced to mere puppets, “only there to apply what the Bavarians dictate to them”.

The era came to be known in Greece as the “Bavariocracy”.

Athens’ Syntagma Square — where angry Greeks have protested swinging cuts in salaries and pensions over the past five years as the country has tried to reduce its debt mountain — also bears a German hallmark.

The parliament building was designed by the official architect of the court of Bavaria. It has been targeted by Greeks hitting out at austerity imposed by the hated “troika” of creditors, the European Commission, European Central Bank and the International Monetary Fund.

“With the crisis, I’ve seen this memory of Bavariocracy reactivated,” said Delorme, author of “Greece and the Balkans”.

“When one looks at what the troika is doing today, the Greeks see that as a re-run.”

Otto was forced off the thrown in 1862 but on his death bed, back in Germany’s green and mountainous Bavaria, his last words were “Greece, Greece, my dear Greece...”

More than 30 years later in 1898 Greece declared itself bankrupt and appealed for help from international lenders.

Fast forward to the 20th century when the brutal 1941-44 Nazi occupation of Greece produced a new depth of trauma with what Delorme called the “unleashing of savagery”.

The Nazi occupation was one of the bloodiest in Europe with Hitler’s forces rampaging, pillaging and shooting, and encountering a nation that fiercely resisted.

Like elsewhere in Europe, Greek villages were the scenes of massacres such as in Distomo on June 20, 1944 where 218 people were killed.

More than 50,000 Greek Jews were sent to the gas chambers.

Greek-German historian Hagen Fleischer said the occupation led to a mass famine, adding that “during the first winter, at least 100,000 Greeks died of hunger”.

“People made bread out of grass and soup with the straw from brooms,” according to Delorme.

“When, today, you have austerity policies which lead people to return to the soup kitchen, it’s also a complete revival of this memory.”

Germany has never really paid reparations for the Nazis’ crimes in Greece, Fleischer said, amid calls by Tsipras since his January election victory for German compensation.

The far-left premier said this week that his government was “choosing the path of negotiation. That is our duty to history, to the people who fought and to the victims who gave their lives to defeat Nazism.”

The Greek justice minister has said he is ready to approve a court ruling that could see property belonging to Germany’s archaeological school and the Goethe Institute seized as compensation.

At the height of the Eurozone crisis, Greece’s painful wartime past mixed with the suffering of many of its people sparked caricatures of Chancellor Angela Merkel dressed in Hitler garb.

But Germany remains a destination for many Greek emigrants — more than 300,000 live in Europe’s top economy.

While in the 1960s and 1970s Greek workers were often found manning the production lines of carmakers such as Volkswagen and Mercedes, today it is young Greek doctors and engineers who arrive in Germany to escape their country’s sky-high youth unemployment.

A German king, a Greek crown - historic roots of troubled ties - thenews.com.pk

Greco-German relations reach breaking point as ECB warned to stop 'asphyxiating' Athens

By Mehreen Khan 12 March 2015

Both sides trade insults as Yanis Varoufakis chastises ECB and Germany accuses Leftist government of "squandering trust"

European Union flag waves in front of the Parthenon Temple on Acropolis Hill in central Athens, Greece

Trust between the indebted country and Europe's largest creditor nation reached a nadir after incendiary comments made by Prime Minister Alexis Tsipras earlier this week. Photo: ANA-MPA

Relations between Greece and its creditors reached breaking point on Thursday as the country's finance minister accused the European Central Bank of "asphyxiating" the cash-strapped economy.

In a series of traded insults, Yanis Varoufakis said the ECB, which has tightened the noose on the Leftist government, was "pursuing a policy that can be considered asphyxiating toward our government."

His comments came before Germany's Bundesbank chief Jens Weidmann said Athens had "squandered the trust" of its European partners.

As one of Greece's main three international creditors, the ECB has rebuffed Athens' requests to raise short-term debt to alleviate an impending funding crisis.

Greece, which has yet to be granted access to €7.2bn in bail-out funds, is scrambling to pay €1.2bn in loans to the IMF before the end of the month.

Athens has also been seeking a €2bn increase in emergency funding for its banks as deposit flight has accelerated over the past month. According to reports, the central bank decided to raise the ceiling by just €600m on Thursday.

Greek lenders have been increasingly reliant on the expensive emergency funds from Frankfurt after the ECB stopped its ordinary lending to the country. The country's Euro system funding reached a 13-month high of €104bn, in February according to the Bank of Greece.

But Mr Weidmann, who sits on the ECB's governing council, said the assistance had to be "temporary" and could only continue as long as Greek lenders remained solvent.

German central bank chief Jens Weidmann has been an ardent opponent of Greek debt relief

In a further sign of a rapid deterioration of relations between both parties, the Greek government submitted an official complaint against German finance minister Wolfgang Schaeuble for comments he made about his Greek counterpart.

WATCH: What would happen if Greece left the Euro?

Mr Schaeuble, who has insisted Greece must submit to Eurozone conditions over its bail-out, was quoted as saying Mr Varoufakis was "foolishly naive" in his communication with creditors.

"As a minister of a country that is our friend and our ally, he cannot personally insult a colleague", said Constantinos Koutras, a spokesman for the Greek finance ministry, who confirmed Athens had lodged a complaint from its ambassador in Berlin.

Germany's Wolfgang Schauble - the Eurozone's disciplinarian - has called on all members to respect the rules of the union

Trust between the indebted country and Europe's largest creditor nation reached a nadir after incendiary comments made by Prime Minister Alexis Tsipras earlier this week.

Mr Tsipras reiterated his government's demand that Germany pay back more than €160bn in Nazi war reparations and touted the possibility of seizing German assets as compensation for the country's Second World War occupation.

In another indication that Athens' belligerence was isolating its fellow member states, former Belgian president Guy Verhofstadt accused the Syriza leader of "fuelling hatred between Greeks and Germans."

Greco-German relations reach breaking point as ECB warned to stop 'asphyxiating' Athens - Telegraph

Thursday, March 12, 2015

Greece demands Nazi war reparations and German assets seizures as creditor squeeze continues

By Mehreen Khan 11 March 2015

Prime Minister Alexis Tsipras revives claims for compensation in return for the crimes carried out by the Third Reich

PM Tsipras spoke during a debate reviving a parliamentary committee that would seek German World War II reparations Photo: AFP/Getty Images

Greece's prime minister has demanded Germany pay back more than €160bn (£112bn) in Second World War reparations as his country is squeezed by creditors to overhaul its economy in return for vital bail-out funds.

In an emotive address to his parliament, Alexis Tsipras said his government had a "duty to history, to the people who fought and to the victims who gave their lives to defeat Nazism."

The Leftist government maintains it is owed more than €162bn - nearly half the value of its total public debt - for the destruction wrought during the Nazi occupation of Greece.

"The government will work in order to honour fully its obligations. But, at the same time, it will work so that all of the unfulfilled obligations to Greece and the Greek people are met," said Mr Tsipras on Tuesday at a parliamentary debate on the creation of a reparations committee.

Syriza's leader added the atrocities of the Nazi occupation remained "fresh in the memory" of Greek people and "must be preserved in the younger generations."

Greece's demand for reparations centres on a war loan of 476m Reichsmarks the Greek central bank was forced to make to the Nazis. Athens is also calling for wider compensation for the destruction and suffering caused by the occupation.

The country's justice minister went further, threatening the seizure of German assets in order to compensate the relatives of Nazi war crimes.

Nikos Paraskevopoulos told Greek television he was willing to back a supreme court ruling which would lead to the foreclosure of German assets in Greece.

A spokesman for the German Finance Ministry dismissed the threats, saying there would be no negotiation over the war-time debts.

“We won’t be conducting any talks or negotiations with the Greek side,” said Germany’s Martin Jaeger when asked about the latest Greek demands.

“Making these emotional and backward-looking allegations doesn’t help in the context of the work we need to tackle together with the Greeks.”

The Third Reich famously subdued Greek resistance in a matter of weeks in 1941, after the country had held out for months against Mussolini’s Italian army.

The occupation that followed saw more than 40,000 civilians starved to death in Athens.

Germany maintains it has paid up all of its reparations to Greece in a post-war accord agreed in 1960.


The rhetoric comes as Athens prepares to open its books to its lenders in a bid to release €7.2bn in bail-out funds the country desperately needs to stay afloat.

Inspection teams from the European Central Bank, International Monetary Fund and European Commission, who have now been officially renamed as the "Brussels Group", are due to cast their eyes over the country's finances and begin technical work over the terms of the bail-out extension in the coming days.

Athens is scrambling to pay €1.3bn in loans to the IMF before the end of the month.

Greece demands Nazi war reparations and German assets seizures as creditor squeeze continues - Telegraph

Wednesday, March 11, 2015

Greece awarded financial breathing space with €550m lifeline

By Mehreen Khan 10 March 2015

Athens will be allowed to take back more than half a billion euros in rescue funds as it struggles to meet debt repayments

Greece's Leftist government faces loan redemptions of €1.3bn to the International Monetary Fund over the next 20 days Photo: Bloomberg

Greece's cash-strapped government will be able to tap more than half a billion euros in bank rescue funds, easing the pressure on the country as it scrambles to meet loan repayments due later this month.

Following a revision of the Eurozone's financial backstops, Athens will be eligible to receive more than €550m (£390.7m) from the Hellenic Financial Stability Fund (HFSF) - a bank rescue vehicle used to recapitalise the country's stricken lenders in 2012.

Klaus Regling, head of Europe's financial rescue fund, said the money was originally paid in by Greek banks before the country's bail-out in 2010, and creditors "had no legal claims" on it.

The cash injection could now help alleviate the squeeze on Greece's Leftist government, which faces loan redemptions of €1.2bn to the International Monetary Fund over the next 20 days.

Greece's economy minister told The Telegraph last month that his government had a number of options to stay solvent until April.

The government has touted plans to raid pension funds held at the central bank to meet its obligations to the IMF.

According to government officials quoted in the Financial Times, Syriza needs to find €1.5bn by the end of the month in order to make government wage and pensions payments.

Eurozone officials fear Greece could run out of money in a matter of weeks, amid a climate of deteriorating tax revenues and capital flight from its banks.

Greece's international creditors have tightened the noose on the nascent Syriza government in recent days.

Jeroen Dijsselbloem, head of the Euro group, warned the country to hasten the implementation of economic reforms in a bid to release the vital €7.2bn in bail-out funds needed to keep Greece afloat until June.


The European Central Bank has also taken a tough line with Athens, banning the acceptance on Greek bonds as collateral for its cheap loans.

Greece is now asking the ECB to raise the cap on the emergency funding (ELA) it provides to the country's banks as capital has fled the country.

The ECB could provide some relief for lenders at an emergency meeting to discuss ELA on Thursday, according to Bloomberg.

Greece awarded financial breathing space with €550m lifeline - Telegraph

Tuesday, March 10, 2015

Spend first, ask questions later: Greece is proof that debt economics doesn’t work

Peter Franklin

By Peter Franklin March 9, 2015

Well, that didn’t last long. The debt deal agreed between Greece and the Eurozone bosses last month is already unravelling. With the Euro group threatening to reject the Greek government’s effort at economic reform, the Greek finance minister has made a counter-threat of fresh elections or even a national referendum on the whole agreement.

As discussed on the Deep End last week, it’s easy for us to cast the Greeks as the victims and the Eurocrats as the villains of this drama. For the British right, the crisis confirms the wickedness of Brussels (and Frankfurt); while for the British left it provides proof that austerity economics doesn’t work.

However, in an article for Project Syndicate, Ricardo Hausmann refutes the notion that austerity is to blame for the weakness of the Greek economy:

“But the truth is that the recession in Greece has little to do with an excessive debt burden. Until 2014, the country did not pay, in net terms, a single euro in interest: it borrowed enough from official sources at subsidized rates to pay 100% of its interest bill and then some.”

Far from starving Greece of capital, membership of the EU and the Eurozone provided the country with unprecedented access to credit:

“…the problem is not that austerity was tried and failed in Greece… Insufficient spending was never an issue. From 1998 to 2007, Greece’s annual per capita GDP growth averaged 3.8%, the second fastest in Western Europe, behind only Ireland.”

For those of a fiscally un-conservative disposition this might look like evidence that Keynesianism works. Yet, this decade of debt-fuelled growth still left the country fundamentally broke:

“But by 2007, Greece was spending more than 14% of GDP in excess of what it was producing, the largest such gap in Europe – more than twice that of Spain and 55% higher than Ireland’s.”

In Spain and Ireland, the flood of credit was pumped into property markets (the sort of investment a country can do without). In Greece, however, the irresponsibility was undisguised with most of the borrowing going into straightforward unearned consumption.

Far from exemplifying the failure of austerity, Greece illustrates the pitfalls of Keynesianism (or at least the ‘spend first, ask questions later’ policies of those who claim that label). The idea that borrowing by governments will automatically find its way into productive investment is the trickle-down economics of the left:

The problem is that Greece produces very little of what the world wants to consume. Its exports of goods comprise mainly fruits, olive oil, raw cotton, tobacco, and some refined petroleum products… The country produces no machines, electronics, or chemicals. Of every $10 of world trade in information technology, Greece accounts for $0.01.

“…in 2008 the gap between Greece’s income and the knowledge content of its exports was the largest among a sample of 128 countries.”

Of course, productive investment requires debt too (or some other means of accessing capital). However, thanks to the unmerited influence of macroeconomists on public policy, governments have assumed that if they can pump enough cheap credit into the economy, the right investment opportunities will naturally present themselves.

The experience of Greece, Spain, Ireland and, indeed, our own country, shows that this is the central economic fallacy of our time.

Spend first, ask questions later: Greece is proof that debt economics doesn’t work | Conservative Home