Friday, July 31, 2015

Tsipras embraces troika while quelling Greek party rebellion


The troika has a new enforcer: Alexis Tsipras.

His finance minister, Euclid Tsakalotos, will welcome representatives from the European Union, International Monetary Fund and European Central Bank at 10 a.m. Friday while the premier focuses his attention on stamping out an internal rebellion. It’s the first time since SYRIZA swept to power in January that the loathed trio get access to a cabinet member.

After railing against austerity, the Greek leader has come to accept it as a necessary evil to keep Greece in the euro. The U-turn leaves Tsipras on the same path trodden by predecessors including arch-enemy Antonis Samaras, who at one time he had blasted for kowtowing to creditors’ demands.

“Whoever thinks another government and another prime minister would do better, they should speak up,” Tsipras, 41, told his party members in Athens Thursday. “If someone thinks that this agreement is the worst compared to the previous bailouts, they should speak up and explain why.”

After winning massive public support for rejecting more belt-tightening, Tsipras folded in the aftermath of bank closures and capital controls. He signed up for more cuts as the only way to get an 86 billion euros ($94 billion) rescue loan.

The reversal left him at odds with own rank and file in a showdown that could put Europe’s most indebted state on course for snap elections.

SYRIZA mutiny

Speaking to the central committee of the SYRIZA governing party, Tsipras challenged critics to hold a party ballot on Sunday if they reject his decisions. In a show of hands, the committee backed his call for an emergency congress in September. The meeting was called after about a quarter of the party’s lawmakers rejected Tsipras’s move to seek a new bailout.

Opposition to the bailout is strongest in the Left Platform of Syriza, led by former energy minister Panagiotis Lafazanis. It accuses Tsipras of violating the mandate voters gave him in January and in a July 5 referendum that saw Greeks oppose more spending cuts. Lafazanis was replaced as energy minister after leading a revolt against the new agreement.

The uprising has forced Tsipras to rely on opposition support to pass policies demanded by creditors.

“After abandoning earlier vows of unity, both sides appear to be preparing for a showdown today that could even split the party,” Paris Mantzavras and George Grigoriou, analysts at Athens-based Pantelakis Securities SA, wrote in a note to clients Thursday.

Party split

Eurasia Group analyst Mujtaba Rahman said a “formal split within SYRIZA is only a matter of time.”

Left Platform dissenters, publishing their views on Iskra, a website named after a newspaper managed by Russian revolution leader Vladimir Ilyich Lenin, have called on Tsipras to annul a July 12 agreement with creditors, and lead the country out of the euro area. Other prominent SYRIZA lawmakers, including Parliament Speaker Zoi Constantopoulou, have joined them in voting against the deal.

Constantopoulou said earlier this month that the measures Germany and other creditors are asking Greece to implement constitute “a crime against humanity” and “social genocide.”

Tsipras fought back on Wednesday, telling Sto Kokkino radio that the alternative to July’s agreement would be the collapse of Greece’s financial system.

“If I did what my heart was telling me to do, get up and leave, the very same day the branches of Greek banks abroad would fall,” Tsipras said. “Within 48 hours,” Tsipras added, the ECB would pull the plug of emergency loans from Greek lenders, “which would mean, at first, the collapse of Eurobank, then possibly the National Bank of Greece, and, maybe, along the way -- the rest of the banks.”

The IMF on Thursday reiterated its support for one of Tsipras’s central arguments, that Greece needs debt relief in order to stabilize its public finances. Standing in the way is Germany, the country that has loaned Greece the most. IMF executives won’t support disbursing more aid to Greece without an explicit, concrete commitment from the euro area to ease the country’s debt burden, a fund official told reporters.

Tsipras embraces troika while quelling Greek party rebellion | News |

Wednesday, July 29, 2015

Supreme Court Brings Lawsuits Against Varoufakis to Greek Parliament

By Philip Chrysopoulos - July 28, 2015

Varoufakis_Supreme CourtGreece’s Supreme Court forwarded two lawsuits filed by Greek citizens against Yanis Varoufakis to parliament, which must now decide whether the former Minister’s immunity should be lifted so that he can stand trial.

The lawsuits were filed by Stylida Mayor and “Teleia” party head Apostolos Gletsos and lawyer Panagiotis Giannopoulos. The two men filed the lawsuits after the tapes of a Varoufakis speech revealed his scheme to set up a secret parallel payment system and push for the return to a national currency.

The former Minister’s plan created an uproar among opposition parties who demanded that Varoufakis is kicked out of SYRIZA. Some PMs even accused him of treason, while several coalition MPs openly criticized Varoufakis’ statements and suggested that the Prime Minister removes him from the party.

Varoufakis defended himself speaking to The Financial Times on Tuesday, saying that all he wanted was to generate a scheme that would help Greece overcome liquidity problems. However, the plan included hacking in to taxpayers’ accounts.

“Given the absence of a central bank to support the state’s endeavours, the Greek government’s arrears to the private sector (individuals and companies) have been perpetually deflationary since 2008,” argued the former Finance Minister.

“Arrears… consistently exceeded 3% of gross domestic product for five years. Meanwhile, a feedback effect boosts tax arrears which, in turn, reinforce the cycle of generalized liquidity,” he said.

“Our simple idea was to allow for multilateral cancellation of arrears between the state and the private sector using the tax office’s existing web-based payments platform,” Varoufakis explained.

“A reserve account could be created per tax file number on the tax office’s web interface and be credited with arrears owed by the state to that individual or organization. Tax file number holders would be able to transfer credits from their reserve account either to the state (in lieu of tax payments) or to any other tax file number reserve account,” he said.

Varoufakis went on to blame creditors for Greece’s financial woes and put most of the blame in Eurozone policies and practices: “There is a hideous restriction of national sovereignty imposed by the Troika of lenders upon Greek Ministers who are denied access to departments of their Ministries, pivotal in implementing innovative policies.”

“When sovereignty is lost, due to unsustainable official debt, yields suboptimal policies in already stressed nations, one knows that there is something rotten in the euro’s kingdom,” he said, paraphrasing Shakespeare.

Supreme Court Brings Lawsuits Against Varoufakis to Greek Parliament |

Greek Economy Faces Total Collapse As Doctors Flee, Retail Sales Plunge 70%

Submitted by Tyler Durden on 28/07/2015

Back in May we outlined the cost to the Greek economy of each day without a deal between Athens and creditors.

At the time, a report from the Hellenic Confederation of Commerce and Enterprises showed that 60 businesses closed and 613 jobs were lost for each business day that the crisis persisted without a resolution. 

Since then, things have deteriorated further and indeed, with the imposition of capital controls, businesses found that supplier credit was difficult to come by, leading to the very real possibility that Greece would soon face a shortage of imported goods, something many Greeks clearly anticipated in the wake of the referendum call as evidenced by the lines at gas stations and empty shelves at grocery stores.

As a reminder, here’s what WSJ said earlier this month

Wholesalers can’t pay for supplies. Importers’ foreign counterparts won’t trade.

Greece’s cash crunch hit small merchants first. They are less able to get credit from their suppliers, especially those dealing in perishable products that are continually imported. Christos Georgiopoulos owns a gourmet supermarket in Plaka, a picturesque Athens neighbourhood frequented by tourists. He sells Champagne and Russian crab legs.

Nobody is buying. "I haven’t had a single customer in two days," he said Wednesday. He is shutting down his shop and says he doesn’t know when he will reopen. He gave some crab legs to his workers and is taking some home. "I haven’t paid my staff and don’t know if and when I will," he added.

And then there was this rather disconcerting commentary from AFP:

Greece's dive into financial uncertainty is forcing struggling businesses to take unusual steps to survive, including hoarding euros in cash.

Businesses which import their raw materials have been the hardest hit, says Vassilis Korkidis, head of the National Confederation of Hellenic Commerce (ESEE).

As unease spreads, getting ones hands on cash has become a sort of national sport, with businesses from restaurants to car mechanics telling customers paying by card is no longer an option.

The inevitable result of the above is that banks’ already stratospheric NPLs are set to rise further meaning that with each passing day, the banking sector’s recapitalization needs grow as the economy sinks further into depression. 

Perhaps now that the "Quadriga" (the new moniker for Athens’ creditors which was ostensibly adopted to reflect the fact that there are now four institutions involved rather than three but which incidentally conjures images of the triumphant statue atop the Brandenburg Gate in Berlin) has touched down in Athens, creditors’ "technical teams" will get a good hard look at what happens when you force deep fiscal retrenchment on a country whose economy is collapsing and then rub salt in the wound by cutting off liquidity and enforcing capital controls. 

Here’s some colour on just how dire the economic situation has become, via Kathimerini:

Turnover in retail commerce is posting an annual drop that in some cases amounts to 70 per cent even though the market is in a sales period. Capital controls have prevented Greek consumers from shopping, while even foreign tourists appear reserved due to the increased uncertainty on developments in Greece.

An extraordinary meeting of the board of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE) on Monday heard data from representatives of local associations that pointed to an annual drop of between 40 and 70 per cent since the capital controls were imposed.

In Athens, the decline came to 40 per cent, while in markets outside the city centre it was even greater. Thessaloniki and Piraeus reported a 60 per cent fall and Trikala, in central Greece, a 60-70 per cent shrinking. Even tourism hotspots such as Rhodes had a 50 per cent decline in turnover.

And a bit more from Greek Reporter:

The Athens Medical Association (ISA) warned about major shortages in medical staff over the next years, since an increasing number of Greek doctors, especially those working in highly specialized fields, and nurses are looking for jobs abroad and leaving the country.

According to the association’s figures, more than 7,500 doctors have migrated to other countries since 2010. It was reported that in the first six months of 2015, ISA issued 790 certificates of competence, an official document required for medical sector employees who wish to work abroad. However, the report also noted that up until 2009, on average, 550 doctor were taking jobs abroad each year.

"One of the biggest losses in the crisis has been that of great minds," ISA chief Giorgos Patoulis stated to Greek newspaper Kathimerini. "In a short time, the national healthcare system will have an aged personnel and will be unable to staff services."

Furthermore, the data showed that a total of 8,000 unemployed Greeks have been forced to look for job opportunities abroad. The Greek Nurses Union announced that it issued 349 certificates just last year, 357 in 2012 and 74 certificates in 2010.

And don't expect this situation to improve any time soon because despite the passage of two sets of prior bailout measures, still more austerity will need to be pushed through the Greek parliament if Athens hopes to activate bailout funds by August 20, in time to make a €3.2 billion payment to the ECB. Here's Reuters: 

"More reforms are expected from the Greek authorities to allow for a swift disbursement under the ESM. This is also what is being discussed right now," [and EU Commission spokesperson] said.

The banks have reopened after the ECB increased emergency funding but capital controls remain in place. Doubts persist about whether a severely weakened Greek economy can support another programme after a six-year slump that has cut output by a quarter and sent unemployment over 25 per cent.

Among politically sensitive measures held back from the initial package were curbs on early retirement and changes in the taxation of farmers to close loopholes that are highly costly for the Greek state. A source close to the talks said these reforms were expected to be enacted by mid-August.

However, touching pensions is sensitive with Tsipras's left-wing Syriza party, which has already suffered a substantial revolt over the Brussels agreement, and the main opposition New Democracy party opposes ending tax breaks for farmers.

In other words, Tsipras is about to go back to parliament and attempt to pass a third set of prior actions that will further imperil Greeks' ability to spend, and he must do so quickly because if creditors aren't satisfied with the progress by August 18, then paying the ECB won't be possible and then it's either tap the remainder of the funds in the EFSM (which would require still more discussions with the UK and other decidedly unwilling non-euro states) or risk losing ELA which would trigger the complete collapse of not only the economy but the banking sector and then, in short order, the government.

And through it all, Tsipras is attempting to beat back a Syriza rebellion (which will only be exacerbated by the upcoming vote on the third set of measures) while convincing the opposition that he's not secretly backing the very same Syriza rebels in their attempts to forcibly take the country back to the drachma. 

The only real question at this point is whether Greece can possibly navigate the next several months without descending into outright chaos, politically, economically, and socially.

Greek Economy Faces Total Collapse As Doctors Flee, Retail Sales Plunge 70% | Zero Hedge

Brussels rejects Yanis Varoufakis' claims that troika controlled Greek tax system

Helena Smith in Athens Wednesday 29 July 2015

Allegations of covert scheme described as ‘simply not true’ by European commission as Alexis Tsipras looks to conclude third bailout deal with creditors


Yanis Varoufakis had claimed in a private conference call that ‘the general secretariat is appointed, effectively, through a process that is troika-controlled’. Photograph: Louisa Gouliamaki/AFP/Getty Images

The European commission has denounced as “false and unfounded” claims by Greece’s former finance minister Yanis Varoufakis that international creditors had exclusive control over the country’s tax system.

Brussels slammed the suggestion that external supervision of the Greek tax revenue agency forced Varoufakis to consider hacking the ministry’s computers as part of a secret plan to devise a parallel payment system for the nation.


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“On what Mr Varoufakis has been saying, the allegations that the troika was controlling the secretariat general of public revenues are false and unfounded,” said Mina Andreeva, a spokeswoman for the European commission, referring to the triumvirate of lenders propping up the near bankrupt Greek economy. “The secretariat general of public revenue is a quasi-independent entity, responsible for tax administration, that is formally part of the Ministry of Finance.”

While creditors at the European commission, European Central Bank and International Monetary Fund provided the tax system with technical assistance, it was “simply not true” that lenders controlled it, she added.

The denunciation added a new twist to revelations that have shaken Greece after it emerged that Varoufakis, who resigned this month, had drawn up contingency plans outlining an alternative monetary system in the event of Athens being ejected from the Eurozone.

To create the parallel system – one that would allow the debt-stricken country to leave the euro “at a drop of a hat” – Varoufakis admitted that he had to hack his own ministry’s computer system to access individual tax codes controlled “fully and directly by the troika.”

The confession was made during a private conference call with investors that was subsequently revealed in the Greek media.

“It was not under control of my ministry,” Varoufakis was quoted as saying. “It was controlled by Brussels. The general secretariat is appointed, effectively, through a process that is troika-controlled and the whole mechanism within.”

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The revelation of the covert scheme has added weight to speculation that prime minister Alexis Tsipras’s left-wing government had planned to drop the euro even as it conducted fraught negotiations over further financial assistance with creditors. Government insiders have refused to be drawn on the former finance minister’s claims.

On Tuesday, the Greek media quoted prime ministerial aides as saying they had “tired” of Varoufakis. The prime minister, who turned 41 this week, is keen to conclude a third bailout with the EU and IMF that would unlock as much as €86bn (£61bn) in fresh loans to keep the country afloat.

Varoufakis is opposed to the stringent spending cuts and tax increases Athens has to agree to in exchange for the aid. With Greek banks operating under capital controls and the international standing of Athens damaged after months of acrimonious talks with creditors, largely overseen by Varoufakis, calls are also growing for the academic-turned-politician to be tried for high treason.

On Tuesday night, supreme court prosecutor Efterpi Koutzamani forwarded two suits filed against Varoufakis by private individuals to parliament – a move that could see the 300-seat House lifting his political immunity, the first step towards him standing trial.

The revelations overshadowed the start of an inspection tour in Athens by technical teams representing foreign lenders. Mission heads with the EU and IMF arrive in Athens on Wednesday and are expected to be greeted with draconian security as they try to gauge the parlous state of the Greek economy.

Athens urgently needs emergency funds to avert defaulting on 20 August when it must meet a €3.4bn bond repayment to the ECB. Although capital controls are not expected to be lifted for several months, there were reports on Tuesday suggesting that the Athens stock exchange, which like banks had also been closed, would reopen later in the week. Lenders opened their doors 10 days ago after a three-week shutdown.

Brussels rejects Yanis Varoufakis' claims that troika controlled Greek tax system | Business | The Guardian

Tuesday, July 28, 2015

Greece's Plan B: Varoufakis confirms secret parallel currency plan

Source: Reuters 28 July 2015

Yanis Varoufakis

Former Greek Finance Minister Yanis Varoufakis has confirmed he had made secret preparations to hack into citizens' tax codes to create a parallel payment system after the disclosure provoked shock and disbelief in Greece.

However, the self-proclaimed "erratic Marxist" academic, in office until July 6, sought to play down the initiative as a contingency plan that had never been implemented.

Greece was on the verge of tumbling out of the euro single currency before striking an 11th-hour deal on July 13 that imposes a new round of austerity measures in return for talks on a third international bailout.

Varoufakis' comments prompted the pro-European opposition to demand that Prime Minister Alexis Tsipras disclose the extent of planning for "Grexit" - which his government has repeatedly said it refused to consider. The furore piled new pressure on a premier struggling to contain a leftist party revolt.

In a conference call with the London-based OMFIF think-tank, recorded on July 16 but released on Monday, Varoufakis outlined his secret planning and also accused German Finance Minister Wolfgang Schaeuble of being "bent on effecting a Grexit" - forcing Athens to leave the currency area.

In the recording Varoufakis said Prime Minister Alexis Tsipras had "given me the green light to come up with a Plan B" before coming to power in January and he had assembled a five-person team led by U.S. economist James Galbraith to work covertly.

"We were planning to create, surreptitiously, reserve accounts attached to every tax file number, without telling anyone, just to have this system in a function under wraps," he said, adding that "of course this would be euro-denominated but at the drop of a hat it could be converted to a new drachma."

At one point, the moderator cautioned Varoufakis that other people were listening to the teleconference but would not repeat its contents. The former finance minister replied: "I know they are. And even if they do I will deny I said it."

He went on to elaborate on plans to hack into his own ministry's software to copy tax systems code, saying he had recruited a childhood friend who was a software expert to help with the planning.

In a statement from his office posted on his blog, Varoufakis defended the comments as essential contingency planning and attacked the media for indulging in "far-fetched articles that damage the quality of public debate".

"Greece's Ministry of Finance would have been remiss had it made no attempt to draw up contingency plans," the statement said, adding the unit worked within government policy and its recommendations were aimed at keeping the country in the euro zone.

In a separate statement posted on Varoufakis' blog, Galbraith said he had worked unofficially in an unpaid capacity on the basis that the government was committed to negotiating within the euro zone and the team kept its work secret to avoid jeopardizing that.

Apart from one chat with far-left lawmaker Costas Lapavitsas, who has openly called for a return to the drachma, Galbraith said the group had no cooperation with the radical Left Platform of Syriza and wrapped up its work in May.

Varoufakis has said his proposal for an "aggressive" response to the closure of Greek banks and the introduction of capital controls on June 28, after Athens rejected an earlier bailout proposal, was outvoted, leading to his resignation.

The opposition New Democracy party demanded that Tsipras answer questions in parliament on the plan while the centrist To Potami party also demanded that the prime minister say whether and what he knew of the plan.

"Opportunism which results in criminal action is not a party secret and should not be concealed," To Potami said.

Greece's Plan B: Varoufakis confirms secret parallel currency plan | SBS News

Greek ex-finance minister scandal overshadows bailout talks


Greek Finance Minister Yianis Varoufakis briefs the media after his meeting with Swiss Deputy Minister for International Financial Affairs Jacques de Watteville in Athens on April 28, 2015. LOUISA GOULIAMAKI/AFP/Getty Images

ATHENS, Greece -- Greece's government on Monday launched complex bailout negotiations with creditors, but faced rebuke following revelations that former finance minister, Yanis Varoufakis, formed a secret committee to plan for the possible conversion of euros into drachmas "at a drop of a hat."

Finance Minister Euclid Tsakalotos said late Monday that meetings in Athens had begun between Greek officials and negotiating teams representing creditors, with talks to intensify Tuesday, paving the way for higher level discussions possibly by the end of the week.

Before the talks started in Athens, a recording of Varoufakis discussing a parallel currency plan was made public.

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Opposition parties have criticized Varoufakis and have urged Prime Minister Alexis Tsipras to explain to lawmakers what he knew of his former finance minister's actions.

In the recording of a telephone briefing for investors on July 16 in the wake of his resignation days earlier, Varoufakis claimed he and a childhood friend who was a computer expert hacked into his ministry's computer systems as a first step to creating "a parallel banking system" in the event Greek banks were shuttered.

The Greek banks were closed on June 29 to avoid a bank run amid fears that Greece was heading for a euro exit. In theory, a parallel system formed from the effective cloning of tax accounts would have allowed the finance ministry to continue payments in the form of so-called IOUs.

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Varoufakis said he had been authorized by Tsipras to undertake the planning prior to the general election in January when the radical left Syriza party swept to power. And he insisted that his actions were legal, in the public interest and aimed at keeping the country in the 19-country Eurozone.

In essence, the plan, which Tsipras ultimately blocked, would have created a "functioning parallel system" to give the government "some breathing space."

"It would be euro-denominated but at the drop of a hat it could be developed to a new drachma," Varoufakis said.

Varoufakis confirmed the authenticity of the recording, which was released by the briefing organizers, London-based Official Monetary and Financial Institutions Forum.

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The revelation that Varoufakis was working on a Plan B over Greece's future was one of many in a wide-ranging discussion on the Greek crisis. He also said that German Finance Minister Wolfgang Schaeuble wanted Greece to leave the euro but that his boss, Chancellor Angela Merkel, was against so-called Grexit.

The recording prompted an outcry among opposition parties.

The main conservative opposition, New Democracy, accused Varoufakis of "dark methods that threaten democracy" and summoned Tsipras to brief parliament.

Tsipras, who is already facing a revolt within his radical left Syriza over a raft of austerity measures required by creditors for the talks to actually begin, is under pressure to call early elections once the bailout discussions are completed.

The technical discussions on a wide array of issues such as pensions and labor market reforms are designed to clear the path for high-level discussions between Greek ministers and senior European Union and International Monetary Fund officials later this week.

After passing a series of reforms demanded by creditors, such as steep sales tax hikes, the Greek government is hoping negotiations will be completed by Aug. 20 when the country has a big debt repayment of around 3.2 billion euros ($3.5 billion) to make to the European Central Bank.

Without the money from the expected three-year bailout totalling around 85 billion euros, Greece would be unable to make that payment - a development that would likely trigger fresh fears over the country's future in the euro.

But the reforms have come at a price for Tsipras. One in four of his lawmakers refused to back them in two votes in parliament, arguing that they flew in the face of Syriza's anti-austerity platform in January's election.

The laws were passed with solid backing from pro-European opposition parties, but left Tsipras without an effective parliamentary majority. That has stoked talk of early elections, just six months into Tsipras' four-year mandate.

"We must seal the (bailout) agreement and immediately afterwards launch an electoral process," said senior Syriza official Dimitris Vitsas, who is the deputy defence minister. "After that (there will be) a new government with a fresh mandate.

Mina Andreeva, a spokeswoman at the European Commission, said teams from the institutions are "now already on the ground in Athens and work is starting immediately."

She added that, while Athens has already delivered "in a timely and overall satisfactory manner" the reforms demanded for the talks to start, more will be required to secure a swift rescue loan disbursement.

"And this is also what is being discussed right now."

Greece has relied on bailout funds for a little more than five years after being locked out of international bond markets. In return for around 240 billion euros worth of rescue money, successive Greek governments have had to enact a series of income cuts, tax hikes and economic reforms.

Though the measures drastically contained budget overspending, they hit economic activity hard and drove unemployment to record peacetime highs. And because the Greek economy is around 25 per cent smaller than it was, the country's debt burden has increased to around 170 per cent of Greece's annual GDP.

Some sort of debt relief for Greece is up for negotiation though a direct cut in the amount owed is off the agenda. The IMF has said Greece needs big relief and has advocated delaying Greek debt repayments to European creditors for many years.

ECB executive board member Benoit Coeure said in an interview published Monday that Greek debt relief "is no longer a matter of debate" but must come alongside measures to turn the Greek economy around.

"In truth, the question is not whether Greek debt should be restructured, but how to do it so it really benefits the country's economy," he told French daily Le Monde.

© 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Greek ex-finance minister scandal overshadows bailout talks - CBS News

Monday, July 27, 2015

Greece rocked by reports of secret plan to raid banks for drachma return

Staff and agencies Monday 27 July 2015

Opposition demands answers after covert proposals attributed to Yanis Varoufakis and fellow ex-minister highlight deep split in Syriza party


Yanis Varoufakis (left) has opposed the bailout deal struck by Alexis Tsipras. Photograph: Alkis Konstantinidis/Reuters

Some members of Greece’s leftist-led government wanted to raid central bank reserves and hack taxpayer accounts to prepare a return to the drachma, according to reports that highlighted the chaos in the ruling Syriza party.

It is not clear how seriously the government considered the plans, attributed to former energy minister Panagiotis Lafazanis and ex-finance minister Yanis Varoufakis. Both ministers were sacked this month. However, the revelations have been seized on by opposition parties who are demanding an explanation.

The reports on Sunday came at the end of a week of fevered speculation over what Syriza hardliners had in mind as an alternative to the tough bailout terms Tsipras has reluctantly accepted to keep Greece in the Eurozone.

About a quarter of the party’s 149 MPs rebelled over proposals to pass sweeping austerity measures in exchange for up to €86bn (£60bn) in fresh loans. Tsipras has been struggling to hold the party together.

In an interview with Sunday’s edition of the RealNews daily, Lafazanis said he had urged the government to tap the reserves of the Bank of Greece in defiance of the European Central Bank.

Lafazanis, the leader of a hard-line Syriza faction that has argued for a return to the drachma, said the move would have allowed pensions and public sector wages to be paid if Greece were forced out of the euro.


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“The main reason for that was for the Greek economy and Greek people to survive, which is the utmost duty every government has under the constitution,” he said.

In a separate report in the conservative Kathimerini newspaper, Varoufakis was quoted as saying that a small team in Syriza had prepared plans to secretly copy online tax codes. It said the “plan B” was devised to allow the government to introduce a parallel payment system if the banks were closed down.

In remarks which the newspaper said were made at an investors’ conference on 16 July, Varoufakis said passwords used by Greeks to access their online tax accounts were to have been duplicated secretly and used to issue new PIN numbers for every taxpayer to be used in transactions with the state.

“This would have created a parallel banking system, which would have given us some breathing space, while the banks would have been shut due to the ECB’s aggressive policy,” Varoufakis was quoted as saying.

Varoufakis stood down this month to facilitate bailout talks. He has been a strident opponent of the deal ever since.

Under the secret plan, which the report said was devised before Tsipras was elected in January, transactions through the parallel system would have been nominated in euros but could easily change into drachmas overnight.

Varoufakis told the Daily Telegraph that the quotes were accurate but some reports in the Greek press had been twisted, making it look as if he had been plotting a return to the drachma from the start.

“The context of all this is that they want to present me as a rogue finance minister and have me indicted for treason. It is all part of an attempt to annul the first five months of this government and put it in the dustbin of history,” he said.

The deputy finance minister Dimitris Mardas denied the government had ever discussed plans to take Greece out of the euro. “I have repeatedly said that such discussions have never taken place at a government policy level,” he told SKAI television.

Greece rocked by reports of secret plan to raid banks for drachma return | World news | The Guardian

Saturday, July 25, 2015

This Is the End of the Line for Syriza

By Dimitris Dalakoglou, VU University Amsterdam* July 25, 2015


Greek banks have reopened after weeks of closure. The patient and orderly way customers queued outside to use ATMS during the big shut down was an impressive sight, especially for those people who are fond of considering Greek people as somehow incapable of doing things right.

But nothing is harmonious. The queues outside the job centres are as long as ever, while many of the shops that shut down at the same time as the banks, still haven’t reopened. Anti-austerity and anti-governmental protests have started to take place for the first time since Syriza came to power. Dozens were arrested as the Greek parliament voted to accept a new bailout deal from Europe, based on the very terms that were rejected just days earlier in a national referendum. Fresh riots took place as the parliament passed a law that allows the confiscation of people’s homes.

As Syriza burns its bridges with the general public, life for the majority of people has returned to hopeless normality – indeed, many people have spent more time talking about the wildfires that have broken out around the country than the troika in the past few days.

Greece’s ruling party might be called the coalition of the radical left but it seems to be rejecting a basic argument put forward by activists at that end of the political spectrum for years: It is impossible to transform this unequal, structurally and physically violent world into a better place if you try to do it via the institutional route. State governance, the parliamentary system, prime ministerial meetings and the rest are all the enemies of meaningful change.

Perhaps to a certain extent Syriza’s leaders were aware of the risks they were taking when they sought to continue negotiating with Europe. They could end up crossing the political spectrum to join the rest of the austerity governments or, less likely, be overthrown for failing to comply with the requests of creditors and international bankers.

Players in the neoliberal system have never been afraid of drawing blood – and Greek history has quite a few examples. The left has often been brutalised in order to protect capitalist forms of governance. This is what happened during the military coup of 1967. And although such extremes are unlikely these days, the bailout debacle has introduced Syriza’s leadership to real politics.

Just after prime minister Alexis Tsipras agreed to the terms presented to him by Greece’s international creditors, the IMF, itself part of the deal, spoke out against what was on offer. Greece, it argued, would never be able to pay its debts under the terms being put forward. Very soon followed the German minister of finance who made it publicly known that he does not think the programme proposed by his own government will work.

And yet this was the route taken by EU leaders. Syriza argues that the Greek government chose these new catastrophic terms and conditions instead of a much more catastrophic option. This is precisely how high-level politics works behind closed doors. There is blackmail and there are threats. One can only wonder why Syriza would have expected anything else.

Many believe Tsipras was forced into agreeing to the terms but Syriza is not innocent in this situation. It continues to glorify the Eurozone and still prioritises paying back a supposedly national debt that ends up bailing out the Greek and European banking sector.

Moreover, Syriza’s belief in national unity also reflects the mistakes long made by the Greek left. The Greek population includes both massively impoverished social classes and a corrupted few who get richer every day. The latter group has no interest in an even slightly fairer system than extreme austerity for the poor and state generosity for the rich.

At least amid all the confusion there is clarity in one respect. Voters are seeing that Syriza’s parliamentary victory does not mean the end of austerity and poverty. Even Syriza’s own youth group publicly denounced the new loan agreement.

The deep division between the government and people is opening again. Since Syriza’s election in January 2015, significant parts of the grassroots movement that opposed austerity – from solidarity and protest groups to immigrant support initiatives and unions – had remained somewhat inactive. They had slipped into a lethargic state, expecting a smoother state of affairs with Syriza at the helm of the austerity-ridden country. But the scales have fallen and those who were sympathetic to this new government are losing again faith in politics from above.

*Dimitris Dalakoglou is a Professor of Social Anthropology at VU University Amsterdam. This article first appeared on The Conversation.

This Is the End of the Line for Syriza |

© Copyright 2014 -

The great Greece fire sale

Jennifer Rankin in Brussels and Helena Smith in Athens Saturday 25 July 2015

Greece needs to sell off €50bn worth of state assets such as airports and marinas quickly as part of its third bailout deal. But is such a plan realistic?

The neglected, overgrown beach volleyball stadium in Athens. Most of the newly constructed stadiums for the 2004 Games now lie abandoned.

The neglected, overgrown beach volleyball stadium in Athens. Most of the newly constructed stadiums for the 2004 Games now lie abandoned. Photograph: Milos Bicanski/Getty Images

In the early days of the Greek debt crisis, two German politicians came up with a radical solution: Greece should sell off some of its uninhabited islands and property to pay back its creditors. “Sell your islands you bankrupt Greeks! And sell the Acropolis too!” was how the German tabloid Bild summed up their idea.

While selling off ancient monuments was never a serious idea, the privatisation of state assets has always been an integral feature of Greece’s international bailouts. Over the past five years, Greece has faltered on promises to sell vital parts of its infrastructure – ports, airports, marinas and waterworks – in exchange for billions of euros in loans.






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Privatisation remains a vital element of Greece’s latest bailout deal. Under threat of being forced out of the Eurozone, Athens agreed to transfer “valuable assets” to an independent fund, with the aim of raising €50bn (£35bn). Half the proceeds will be used to shore up capital reserves at Greek banks; a quarter will be used to repay Greece’s creditors, and the remainder will be spent on unspecified investments.

The privatisation fund was the issue that almost forced a Grexit at the marathon 17-hour, all-night summit of European leaders in Brussels earlier this month. “It was the only thing discussed at the summit,” recalls one diplomat.

At 6am, as Greece teetered on the brink of leaving the euro, the Greek prime minister, Alexis Tsipras, was still haggling over privatisation details with his counterparts, Angela Merkel and François Hollande.

The idea of the privatisation fund first emerged in a leaked German government paper which argued Greece should leave the Eurozone if it did not agree to put €50bn in a Luxembourg fund as collateral for its debts. Although drafted in Berlin, the plan soon found support among Greece’s hard-line creditors in central Europe and the Baltics.

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Tsipras wrung two concessions: the fund would be run from Athens, not Luxembourg, and a tranche of the cash would be earmarked for investments in Greece.

The privatisation fund is likely to remain one of the most contentious issues as Greece and its creditors strive to conclude bailout talks by mid-August.

From the creditors’ perspective, Greek privatisation has been failure heaped upon failure. In 2011, international creditors decreed that Athens would raise €50bn by the end of 2015 from selling state assets. By early 2015, only €3.2bn had been raised; none of the most sensitive aspects – airports, ports, railways – had been sold. Neither officials at the European commission nor the International Monetary Fund are taking the €50bn target remotely seriously.

In a devastating analysis of Greece’s debt burden published in July, the IMF said it was realistic to assume asset sales would be worth no more than €500m a year – meaning it could take 100 years to raise €50bn.

Gabriel Sterne at Oxford Economics argues that the IMF has failed to learn from its recent history that “less is more” when it comes to setting numerical targets. “It is economics versus faith – ‘Somehow we will make this work even if it doesn’t add up’ – but the economics really doesn’t add up.”

When Syriza swept to power in January, one of its first actions was to sack the people in charge of Greece’s privatisation agency and cancel plans to sell Greece’s electricity transmission operator (ADMIE). The sale of other assets – most notably regional airports and the port of Piraeus – had almost been completed, but was thrown into doubt. The government is expected to put up little resistance to the sales now being concluded. Venues purpose-built for the 2004 Athens Olympic games, which have sat derelict and rotting for the past decade, will also be among the assets moved to the fund, alongside state utilities, including the water board and ADMIE.

Both Russia and China have expressed interest in snapping up the state-run railway network, one of the biggest encumbrances on public finances before the debt crisis erupted in late 2009. The Greek state is also rich in buildings bequeathed by individuals to municipalities and the Orthodox Church – properties that are also expected to be included in the fund. Contrary to popular perception, the public sector owns very few islands. The sale last week to Hollywood star Johnny Depp of the Aegean islet of Stroggilo, for a reputed €4.2m, was conducted privately.

While Tsipras has been forced into a humiliating climb-down over the sale of state assets, he has repeatedly branded the entire bailout plan as a bad deal that he doesn’t believe in.

Unions with ties to the governing party have already vowed to “wage war” to stop the sale of docks in Piraeus, where the Chinese conglomerate, Cosco, currently manages three piers. With the debt-stricken country on its knees, officials have stressed that the prime minister will fight to ensure the denationalisations are not seen as a fire sale.

However, independent observers fear just that. “Privatisation in Greece right now means a fire sale,” political economist Jens Bastian said.

Bastian was one of the officials responsible for privatisation under the European commission’s Taskforce for Greece, a body of experts distinct from the troika. He thinks it was a “political mistake” to set a target to raise €50bn from asset sales, in the absence of support from Greek politicians across the political spectrum, from the centre-right New Democracy party, to Pasok on the centre-left and Syriza on the left.

“We have never had a political majority to embrace the idea of privatisation. How are you going to create the political momentum that has been absent in the past years under more difficult conditions today?” he asks.

Greece’s creditors share such scepticism. Their answer is tighter controls. The privatisation fund will be managed by Greeks under the close watch of creditors.

The privatisation fund has few precedents, although it has been compared to the Treuhandanstalt, the German agency created in the dying days of the GDR to privatise East German assets shortly before reunification. Greece’s former finance minister, Yanis Varoufakis, was one of the first to draw the parallel, although others offer the comparison unprompted. Peter Doyle, a former IMF economist, says the Treuhand offers the closest parallels: the agency had full control over government ministries to sell assets quickly. “The principal task was to sell these things to somebody for cash.”

Greek government officials and opposition politicians said it was too early to know how the Greek fund would operate.

“We’ve got a long way to go before we have a clear picture of what this fund and the privatisation scheme will entail,” Anna Asimakopoulou, shadow finance minister with the main opposition New Democracy party, told the Guardian. “But the entire privatisation process will feature large in negotiations because Tsipras is so opposed to them and creditors see them as a good way to raise revenues.”

Greece has an urgent need for cash: although the Eurozone bailout is meant to be worth up to €86bn, only €50bn is on the table, via the Eurozone's bailout fund, the European Stability Mechanism.

Doyle thinks Greece’s bailout is underfunded. “The Europeans just don’t have enough cash ... and a major way to fill that gap is through privatisation.” Officials at the Greek privatisation agency are “going to find their arms very strongly twisted to provide needed cash”, he says.

“The privatisation agency is facing a trade off between doing something that is fair and open and following judicial procedures, or something that is going to deliver needed cash.”

He fears Greece could be heading down the path taken by Russia in the 1990s, when valuable state assets were sold at knockdown prices to raise urgently-needed cash, creating a new oligarch class in the process.

“The very thing we all think that Greece needs – to get rid of its oligarchy – will in fact be entrenched by privatisation done this way,” argues Doyle, who worked on privatisations in the Czech Republic, Slovakia and Poland in the 1990s. The difference between those countries and Greece, he thinks, is that the population and political class in central Europe accepted the idea of privatisation, despite the short-term hardships.

He is convinced the current privatisation plan for Greece is doomed to fail. “The programme was set up to encourage Greece to leave the euro and that plan didn’t work, so now we are stuck with the privatisation arrangement that nobody, not even the original creditors, ever intended to happen.”

Up for sale
  • Helliniko Olympic complex
  • Ports of Piraeus and Thessaloniki
  • 14 regional airports
  • PPC power company, including ADMIE, the electricity transmission operator
  • DEPA natural gas company
  • Hellenic Petroleum
  • Hellenic Post
  • Athens Water Supply and Sewerage Company
  • Xenia Hotels in Rhodes
  • Marinas of Chios, Pylos and other locations

Source: Hellenic Republic Asset Development Fund

The great Greece fire sale | Business | The Guardian

© 2015 Guardian News and Media Limited or its affiliated companies. All rights reserved.

Greek debt crisis: Greece 'seeking a new loan' from the IMF in step closer to bailout


Debt-crippled Greece took a step closer to a huge third international bailout by formally requesting IMF help, but sources said "logistical problems" were delaying the start of talks in Athens.

New Greek finance minister Euclid Tsakalotos Photo: Finance minister Euclid Tsakalotos wrote Greece was "seeking a new loan" from the IMF in a letter to managing director Christine Lagarde. (AFP: Angelos Tzortzinis)

Related Story: Eurozone backs Greece bailout extension

Related Story: Greece's parliament passes second crucial bailout bill

The Greek government, which is seeking a three-year bailout worth up to 86 billion euros ($129 billion) to avert financial meltdown and a chaotic exit from the Eurozone, had initially planned to go without fresh help from the IMF as it considered the agency too wedded to draconian austerity measures.

But in a letter to IMF managing director Christine Lagarde, finance minister Euclid Tsakalotos wrote Greece was "seeking a new loan" from the IMF.

He noted Greek parliament had passed two laws enshrining a series of tough reforms demanded by the creditors, including tax rises and a pensions overhaul, in a step closer to finalising the deal.

"The Greek authorities have committed to implement a number of policies that would enhance fiscal sustainability, strengthen fiscal stability, sustain long-term growth and, importantly, spread the cost of economic adjustment in a fair way," Mr Tsakalotos wrote in the letter, dated July 23 and released to the public on Friday.


Greece drama unfolds
June 28:
Greek banks are closed, withdrawal limits are set to 60 euros ($89) a day
July 5:
Greek voters reject terms of a bailout proposition with 61.31 per cent voting "No", boosting prime minister Alexis Tsipras at the negotiating table
July 6:
Yanis Varoufakis resigns as Greek finance minister to improve relations with Eurozone creditor countries, and is replaced by Euclid Tsakalotos, who has been steering talks with EU-IMF creditors
July 7:
Eurozone finance ministers meet in Brussels but no proposal reached European Commission head Jean-Claude Juncker, who is not in favour of Greece leaving the EU, warns a Grexit scenario has been prepared "in detail"
July 8:
Mr Tsipras is greeted by boos and cheers at the European parliament, says
Greece will submit "credible" reform plans and wants to prevent a "divided Europe". His speech draws a mix of boos and cheers from European MPs
July 11:
Greek parliament
backs new reform plan, submits proposals to the EU for consideration
July 12:
Eurozone finance ministers meet for talks, planned EUCO summit delayed
July 13:
Greece agrees to tough reforms in return for a three-year bailout worth up to 86 billion euros

"It is our belief that it will take several quarters before the Greek economy faces up to these challenges and returns to a vigorous and sustainable path to growth with fairness and social inclusion," he added.

Mr Tsakalotos confirmed Greece, which has been bailed out by the European Union, European Central Bank and IMF twice since 2010, had already formally requested a new three-year loan from the Eurozone's bailout fund, the European Stability Mechanism.

Greece's existing aid program from the IMF runs until early 2016, and the letter appears to have been a gesture of goodwill as a new request is not technically necessary.

The request came amid an apparent delay in getting the ball rolling on talks to finalise the package.

Negotiators from the creditors, known collectively as the troika, have not set foot in Athens for more than a year as hostility has grown between the two sides.

On Thursday, Greece said negotiators would fly in to Athens to begin the talks on Friday, but this swiftly became "in the coming days", according to a European Commission spokeswoman, with the location of the talks and offices for the creditors apparently among the sticking points.

"The mission is being prepared. We are still discussing a location as we have to find an accessible place to work, near the ministries," a source close to the negotiations said.

The two sides are under enormous pressure to hammer out the rescue deal before August 20, when Athens is scheduled to make a loan repayment of 3.2 billion euros to the ECB that it cannot currently afford.

'A difficult path ahead'

The IMF warned finalising the deal, which is conditioned on Greece implementing painful reforms, would not be easy.

The Fund took part in the two previous bailouts but has said it will only participate this time around if European creditors reduce Athens' debt burden to a level it considers "sustainable".

Tough bailout terms explained

The key points of the agreement between Greece and its Eurozone partners that includes punishing austerity measures.

"Clearly it's a difficult path ahead, we're just at the beginning of the process," IMF spokesman Gerry Rice said.

In the early hours of Thursday, Greek parliament passed further reforms demanded by creditors for the talks to begin, including changes to the justice system, a bank deposit protection scheme and measures to shore up the liquidity of Greece's banks.

The bill passed by a resounding 230 votes out of the 298 members of parliament present, after a five-hour debate that once again exposed deep divisions in the governing Syriza party over whether to accept more austerity.

While the result is a victory for Prime Minister Alexis Tsipras in that he managed to convince parliament to back him on the bailout, he did suffer a major rebellion from Syriza MPs for the second time in a week — prompting analysts to predict he may be forced to call early elections.


From other news sites:

Greek debt crisis: Greece 'seeking a new loan' from the IMF in step closer to bailout - ABC News (Australian Broadcasting Corporation) © 2015 ABC

Friday, July 24, 2015

Greek business exodus to 'safe haven' Bulgaria

Vessela Sergueva, AFP July 24, 2015

Panagiotis Douvos stands in his Greek deli in downtown Sofia, one of many Greek businessmen who have moved to Bulgaria faced with a deep economic crisis at homePanagiotis Douvos stands in his Greek deli in downtown Sofia, one of many Greek businessmen who have moved to Bulgaria faced with a deep economic crisis at home © AFP Dimitar Dilkoff

Sofia (AFP) - Faced with a deep economic crisis at home, at least 11,000 Greek companies have found a safe haven in neighbouring low-wage Bulgaria -- the poorest member of the European Union.

"We have stability here: reliable taxation, sound legislation and a positive environment," said Ioannis Politis, manager of Greek hygiene products company Septona, which established a plant in the northern Bulgarian city of Ruse 10 years ago.

Some 120 large Greek businesses set up in Bulgaria in the 2000s in sectors such as retail, metallurgy, fuel distribution, construction and real estate. 

And if the Greek crisis put an end to the big-business migration in 2009, a rising number of small and medium Greek companies -- especially ones that trade with Europe, the Balkans and Russia -- have continued moving to Bulgaria to take advantage of its lower taxes.

Kostas Mikhail left Athens in 2014 to open a bakery in Sofia.

He has already plans to expand his business.

"I don't think the situation in Greece will impact this," he said with a smile.

His fellow countryman Panagiotis Douvos made the move in 2011.

"Bulgaria gave me an opportunity to survive, which is difficult in Greece these days," Douvos told AFP among rows of olive oil bottles and stacks of haloumi cheese in his deli in downtown Sofia.

"It is almost impossible to run a business in Greece, companies disappear within one, two, three months because the taxes and (bank) rates are very high."

The 46-year-old wants to open shops in the Black Sea cities of Varna and Burgas.

But the chaos in Athens is still threatening his livelihood.

"All my suppliers are Greek and I am afraid that they might not be able to produce and keep up deliveries for the shop," he said.

"Because of the capital controls in place, they can't withdraw money for transportation and fuel. Now it is definitely safer to keep your money here."

- 'Nothing to fear' -

Many export-oriented companies had already discovered Bulgaria as a business haven two decades ago.

Working primarily with Western companies, Kyriakos Fotinos moved his clothing company to Bulgaria in 1996. He said he was "more touched by the economic crisis in Europe in the past five years" and Chinese dumping than by recent developments in his home country.

The company, which also has a factory near Athens, has an annual turnover of 50 million euros (£35.5 million) and claims 30 per cent growth over the past five years thanks to the fact that it exports to Western Europe and not back to Greece.

The crisis in Athens has also spurred the flight of Greek capital into Bulgaria.

"Greek enterprises invested 4.5 to 5 billion euros in six years in Bulgaria's economy," Krasen Stanchev of the Sofia-based Institute for Market Economics told AFP.

Meanwhile, between 50,000 and 60,000 Greeks opened accounts in Bulgarian banks over the same period, he added.

But despite images of queues outside banks in Greece, there was no massive transfer of capital to Bulgaria in 2015 because "the game was already over", Stanchev said.

The Bulgarian central bank BNB assured investors last month that the four banks with Greek shareholders operating in Bulgaria -- which control some 21 per cent of Bulgarian banking assets -- had "above-average levels of liquidity and capital adequacy".

Bulgarian-owned banks were also safe, the BNB added, as they had "no receivables from Greek credit institutions and no investments in securities of the Greek government".

Bulgaria itself defaulted on its debt in 1990 after the fall of Communism, and was again on the brink of bankruptcy in 1996-97 after the collapse of 14 banks.

An IMF austerity regime imposed back then -- which still ties its lev currency to the euro -- helped the country emerge from the crisis and become one of the most fiscally disciplined members of the EU.

Bulgaria's public debt stands at 28.8 per cent of output, one of the bloc's lowest, compared to Greece's 177 per cent.

Bulgaria's Prime Minister Boyko Borisov claimed that "there is nothing to fear (economically) apart from artificially sparked hysteria" about contagion from Greece.

Greek business exodus to 'safe haven' Bulgaria - Business Insider

Greece debt crisis news: Alexis Tsipras shows his Machiavellian streak in a purge of Syriza rebels

Michael Day Sunday 19 July 2015

Alexis Tsipras at Saturday's swearing in of new ministers at the Presidential Palace in Athens AP

Anti-austerity PM hangs on to power even though Greeks now face even harsher measures than those they voted against

Greece’s Prime Minister Alexis Tsipras has shown no mercy in axing left-wing cabinet colleagues in order to implement the austerity measures that saw a quarter of his MPs desert him and violence flare in the streets of Athens.

Only by silencing his critics can he hope to introduce the tax hikes, labour reforms and privatisations which were ordered by the Troika (the European Commission, European Central Bank and International Monetary Fund) but are anathema to most of his party. Among the nine changes, hard-left energy minister Panagiotis Lafazanis was replaced by moderate Panos Skourletis, while Trifon Alexiadis became deputy finance minister after Nadia Valavani’s resignation ahead of Wednesday’s vote.

For someone hailed by many as Greece’s first frank, fearless and forthright leader, Mr Tsipras is showing a remarkably Machiavellian streak. Within the past few days, his pledge to quit in the face of a parliamentary revolt evaporated with the alacrity of earlier promises to protect the country’s crippled economy from further austerity measures. Pundits say his resolve comes from a new conviction that a Grexit would be more catastrophic for his country than was previously imagined.

The swearing-in ceremony of the newly appointed members of the Government at the presidential palace in Athens (Rex) The swearing-in ceremony of the newly appointed members of the Government at the presidential palace in Athens (Rex)

But despite the political and economic chaos, Mr Tsipras remains popular among many Greeks who see him as less corrupt than previous leaders, and prepared to battle for his country. His rhetoric, painting Greece as a small country fighting for survival against merciless international powers, has struck a chord. “I’m proud to be here to fight for the future of my country,” he said. “Against us there are great forces. We are a little country battling for our rights. We’ve managed to give the whole world a lesson in dignity.”

Polls suggesting Syriza still has the support of 38 per cent of the public have bolstered Mr Tsipras’s resolve, and news that the banks look set to reopen on Monday, thanks to some emergency liquidity, has provided a welcome respite.

read more:
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Greeks divided over dramatic eleventh-hour austerity deal
'Who will trust Germany after this?' asks Paul Krugman

But with a rebellion under way in Syriza and new austerity measures – tax hikes in particular – due to hit an economy that has already shrunk by 25 per cent in the past five years, Mr Tsipras knows he has a Herculean task ahead of him.

Former finance minister and darling of the far left Yanis Varoufakis was more damning than ever in his criticism of the bailout deal. “This programme is going to fail whoever undertakes its implementation,” he said. Mr Tsipras’s response so far has been to tell left-wing critics: “You’ve not come up with an alternative.”

Some on the left who berated the bailout agreement during Wednesday’s stormy debate declined to attack Mr Tsipras, and went on to vote for the proposals. But such a large number of defections – 38 of his 149 MPs –robbed Mr Tsipras of his government majority, and many believe a new coalition or even a snap election is now likely.

Mr Tsipras appeared to tell his Syriza MPs, before the vote, that a sizeable rebellion would make his role untenable. “I am the Prime Minister because I have a Parliamentary Group that I depend on,” he said. “If I do not have support from the Parliamentary Group, it is difficult for me to be Prime Minister the next day.”

Not for the first time, though, he’s performed a U-turn and indicated that he will stay on for the time being. After the vote in the early hours of Thursday, instead of quitting, he criticised Syriza MPs who opposed the deal – for acting against “principles of camaraderie and solidarity”.

His short-term strategy appears to be to work with the centre-left and centre-right opposition day-to-day – at least for the month it will take to satisfy the demands of Greece’s creditors, see the banks reopen, then, possibly, call fresh elections.

The alternative would be to go straight for a national unity coalition government. Mr Tsipras had already said however, that he would step down rather than lead such a government. “I’m not a man for all seasons,” he said earlier this week in response to such speculation. “If the executive is to include other parties, I won’t be guiding it.”

Mr Tsipras’s reluctance to enter into a coalition stems from the widespread belief that it was cronyism and corruption in the mainstream parties that helped bring Greece to its knees in the first place.

read more:
Caroline Lucas condemns austerity package
Apple giving Greeks free iCloud to get through debt crisis
Tsipras given ultimatum – push through cuts this week or quit euro

Some commentators say an EU plot to oust Mr Tsipras and his left-wing party is under way. Stathis Kouvelakis, an academic from King’s College London and far-left Syriza member said that Stavros Theodorakis, the leader of the reforming, pro-European To Potami party, was the “EU’s and big business’s Trojan horse … behaving like a minister-in-waiting, with the leaders of New Democracy and Pasok as constituent parts of a new ‘pro-agreement’ majority”.

Deputy Finance Minister, Nadia Valavani, resigned ahead of last Wednesday’s vote (AFP) Deputy Finance Minister, Nadia Valavani, resigned ahead of last Wednesday’s vote (AFP)

But it is not only the far left – and conspiracy theorists – who detect meddling by European powers – in the same way that France, Germany and the European Commission are believed to have played a part in ousting former Italian prime minister Silvio Berlusconi, during Italy’s sovereign debt crisis in late 2011. The Greek media talks about a joint opposition “solicited by the EU to unite as a pro-European group” to replace the far-left Syriza.

For his part, Mr Theodorakis said on Friday that a new government was needed because “Syriza is not able to transform into reality all he has promised to creditors”.

Everyone knows current proposals are utterly unrealistic. The Greek prime minister will attempt to hang on, hoping that debt relief and/or rescheduling arrives by autumn. But while Mr Tsipras’s task is immense, opposition MPs are starting to wonder whether they may have underestimated his skill and resolve.

Greece debt crisis news: Alexis Tsipras shows his Machiavellian streak in a purge of Syriza rebels - Europe - World - The Independent

Former Greek finance minister Yanis Varoufakis says government should 'hand over the keys'

By Brigid Andersen Friday 24 July 2015

Video: Watch the full Lateline interview with Yanis Varoufakis (Lateline)

Yanis Varoufakis Photo: Yanis Varoufakis resigned as finance minister over the latest austerity measures

Related Story: Greece's parliament passes second crucial bailout bill

Related Story: Finance minister walks away with Greece on the brink after 'No' vote

Map: Greece

Former Greek finance minister Yanis Varoufakis says he does not believe in the country's latest bailout plan and his government should "hand over the keys".

Mr Varoufakis's comments came after the ruling Syriza party had to rely on opposition MPs to pass a second batch of reforms to unlock a new bailout deal worth $126 billion.

MPs in the left-leaning party rebelled against the laws that upped Greece's taxes on public transport and processed foods, and changed pensions and labour rules.

Speaking to Lateline, Mr Varoufakis said it was a "comedy of errors" in Europe and "we seem to be doing the wrong thing consistently".

"It's my considered opinion that the responsible thing to do for our party will be to hand over the keys of government to those who believe in this program, in this fiscal consolidation reform program and the new loan, because we [Syriza] don't believe in it and we should not be trying to implement a program whose logic we contest," he said.

The former University of Sydney lecturer said the reason he resigned as finance minister was because he disagreed with the path prime minister Alexis Tsipras and the government was taking.

He said he voted no in last week's bailout vote but changed his position for the second vote on reforms.

"I am absolutely on the side of Alexis Tsipras. I'm a team player, but I will not succumb to the blackmailing of the Eurozone which is forcing a government that is already heavily indebted into more debt without having any plan on how to render that debt sustainable and the Greek economy sustainable," he said.

Mr Varoufakis said European governments and the International Monetary Fund were imposing a set of targets on Greece which were impossible to reach.

"You have to have more and more cutbacks, more and more austerity. That depletes the national income from which the new debts and the old debts have to be repaid," he said.

"That gives rise to more austerity and further shrinkage of national income, a further collapse in the tax take which then requires even more loans.

"It's extending and pretending. It's what bad bankers do when they want to avoid the truth that the bad debts that they are holding will simply never be repaid."

But he said he was not proposing a write-off and instead had hoped for a swap of debts.

"To render our debt repayment schedule doable, manageable and to combine that with a reduction in the degree of austerity which is accompanying this program," he said.

Mr Varoufakis said a Greek exit from the Eurozone would be catastrophic.

"Let me put it in a graphic way. The path that you follow to enter the monetary union, once you enter it, disappears, disintegrates," he said.

"It's like a bridge that you cross and once you've crossed it, it collapses.

"So reversing your path, getting out of that monetary union, however ill-designed it might've been, is not a good idea."

Former Greek finance minister Yanis Varoufakis says government should 'hand over the keys' - ABC News (Australian Broadcasting Corporation)

Thursday, July 23, 2015

Greek parliament approves next phase in bailout reforms

Helena Smith in Athens and Graeme Wearden Thursday 23 July 2015

Large majority of MPs including Yanis Varoufakis, the renegade former finance minister, approves further measures required to qualify for €86bn in loans


Members of Greece’s PAME union march in Athens against the proposed bailout programme. Photograph: Ronen Zvulun/Reuters

Greece’s prime minister easily won a crucial vote on a third bailout programme for the debt-stricken nation early on Thursday, hours after the European Central Bank infused cash-starved Greek banks with further emergency liquidity.

A total of 230 MPs backed the economic reforms programme demanded by Greece’s creditors, while 63 voted against the plan at the late-night vote.

Alexis Tsipras again faced down rebels within his own party who oppose a third bailout. Thirty-six Syriza MPs either voted no or abstained, three fewer than at a similar vote last week.

Yanis Varoufakis, the high-profile former finance minister, supported the measures. Last week he had voted against the first set of bailout conditions, including VAT rises and pension cuts, after resigning his post. But in this case, Varoufakis said, the specific measures being voted on included reforms he had previously put forward himself.

The vote clears the way for Greece to begin formal talks with its lenders on a three-year package of loans that could be worth €86bn.

Before the vote Tsipras had urged MPs to support the bailout, which will save Greece from bankruptcy and preserve its place in the Eurozone.

“We made difficult choices and now we must all adapt to the new situation,” he told MPs, repeating that he did not agree with many of the reforms but would do his best to implement them.

Athens was thrown further emergency assistance when the European Central Bank (ECB) increased liquidity for Greek lenders ahead of the crucial vote.

The ECB’s governing council agreed on Wednesday to raise the cap on emergency assistance for the country’s fragile banking system by €900m (£629m). The move was immediately received with relief. Greek banks, newly opened after three weeks of enforced closure, have become a weather vane for normality in a country whose close brush with bankruptcy has kept it on the frontline of Europe’s debt drama.

The decision – the second such injection of emergency funds since late June – will allow Greece’s cash machines to keep operating as the tourist season gathers pace, despite the continued imposition of capital controls across the banking sector. The ceiling on funds was previously set at €89.5bn.

With continued membership of the Eurozone still far from assured, the Greek finance minister, Euclid Tsakalotos, kicked off a raucous debate in the 300-seat parliament imploring MPs to support the bailout plan. The passage of reforms, including a new code of civil procedure that would overhaul Greece’s notoriously slow judicial sector, were demanded by the EU and the International Monetary Fund in exchange for opening talks on a third rescue package.

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Tsakalotos told MPs: “It is extremely important to wrap up this procedure of prior actions so that we can start negotiations on Friday.”

A new bailout programme will provide as much as €86bn in loans for Greece, tiding it over for the next three years. But the stringent terms attached to the package have divided the ruling left-wing Syriza party and raised fears of political instability. With at least a third of the governing party vehemently opposed to the measures, and advocating a euro exit and a return to the drachma, the late-night vote was always expected to be a test of the authority over Syriza of Tsipras.

Hardliners, including the flamboyant former finance minister Yanis Varoufakis, have described the policies as unworkable in a country already labouring under record levels of poverty and unemployment. But on Wednesday night even Varoufakis voted yes.

Costas Isychos, the former deputy defence minister who resigned in outrage over the measures, said: “The coping strategies of a large part of society ran out long ago. The road map foreseen by the accord not only cannot be enforced, I believe large parts of society will fight back.”

Ahead of the ballot, anti-austerity protestors took to the streets, with the civil servants union ADEDY and militants from the communist-affiliated PAME organising rallies against reforms denounced as the harbingers of yet more destitution.

Insiders said it was essential that Tsipras at least retained control of the 110 MPs who last week voted in favour of tax rises and pension cuts – measures spurned by the young prime minister until his spectacular U-turn in the face of possible Eurozone ejection.


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The controversial policies were passed with the help of “pro-European” opposition parties, including the main centre-right New Democracy, which have argued that Greece must remain at the heart of Europe, and in the Eurozone, at any cost.

But across the political spectrum MPs said it was impossible for the government to continue counting on the opposition for support.

Antigone Limberaki, an MP with the centrist Potami party, said: “Tsipras cannot cohabit with at least a third of his political group and more than half of his central committee totally opposed to the measures [outlined] in the third memorandum. Everything now depends on how he handles the problems in his party. It is very clear that he is burning bridges with the other side, that he feels he is on a one-way track and is going down the road of moderation.”

Greek parliament approves next phase in bailout reforms | World news | The Guardian