Hope and fear in the endless Greek crisis

by Martin Wolf

Financial Times
December 22, 2015

The Greek economic crisis has blighted the country and the eurozone for six years. The election last January, which brought Alexis Tsipras and his leftwing Syriza party to power, added further friction between Greece and the rest of the eurozone. Mr Tsipras vowed to undo austerity — a promise he could not deliver on his own.

In the event, after winning a referendum in July against the terms offered by the eurozone, he agreed to a new €86bn three-year eurozone programme on terms not so different from those he had persuaded the Greek people to reject. After a split in his party, Mr Tsipras then won another election in September. Yet the capital controls imposed in June remain in force and the economy has fallen back into recession.

Is there a good chance that economic recovery will take hold in 2016? This was in my mind as I visited Athens last week. My conclusion was that a chance does exist. But it is not, alas, that good.

The starting point has to be with the differences of view among the main players: the Greek government and wider political community; the International Monetary Fund; and eurozone creditors, particularly Germany.

As Mr Tsipras made clear last week, one of his aims is to avoid another programme with the IMF. He finds its demands hard to bear. More broadly, he thinks that “the sooner we get away from the [bailout] programme the better for our country”. He notes: “If Greece completes the first [progress] review in January, we’ll be covering more than 70 per cent of fiscal and financial measures in the agreement.” He hopes Greece will soon regain its sovereignty or, with the IMF out of the picture, at least will only have other Europeans to deal with.

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Alexis Tsipras pushes for IMF to stay out of next Greek bailout

by Kerin Hope & Martin Wolf

Financial Times
December 20, 2015

Greek prime minister Alexis Tsipras is pushing for the International Monetary Fund to stay out of the country’s €86bn third bailout, leaving the eurozone to take full responsibility for overseeing economic reforms.

Mr Tsipras said in an interview with the Financial Times he was “puzzled by the unconstructive attitude of the fund on fiscal and financial issues”. He indicated that the IMF should leave his country’s third bailout to the eurozone when it decides whether to stay involved early next year.

“We think that after six years of managing in extraordinary crisis, Europe now has the institutional capacity to deal successfully with intra-European issues.”

Mr Tsipras’s assertion is likely to anger the German government, which has always insisted the IMF stay on board. Berlin values the fund’s technical expertise as much as it doubts the European Commission’s resolve.

Mr Tsipras also risks alienating the IMF, which is a strong advocate of debt relief for Athens while Germany and other eurozone members are strongly against debt writedowns, although he praised the fund’s support on this issue.

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Binding Bids for Greece’s Piraeus Port Expected Next Week

by Costas Paris

Wall Street Journal
December 17, 2015

The long-delayed privatization of Greece’s main port of Piraeus is moving forward, with three of the world’s biggest port operators expected to submit their binding bids next week, the head of the country’s​privatization department said Thursday.

​Greece’s leftist government had pushed the move back for a year, upsetting potential investors and ​the country’s international creditors. The creditors had made the selling of state assets a condition for a multibillion euro bailout package to keep​Greece from defaulting on its debts.

“We understand the frustration caused by the delays, but we are now moving forward full speed,” Stergios Pitsiorlas, the head of Hellenic Republic Asset Development Fund, which manages privatizations, told The Wall Street Journal. “All the offer documents are with the potential investors and the deadline for binding bids is on Monday. From there on, the bids will be evaluated and the deal will be completed.”

The deal involves bids for a 67.7% stake in​ Piraeus Port Authority SA . A 51% slice will be transferred to the winning bidder at once and the remaining 16.7% over the next five years as required infrastructure investments at the port take shape.

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The Greek right, in search of a leader

by Yannis Palaiologos

Politico
December 17, 2015

It was a study in contrasting political styles. As the center-right New Democracy party’s leadership race enters the final stretch, this writer attended rallies by Kyriakos Mitsotakis, the Harvard- and Stanford-educated scion of one of Greece’s great political dynasties, and Adonis Georgiadis, the book salesman and TV personality who has moved from the right-wing fringes to the position of standard-bearer of unapologetic conservatism. The first round of voting takes place December 20, with a majority required for an outright victory. Also in the running are Evangelos Meimarakis, the old party hand who served as interim leader between July and November, and Apostolos Tzitzikostas, the young regional governor of Central Macedonia.

In the municipal council hall of Kallithea, a suburb of Athens just south of the city center, after a warm introduction from the reformist-minded mayor, Mitsotakis delivered a polished, confident half-hour performance, without notes, emphasizing the reasons why he is the man the Greek center-right needs to recover its mojo.

He told the assembled crowd of close to 200 people, mostly middle-aged or older, that they would not only be voting for a party leader — “You will also be voting for the next prime minister of the country.” He admitted that in the past New Democracy, having “caught the populist bug,” had strayed from its liberal ideals, and he talked up his record as minister of public administration reform under Antonis Samaras — a grueling 18-month stint during which he took some important first steps toward bringing order and meritocracy to the chaos of the Greek public sector.

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Greek Lawmakers Approve New Economic Overhauls

by Stelios Bouras

Wall Street Journal
December 15, 2015

Greek lawmakers approved Tuesday a new set of economic overhauls the government must implement to receive a €1 billion ($1.1 billion) slice of its bailout financing.

In the country’s 300-seat legislature, 153 lawmakers backed the reforms, while 138 opposed and nine abstained. The measures were backed by all of the parliamentarians belonging to the ruling left-wing Syriza party and its junior coalition partner, the right-wing Independent Greeks.

Senior officials from eurozone finance ministries are expected to give the go-ahead on Wednesday for the disbursement of the aid tranche from Greece’s third bailout loan, reaching up to €86 billion.

The measures include overhauls to the banking sector, the design of a privatization fund and the partial privatization of the power grid operator ADMIE.

The grid operator will be split off from the power utility Public Power Corp. The state will retain a majority 51% stake, while 20% will be sold to a strategic private investor and the remaining 29% will be privatized, under Greece’s agreement with lenders.

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14 Airports in Greece to Be Privatized in $1.3 Billion Deal

by Niki Kitsantonis

New York Times
December 14, 2015

Greece’s leftist-led government on Monday signed its first major privatization deal, granting a German company the right to lease and manage more than a dozen regional airports.

The contract, worth 1.2 billion euros, or $1.3 billion, is part of an effort to privatize state assets and adopt economic changes demanded by international creditors under Greece’s €86 billion bailout program. Some other measures are under debate in the Greek Parliament and are scheduled for a vote Tuesday night.

The airport management contract had been under negotiation with the German company, Fraport, when Prime Minister Alexis Tsipras and his leftist Syriza party stormed to power in January. The party pledged to end years of austerity and foreign oversight by the country’s creditors: the other nations that use the euro, the European Central Bank and the International Monetary Fund.

The airport contract talks were revived only after Mr. Tsipras capitulated to creditors during the summer as Greece teetered on the brink of bankruptcy, accepting the country’s third bailout since 2010.

The government’s debt problems have for years deprived many Greek airports of sufficient money for maintenance and modernization. One exception is the Athens airport, which has already been partly privatized and generally lives up to its role as a modern international hub.

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Expected Real GDP growth for 2016 in the Member States

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Eurozone Fund Weighs Greece Debt-Relief Options

by Viktoria Dendrinou

Wall Street Journal
December 10, 2015

A deal to reduce Greece’s debt burden could include capping interest payments, extending debt maturities and linking debt repayments to economic growth, according to a paper drawn up by the eurozone’s bailout fund.

The nine-page document, dated Aug. 10 and seen by The Wall Street Journal, was put together by the European Stability Mechanism, the Luxembourg-based eurozone bailout fund, and outlines different options to reduce Greece’s large debt load.

The paper focuses on three measures: extending the maturity of some of Greece’s loans, linking fixed debt repayments to the country’s gross domestic product and capping or deferring interest payments.

“These measures provide the necessary conditions for bringing debt service back to a sustainable path,” it says

The document doesn’t examine cutting the face value of the debt, an option ruled out by eurozone leaders in July.

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Greek central bank governor warns of danger to government reforms

by Kerin Hope

Financial Times
December 4, 2015

The governor of Greece’s central bank has warned that political infighting over a critical final round of economic reforms is threatening to derail a long-awaited recovery in 2016.

On Friday, Yiannis Stournaras took the unusual step of prefacing the bank’s half-yearly report to parliament on monetary policy with an appeal to MPs on the need to maintain consensus on implementing Greece’s €86bn third bailout programme.

“Parliament must contribute to the legislative work of completing the programme, at this precise moment when most of the adjustment has been achieved and only a very small portion remains,” the report said.

“A basic condition for returning to economic normality is to maintain a climate of political stability and consensus.”

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Greece’s Sane Party Is Losing the Plot

by Yannis Palaiologos

Wall Street Journal
December 3, 2015

With Prime Minister Alexis Tsipras running aground in his efforts to implement Greece’s latest bailout program, conditions seem ideal in the country for the return of a pro-European center-right party. The Syriza leader’s popularity is falling fast. This summer’s poisonous division over the bailout has subsided. A party that espouses free-market principles and a government meritocracy might find voters once again receptive to its ideas. But as the recent implosion of the New Democracy leadership contest painfully showed, it’s far from clear that such a party in Greece exists.

Nov. 22 was supposed to be the day New Democracy, Greece’s center-right official opposition, held the first round of elections to pick its new leader. It was supposed to be something like an open primary: Anyone willing to pay a €3 fee could register and choose among the four candidates who, back in October, had collected the necessary 50 signatures from party insiders. Instead, the date will now be remembered as a red-letter day in the annals of Greek conservatism.

To start, the technology company hired to run the election proved risibly unequal to the task. It failed to detect and fix the glitches in the electronic system that was designed to register voters and tabulate results. On election day, it quickly became clear that the system couldn’t guarantee the integrity of the proceedings. The vote was suspended, but not before many New Democracy supporters had already made their way to the polls.

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Greece warned EU will reimpose border controls

Financial Times
December 1, 2015

The EU is warning Greece it faces suspension from the Schengen passport-free travel zone unless it overhauls its response to the migration crisis by mid-December, as frustration mounts over Athens’ reluctance to accept outside support.

Several European ministers and senior EU officials see the threat of pushing out Greece over “serious deficiencies” in border control as the only way left to persuade Alexis Tsipras, Greece’s prime minister, to deliver on his promises and take up EU offers of help.

If the EU follows through on its threat, it would mark the first time a country has been suspended from Schengen since its establishment in 1985.

The challenge to Athens comes amid a bigger rethink on tightening joint border control to ensure the survival of the Schengen zone. The European Commission will this month propose a joint border force empowered to take charge of borders, potentially even against the will of frontline states such as Greece.

Greece’s relatively weak administration has been overwhelmed by more than 700,000 migrants crossing its frontiers this year. Given the severity of the crisis, EU officials are vexed by Athens’s refusal to call in a special mission from Frontex, the EU border agency; its unwillingness to accept EU humanitarian aid; and its failure to revamp its system for registering refugees.

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