IMF internal probe exposes failings in response to Greek crisis

by Arthur Beesley

Financial Times
July 28, 2016

An unsparing assessment of the International Monetary Fund’s intervention in the eurozone debt crisis prompts new questions over its approach to Greece, the origin of the saga and its epicentre.

At issue is an IMF decision expected this autumn on whether to take part in a third bailout of Greece, which has been under international tutelage for six long years. Germany has threatened to stop lending to Athens if the fund pulls out.

The IMF has warned repeatedly that it cannot participate in any further bailout without meaningful debt relief. Amid ructions in Turkey after a failed military coup two weeks ago, the US has stepped up pressure on European creditors of Greece to settle its finances so it can serve as a regional anchor. But this remains deeply contentious in the eurozone, where Germany leads resistance to far-reaching debt forgiveness.

The report by internal IMF inspectors makes clear that this question goes right back to the beginning of the crisis in 2010, when the fund was drawn into Europe’s chaotic campaign to shore up the single currency. A succession of huge bailouts for Greece and other weaker states followed. It paints a picture of poor pre-crisis surveillance, followed by problems in the design and execution of rescue programmes. Improvisation was the order of the day and rules were stretched, not least in the IMF where there was doubt from the outset about the Greek rescue.

More

Read the Report

How the refugee crisis turned waiters into goatherds on the Greek islands

by William Booth

Washington Post
July 27, 2016

This is a story about war and waiting tables, about how a line can be drawn between the chaos in Syria and why Theodore Kourniaris lost his job on the Greek island of Lesbos.

In the eastern isles of Greece, the hidden face of the European refu­gee crisis is an everyday dude like Kourniaris, who suspects he has been cheated — not only by Syrian President Bashar al-Assad, who drops barrel bombs on his own people, but also by leaders such as German Chancellor Angela Merkel, who threw open the door to refugees and then slammed it shut.

Kourniaris, 27, is a Greek waiter who lives with his mom. He has spent every summer season since he was a kid humping bottles of chilled retsina and plates of grilled octopus to German and British and Dutch ­merry-makers in packed tavernas in his picture-postcard-perfect village on the sea.

The tourists?

“They’re gone, man,” said Kourniaris. The April-to-October trade that sustains the island has — poof! — vanished, as middle-class European pensioners and young families with children decided they would not spend their holidays on an island that hosted 600,000 war refugees and economic migrants over the past 18 months.

More

Erdogan Should Look Across the Aegean

by Nikos Konstandaras

New York Times
July 27, 2016

Military coups have been an integral part of politics through most of the modern history of Greece and Turkey, shaping them domestically and determining relations between them. If war is diplomacy by other means, in these two neighbors and NATO allies, military coups were politics by other means. The recent attempt by military forces to overthrow Turkey’s elected government underlines the different course the two countries have taken in the past few decades. What follows may lead them even further apart.

Turkey’s president, Recep Tayyip Erdogan, appears determined to use the failed coup as an opportunity to wipe out opposition from every quarter, ordering a sweeping purge of the military, the judiciary, the police, academia, the civil service and some journalists.

Before the July 15 mutiny, Mr. Erdogan was already showing increasingly autocratic tendencies: curbing media freedom, cracking down on anti-government demonstrators, flirting with Islamist extremists, cultivating tension with his country’s Kurdish minority, deposing his own prime minister for not being enthusiastic enough in his support, allowing readings of the Quran in the Hagia Sophia museum — formerly the greatest cathedral of eastern Christendom.

More

Greece loosens capital controls to win back deposits

by Kerin Hope

Financial Times
July 25, 2016

Greece’s central bank has loosened capital controls it imposed 13 months ago in the hope that depositors will return some of the cash they pulled from banks during last year’s panic.

George Chouliarakis, deputy finance minister, said he expected that lifting various restrictions on cash withdrawals would soon attract some €3-4bn in fresh deposits.

The controls were imposed in June last year to stem a run on Greek banks as the government’s negotiations with its international creditors foundered and many feared the country was poised to crash out of the euro. Among other measures, they set strict limits on how much money depositors could withdraw from their accounts each week.

Lifting the controls will pose a critical test of confidence in the leftwing Syriza-led government of Alexis Tsipras, the prime minister. Specifically, it will show whether Greeks now feel safe holding their cash in the country’s banks.

More

Tsipras Loses Bid to Apply New Rules in Next Greek Election

by Eleni Chrepa

Bloomberg
July 22, 2016

Greece won’t immediately implement new electoral rules which scrap a 50-seat bonus for the winning side after Prime Minister Alexis Tsipras failed to raise enough support to make the changes effective immediately.

Tsipras’s Syriza government failed to secure a majority of 200 lawmakers in the 300-seat chamber to make the new rules, approved in a session that ended early Friday, effective immediately. A total of 179 lawmakers voted to abolish the bonus, with 83 voting against and 19 abstaining. That means the bonus remains in place for Greece’s next election, scheduled for 2019, and will be scrapped for the subsequent vote.

With the bonus seats still in play, “the scenario of snap elections now looks completely distant, as it would only move Syriza further from governance,” said Aristides Hatzis, a professor of law and economics at the University of Athens. Syriza has struggled in recent opinion polls, which show that rival New Democracy could finish first if elections were held now.

“Greece dodged the worst,” by voting to maintain the old system for the next election, Hatzis said. Given political divisions in the country, any parliament formed under the new law “would be so fragmented it could be impossible to form a government.” Coalitions under the new law would likely consist of “many partners with vetoes to block any decision they don’t like.”

More

Greece was once the fast lane to Europe for refugees. Now it’s a grim waiting room.

by William Booth

Washington Post
July 7, 2016

The human traffickers who brought a million desperate asylum seekers through Turkey to the Greek islands have been stopped. Where once thousands a day were smuggled by the mafias on cheap rubber rafts, very few are making the trip this summer.

To shut down the Eastern Mediterranean route, countries such as Macedonia, Hungary and Bulgaria acted independently and threw up razor-wire fences along their southern borders, defying Europe’s central authority in Brussels.

The European Union itself struck a deal that threatens to send the migrants back to Turkey from Greece en masse.

It wasn’t pretty.

Human rights activists called it cruel.

But it worked.

The unimpeded flow of humanity, dominated by Syrians, Iraqis and Afghans, to Europe is over, at least for now. Arrivals in the Greek islands are down 97 percent.

More

Marinopoulos: decline and fall of a retail giant

Economist
Intelligence Unit
July 7, 2016

On July 1st the Athens Court of First Instance handed a temporary reprieve to supermarket operator Marinopoulos in the face of bankruptcy claims by its creditors. The retail giant won temporary protection from bankruptcy until September 21st, when the court will consider its petition for a reorganisation process. The privately owned group, which employs more than 12,500 people and runs more than 800 stores, had sought protection from creditors to allow for a restructuring of its business. The decline and fall of the retail giant mirrors the travails of the Greek economy since 2010. If Marinopoulos goes under it is likely to worsen the country's already dire economic plight.

The Marinopoulos family's first foray into business was in the form of a pharmacy, back in 1893, the year that the then prime minister, Charilaos Trikoupis, famously declared Greece bankrupt. The pharmaceutical business developed independently and the family started its first supermarket much later, in 1962—another landmark year for Greece, as its association agreement with the EU came into force. In 1999 the family entered into a partnership with a French multinational retailer, Carrefour, and the business grew to the extent that Marinopoulos became a leading retailer. The partnership ended on the eve of Greece's second general election in 2012, when Carrefour pulled out, although it sanctioned continuing use of the brand. By 2015 Carrefour had slipped into second place behind Belgium's Delhaize in terms of market share, but still had a sizeable 6.3% share of the Greek retail market.

More