Solidarity with Greece will render its debt sustainable

by Klaus Regling

Financial Times
February 9, 2017

Greece has been under financial assistance programmes for almost seven years. There have been delays, concerns and real drama that brought the country close to leaving the eurozone. There has also been a lot of progress in making the Greek economy more competitive. But for many, Greece remains synonymous with bad news. Few were surprised, therefore, when the International Monetary Fund recently stated that the country’s debt was on an explosive trajectory.

A sober look at the facts shows that Greece’s debt situation does not have to be cause for alarm. The European Financial Stability Facility and the European Stability Mechanism, the eurozone’s rescue funds, have disbursed €174bn to Greece. We would not have lent this amount if we did not think we would get our money back.

Much has already happened to ease the country’s debt burden. Both public and private creditors have made unprecedented efforts to keep Greece’s debt sustainable. No other country in the world has ever received greater debt reduction. In 2012, private investors took a haircut on their holdings, scrapping €107bn in loans from Greece’s books.

Then, public creditors eased lending conditions significantly. This reduced the economic value of the country’s debt by around 40 per cent. As a result, Greece enjoys budgetary savings of about €8bn annually — the equivalent of about 4.5 per cent of gross domestic product — and will continue to do so for years to come. This does not lead to budgetary cost for European taxpayers. However, they do take on risks.

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Conflict over Athens’ surplus needles the IMF

Financial Times
Editorial
February 9, 2017

With much of the eurozone economy humming along nicely, and the sovereign debt crisis that engulfed the single currency region having largely receded, it is easy to forget that the country where it all started is still deep in trouble.

This week the enduring problem of Greece took a new and disturbing turn. It was revealed that the executive board of the International Monetary Fund is split on the question of what fiscal surplus Greece should be required to hit — which in itself will affect whether it needs official debt relief to reach sustainable growth.

Disputes between the IMF and the eurozone governments are hardly new but the fact that the fund admitted a division between its member countries is significant. European nations are over-represented on the board relative to their size in the global economy. Wielding that power to dissuade the fund from demanding debt relief from eurozone governments is a clear conflict of interest and poses a threat to the fund’s credibility and independence.

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Worries Grow Over Euro’s Fate as Debts Smolder in Italy and Greece

by Landon Thomas Jr.

New York Times
February 8, 2017

Even as global stock markets climb, worries are building among investors that long-simmering debt troubles in Greece and Italy will put additional strain on the euro.

Over the past year, aggressive bond buying by the European Central Bank and encouraging signs of economic growth across Europe have helped the eurozone overcome a series of political jolts, including Britain electing to quit the European Union and Italian voters rejecting the proposals of a reform-minded government.

Yet with the central bank expected to eventually unwind its purchases of government bonds and other assets, investors are increasingly becoming concerned about how Europe — and Germany, in particular — can cope with escalating debt pressures in Italy and Greece.

The result has been a sell-off of European government bonds as investment funds reassess the risks of holding such securities. In Italy, for instance, some hedge funds are making direct bets that the prices of Italian bonds will collapse.

The yield on Italy’s benchmark 10-year note — which moves in the opposite direction of its price — has doubled to 2.3 percent since late last fall. The yield on the equivalent Greek note has jumped to nearly 8 percent from 6.7 percent at the beginning of the year.

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Greek Government Divided Over Deadlock in Creditor Talks

by Nektaria Stamouli & Marcus Walker

Wall Street Journal
February 8, 2017

The Greek government is split over how to break a deadlock with creditors that has revived bond-market jitters and talk of “Grexit.”

Some aides to Prime Minister Alexis Tsipras are pressing for immediate fiscal concessions, while others are pushing for a tough stance toward the government’s creditors and the International Monetary Fund, Greek officials said.

The debate within the government, which is led by the Syriza party, comes as the IMF haggles behind the scenes with the German-led eurozone over the duration of Greek austerity and the cost of debt relief.

Amid the wrangling, doubts are mounting in financial markets about whether Greece can fulfill the tough terms of its latest, €86 billion ($91.9 billion) bailout plan, signed in 2015. The bailout was Greece’s third since 2010 and is encountering the same problems as the others: Repeated fiscal retrenchment is straining Greek politics without restoring confidence that the country can grow and recover.

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The IMF Staff Has It Right on Greece

by Mohamed A. El-Erian

Bloomberg
February 8, 2017

When the International Monetary Fund’s board met Monday to discuss Greece, it was heartening to read that “most Executive Directors” agreed with the staff’s view that the country’s debt, at 179 percent of gross domestic product at the end of 2015, was “unsustainable.” Yet “some directors had different views on the fiscal path and debt sustainability.” This division within the board also applied to what Greece still needs to do with its budget. With the medium-term primary fiscal surplus heading to 1.5 percent of GDP, “most Directors agreed that Greece does not require further fiscal consolidation at this time.” But, again, “some Directors favored a surplus of 3.5 of GDP by 2018.”

Despite the backing of a majority of the board for the staff’s technical assessment that Greece does not need to tighten its budget screws further but does require debt reduction, the institution is still unable to break a deadlock that harms the country, undermines the integrity of the euro zone, and puts the IMF’s own finances at some risk. Understanding why sheds light on the outdated governance that still plagues the IMF’s good functioning, dents its global standing and weakens its effectiveness.

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Greece’s Financial Odyssey: Pushing Back Against Austerity

by Marcus Bensasson

Bloomberg
February 7, 2017

Greece fought austerity and austerity won. When Alexis Tsipras, the brash young leader of a left-wing party, became prime minister in January 2015, he vowed to stop taking the economic medicine that shrank the country's economy by a quarter, saw more than a million jobs disappear and drove thousands of Greeks below the poverty line. His European counterparts, who had lent Greece more than 200 billion euros ($215 billion) to prevent its default, had a simple response: no. Six months later Greece's banks were shuttered, its stock market was closed, the economy was falling back into recession and the country stood on the brink of expulsion from the euro zone. Tsipras blinked, accepting a new bailout on terms harsher than those he had rebelled against. For more than a year, an uneasy peace held between Athens and Brussels, and Greece's place in the euro seemed assured. But the International Monetary Fund, which is barred from lending to countries unable to repay their debt, in early February 2017 said it didn't think Greece could meet fiscal targets set in the 2015 bailout. That makes it hard for the fund to remain as a creditor. It also threatens to unravel the 2015 deal; the IMF's commitment is necessary to keep Germany and other states as creditors. Wide divisions among euro-area states over the common currency and upcoming German elections further complicate any resolution.

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The new IMF Report for Greece

IMF
February 7, 2017

Greece: 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Greece

Despite the policy constraints imposed by its membership in the currency union, Greece has made significant progress in unwinding its macroeconomic imbalances. But extensive fiscal consolidation and internal devaluation have come with substantial costs for society, which contributed to delays in reform implementation and to policy reversals since the last Article IV Consultation, culminating in a renewed crisis of confidence in 2015. Since then, the situation has stabilized, and growth is estimated to have resumed modestly in 2016. Notwithstanding the substantial progress achieved by Greece, it still faces fundamental challenges: (i) a vulnerable structure of the public finances; (ii) significant tax evasion and an ineffective tax administration; (iii) impaired bank and private sector balance sheets; and (iv) pervasive structural obstacles to investment and growth. Moreover, its public debt remains highly unsustainable, despite generous official relief already provided by its European partners. Addressing these remaining challenges and restoring debt sustainability are essential to creating a vibrant and dynamic private sector capable of generating sustainable and equitable growth and employment.

Read the Report (PDF)

Greece: Ex-Post Evaluation of Exceptional Access Under the 2012 Extended Arrangement-Press Release; Staff Report;and Statement by the Executive Director for Greece

In accordance with Fund policies, this report conducts an ex-post evaluation of a four-year exceptional access extended arrangement under the Extended Fund Facility (EFF) with Greece approved in March 2012. The Fund committed €28 billion under the extended arrangement (SDR 23.8 billion or 2,159 percent of Greece’s quota at the time), following the cancellation of the 2010–12 Stand-By Arrangement (SBA). The program was supported by Greece’s EU partners, who committed €144.7 billion. Significant private sector debt relief (€106 billion) was completed at the outset of the program and large official debt relief was provided as well. The Fund disbursed SDR 10.2 billion. Only five out of 16 program reviews were completed as the program went off track finally in mid-2014. The arrangement was cancelled in January 2016.

Read the Report (PDF)

Greece: Selected Issues

Read the Report (PDF)

Greece Won’t Meet Fiscal Surplus Targets Set By Europe, IMF Says

by Andrew Mayeda & Ian Wishart

Bloomberg
February 7, 2017

Greece is on track to fall short of budget-surplus targets set under a bailout by the nation’s euro-zone creditors, the International Monetary Fund said.

Greece’s primary budget surplus will rise to 1.5 percent over the long run from about 1 percent last year, amid a modest recovery, the IMF said Monday after executive directors met to discuss the fund’s annual assessment of the nation’s economy. Still, the projected surplus falls short of the 3.1 percent forecast by the country’s European creditors.

The fund reiterated its view that Greece’s debt is unsustainable. Most of the executive directors don’t believe the economy needs more fiscal consolidation, the IMF said.

IMF board split over bailout terms for Greece

by Shawn Donnan

Financial Times
February 7, 2017

A stand-off with European authorities over the terms and future of Greece’s bailout has led to a rare public split on the International Monetary Fund’s board, amid growing questions over the fund’s participation.

European institutions and the IMF have for more than a year been at loggerheads over what the fund argues are far too stringent fiscal targets being demanded of Athens by its European creditors and calls by the IMF’s staff for Greece to receive more long-term debt relief.

The battle has raised questions over the IMF’s financial involvement in the current €86bn bailout, with German officials again on Monday saying that without the fund’s participation the rescue programme would end, potentially causing a new funding crisis for the government in Athens.

In an as-yet unpublished report on the Greek economy, the IMF’s staff argue that Greece’s debts are unsustainable and on an “explosive” path to reaching almost three times the country’s annual economic output by 2060.

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Greece’s Response to Its Resurgent Debt Crisis: Prosecute the Statistician

by Marcus Walker

Wall Street Journal
February 6, 2017

Greece is struggling under its austerity regime and new questions are mounting as to whether it can satisfy its bailout terms. Some people in high places know just whom to blame—a statistician in rural Maryland.

Before Greece’s debt crisis, its governments manipulated statistics and masked the size of budget deficits, waste and patronage. The statistician, Andreas Georgiou, moved from the U.S. to become Greece’s first independent head of statistics in 2010. The European Union certified he subsequently fixed the omissions and reported the deficit in full.

On the contrary, Mr. Georgiou’s foes claim, he manipulated the deficit figures as part of a plot to force severe austerity on Greece under the 2010 bailout “Memorandum” imposed by the EU and International Monetary Fund.

Four times in four years, Greek investigators or prosecutors have concluded that Mr. Georgiou merely applied EU accounting rules and committed no crime. Senior politicians and judges have nonetheless kept the accusations alive. He could face five trials, and life imprisonment in one case.

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The IMF Should Get Out of Greece

by Ashoka Mody

Bloomberg
February 3, 2017

The International Monetary Fund's involvement in Greece has been an unmitigated disaster: Time and again, its failure to heed crucial lessons has visited suffering upon the Greek people. When the fund's directors meet on Monday, they should agree to forgive the country's debts and get out.

The IMF should never have gotten into Greece in the first place. As late as March 2010, with concerns about the Greek government's ability to pay its debts roiling markets, Europe's leaders wanted the IMF to stay away. Europeans feared that the fund’s financial assistance to one of their own would signal broader weakness in the currency union. As Jean-Claude Juncker famously put it: “If California had a refinancing problem, the United States wouldn’t go to the IMF.”

Nonetheless, German Chancellor Angela Merkel decided that the IMF’s presence was the signal needed to persuade German citizens that Greece needed urgent financial support and that strict discipline in the use of those funds would be enforced. Merkel’s political priorities coincided with the interests of Managing Director Dominique Strauss Kahn, who was desperate to pull the IMF out of irrelevance. From that moment on, the IMF became Europe's -- mainly Germany’s -- instrument in Greece.

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Greece: Another showdown looming with creditors

The Economist
Intelligence Unit
February 2, 2017

Three things are conspiring to lead Greece towards another conflict with euro zone creditors and another potential debt payments crisis. First, the government is finding it politically almost impossible to push through the reforms required to complete the second review of the bail-out programme. Second, some key euro zone governments facing populist insurgents at the polls are disinclined to make any concessions to Greece. Third, the long-running feud between euro zone institutions and the IMF over how to deal with Greece is coming to a head. In line with our long-standing forecast, we expect the government's political travails to mount in the coming months, and the risk of another early election is rising. We continue to forecast that Greece will leave the euro zone by the end of our medium-term forecast period.

Greece's euro zone creditors are insisting on completion of all reforms under the second programme review and on formal IMF participation in the bail-out programme before they release further funds to Greece. On January 30th Klaus Regling, the head of the European Stability Mechanism (ESM, an inter-governmental assistance fund for countries in the euro zone), the body responsible for loan disbursements to Greece under the third economic adjustment programme, said that Greece must complete the second programme review and the IMF must formally support the programme before the ESM would release further loan tranches. On January 31st the German Ministry of Finance made almost exactly the same points in a public statement.

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Greece three weeks away from 'potentially disastrous' debt problems, says IMF

by Helena Smith

Guardian
January 29, 2016

Greece’s embattled government has three weeks to break the deadlock in increasingly difficult talks with creditors or risk the country’s debt crisis resurfacing with renewed vigour.

Faced with the dilemma of agreeing to additional austerity or calling fresh elections, prime minister Alexis Tsipras was weighing his options at the weekend. Fears of further uncertainty in Europe’s weakest member state mounted as the International Monetary Fund (IMF) predicted that Greece’s debt load could become “explosive” by 2030.

“It is critical that a compromise is found,” said Aristides Hatzis, professor of law and economics at the university of Athens, noting that a slew of elections across Europe would only make Greece’s predicament worse.

“If these negotiations are not wrapped up by 20 February [when eurozone finance ministers next meet] we could be looking at potentially disastrous political turmoil, which would bring back the scenario of Grexit with a vengeance.”

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Turkey threatens to scrap migrant deal in extradition spat with Greece

by Mehul Srivastava & Kerin Hope

Financial Times
January 27, 2017

Turkey has warned Greece it could scrap a deal that helped stem the flow of migrants after a Greek court refused to extradite eight Turkish military personnel.

Mevlut Cavusoglu, Turkey’s foreign minister, made the warning on Friday a day after Greece’s supreme court rejected Ankara’s request for the return of their men it accuses of involvement in last year’s coup attempt.

Mr Cavusoglu said Ankara was keeping its options open in response to the court’s decision in relation to the six army helicopter pilots and two technicians, “including the cancellation of the bilateral readmission agreement”.

Under the accord, Turkey agreed to take back migrants who crossed into Greece and failed to prove their asylum claims. Its cancellation would endanger a more ambitious deal being hammered out between Ankara and the EU that would allow countries in the bloc to return failed asylum seekers.

Scrapping the readmission agreement could encourage more migrants to attempt crossing the Aegean Sea to Greek shores and deal a blow to Athens’ ability to deal with the arrivals.

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France warns ‘window is closing’ for Greek bailout deal

by Jim Brunsden

Financial Times
January 27, 2017

Michel Sapin, France’s finance minister, warned that the “window of opportunity” for a deal on the next stages of Greece’s bailout programme was closing, as a ministerial meeting in Brussels failed to make headway in resolving a split between Athens and the International Monetary Fund.

Mr Sapin, speaking at the end of the regular monthly meeting of eurozone finance ministers, said that the spate of elections in Europe in 2017, starting with those in the Netherlands in March, would soon begin to close out the political space for a deal to be reached. It is widely feared that failure to resolve the issue could knock the bailout programme off course and destabilise Greece.

At Thursday’s meeting, Euclid Tsakalotos, Greece’s finance minister, reaffirmed his rejection of calls from the IMF for Athens to legislate now for the policy measures it would activate after 2018 if the country’s primary budget surplus fell below agreed targets.

Speaking after the meeting, Mr Tsakalotos said it was “not correct to ask a country to legislate two to three years beforehand what it would do in 2019”.

He added: “It is a commitment that goes well beyond the framework of democracy and the ethical values that inspired Europe.”

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Greece’s Top Court Rejects Extradition of Turkish Officers

by Niki Kitsantonis

New York Times
August 26, 2017

Greece cannot extradite eight military officers who fled Turkey after a failed coup in July, the country’s Supreme Court ruled on Thursday. The Turkish government had demanded that the officers be handed over, and it immediately protested the court’s decision.

The court, Greece’s highest, ruled that the eight officers — two majors, four captains and two noncommissioned officers — would face “the curtailment of their fundamental human rights” if sent back to Turkey, and it called for their immediate release. The decision is irreversible.

The officers fled to northern Greece in a Turkish Army helicopter on July 15, saying they feared for their lives, and there was pressure on the court to deal with two seemingly irreconcilable demands: ensuring that the officers’ human rights were respected without angering a sometimes prickly neighbor.

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Greek court rejects Turkish request to return airmen

by Kerin Hope

Financial Times
January 26, 2017

Turkey has protested after Greece’s supreme court rejected its request to extradite eight military personnel who sought political asylum after last year’s coup attempt.

The foreign ministry in Ankara accused Greece of protecting instigators of the coup and harbouring far-left and Kurdish groups that had carried out attacks in Turkey. “Once again Greece, an ally and a neighbour, has failed to fulfil the basics in the fight against terrorism,” the ministry said.

In a written decision released on Thursday, the supreme court ruled against extradition of the six army pilots and two technicians by a majority of 14 to one, saying the men faced “possible violations of human rights” if they were returned to Turkey.

The eight were arrested on July 16, the day after the coup, after landing a military helicopter at Alexandroupolis airport in northern Greece. They faced charges of involvement in a plot to assassinate President Recep Tayyip Erdogan and overthrow the government, according to the extradition documents.

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Greece’s Tsipras Insists on ‘Not One Euro More’ of Austerity

by Marcus Bensasson

Bloomberg
January 25, 2017

Greek Prime Minister Alexis Tsipras dug in against creditor demands for more pension cuts and tax increases before a meeting of euro-area finance ministers to unblock the country’s bailout review.

“There is no way we are going to legislate even one euro more than what was agreed in the bailout,” Tsipras said in an interview with Efimerida ton Syntakton, to mark the two-year anniversary since he was elected on an anti-austerity platform. “The demand to legislate more measures, and contingent ones, no less, is alien not just to the Greek Constitution but to democratic norms.”

Euro-area finance ministers will discuss Greece when they meet in Brussels on Thursday, with Greece and officials representing the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund locked in a stand-off over how to complete the country’s second bailout review, now a year behind schedule. The IMF, in particular, views the projections shared by Greece and the European creditors that the country can reach a primary budget surplus of 3.5 percent of gross domestic product by 2018 as too optimistic.

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Greek court to decide on fate of eight Turkish soldiers

by Helena Smith

Guardian
January 22, 2017

Greece’s supreme court will decide on Monday on the fate of eight Turkish military officers who fled their country a day after last year’s attempted coup in a case that has triggered outrage among intellectuals and is viewed as a test for European democratic values.

The hotly awaited judgment, six months after the doomed putsch against Turkey’s president, Recep Tayyip Erdoğan, has put considerable pressure on already strained relations between Athens and Ankara. “Turkey feels very strongly about this,” a senior official said. “Everyone is watching very closely.”

With the refugee crisis far from over and talks to reunify Cyprus at a critical stage, the ruling could send ripples across the turbulent Aegean Sea that divides the two longstanding Nato rivals. Erdoğan has made clear that he wants the eight men extradited in order to face charges of trying to overthrow the government.

He has publicly said that the Greek prime minister, Alexis Tsipras, has assured him the officers will be sent back. Turkey’s foreign minister, Mevlüt Çavuşoğlu, claims he extracted a similar promise from Nikos Kotzias, his Greek counterpart, during a telephone conversation on 16 July, the day the officers flew their Black Hawk helicopter across the border.

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Fate of eight Turkish airmen is an acid test for democracy

by Nick Cohen

Observer
January 22, 2017

Hard questions for democracies have piled up with a speed we have yet to take in. After the cold war, westerners asked how to stand up to autocrats. Should we intervene to stop genocide in Bosnia? Or demand sanctions and boycotts to protect the rights of Tibetans? The rise of communist China, Putin’s Russia and Erdoğan’s Turkey changed the terms of debate. The question was no longer should we intervene, but could we intervene against powers more than able to resist pressure?

Now that the Trump administration has slouched towards Washington to be born and strongmen have muscled their way into the chancelleries of eastern Europe, the question is more basic: how are supposed democracies different from actual dictatorships?

Greece, the birthplace of democracy, is rarely included in the list of countries that have sunk into corrupt and mendacious authoritarianism. The fact that Syriza is held to be a leftwing rather than a rightwing populist regime is thought to be a distinction of supreme importance by the kind of people who think Paul Mason is an intellectual. Yet the arrival in power of “the coalition of the radical left” did not stop the corruption scandals in Greek politics. Nor did it usher in a new age of freedom.

Instead, Syriza has shown that concepts of “left” and “right” cannot explain the brute realities of 21st-century power. They are almost an irrelevance now. If Donald Trump is right wing, for instance, why do free-market conservatives and national security Republicans fear him so? If Syriza is left wing, why is it in alliance with the ultra-nationalists and religious obscurantists of the Independent Greeks party?

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A Greek tragedy: how much can one nation take?

by Henry Foy

Financial Times
January 20, 2017

It has been more than 3,000 years since the remote Greek village of Efyra had its moment of fame. Perched on one of the rolling hills that undulate across the Peloponnese towards the western coast, it was named by Homer himself as a place that Odysseus once visited.

Today, Efyra draws no such strangers on heroic quests. It is lucky if the local bus, which strains to climb the twisting path to the town, stops more than once a day. For those who live here, it is not just its mythical past that prompts them to look back: many locals say it has no future.

“We are in danger,” says Aggelos Petropoulos, a local baker and the village’s mayor. “Everything is getting worse. Next year will be more so. Old people will die. Young people will not stay. We need help.”

This is a plea increasingly heard across Greece, after more than eight years of financial catastrophe. Today the country has become a byword for the brutal economic, political and social fallout that followed the 2008 crisis. The economy shrunk almost a third in the ensuing years, and the government is effectively bankrupt without outside support: it owes about €320bn — not far from double its gross domestic product of €181bn.

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Italy’s state railway buys struggling Greek operator

by Kerin Hope

Financial Times
January 18, 2017

Greece has wrapped up the sale of its struggling rail operator TrainOSE to Italy’s state railway company as the leftwing government comes under pressure from bailout lenders to accelerate the country’s flagging privatisation programme.

The sale of 100 per cent of TrainOSE to Ferrovie dello Stato Italiane will bring in only €45m. But privatisation officials say it completes a series of infrastructure sales to international investors that will boost Greece’s role as a transport and tourism hub for the eastern Mediterranean.

TrainOSE runs a lossmaking international freight business and a subsidised passenger service linking mainland Greece with central Europe through Macedonia and Serbia. FS is expected to take over the operation of TrainOSE this year.

“[FS] is making an important commitment to strengthen and develop TrainOSE with its expertise and experience, thus creating a major provider of railway services,” Antonis Leousis, chief executive of the Hellenic Asset Development Fund (Taiped), the Greek privatisation agency, said at Wednesday’s signing ceremony.

The sale has still to be approved by the European Commission and ratified by the Greek parliament. Following the signing of the sale agreement, the commission is expected to drop an investigation into allegations that €700m of government subsidies pumped into TrainOSE amounted to illegal state aid, Taiped officials said.

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Will Cyprus be reunified?

Economist
January 15, 2017

The formal split of Cyprus dates to Turkey’s invasion of the island in 1974, which followed a Greece-inspired coup aimed at enosis (union with Greece). Since then Cyprus has been divided between the Greek-Cypriot republic in the south, a full member of the UN and the European Union; and the self-proclaimed Turkish Republic of Northern Cyprus, recognised only by Turkey. Periodic attempts to reunify Cyprus have floundered, most recently in 2004 when the so-called Annan plan was backed by Turkish-Cypriot voters but rejected by three-quarters of the Greek-Cypriot majority. But since 2015 the leaders of the two communities have stepped up efforts to produce a fresh agreement they can sell to their voters. UN-brokered talks in Geneva broke up last week without a deal, but hopes remain high that the two sides will resolve their outstanding disagreements in time to hold dual referendums in the summer. Will Cyprus be reunified?

The constitutional model for a reunified state is a “bi-zonal, bi-communal federation”, based on deep decentralisation to the two communities and power-sharing arrangements at the centre. The recent talks have covered several contentious elements, including governance arrangements, territorial adjustments and compensation for Greek Cypriots who fled the north in 1974. There are also thorny economic issues to settle. But the trickiest matter is security. Under the republic’s 1960 constitution, Britain, Greece and Turkey have the right to military intervention in Cyprus should its integrity be threatened (this was the pretext for the Turkish invasion). The Greek Cypriots want to scrap these provisions, arguing that security is guaranteed by EU membership (Cyprus joined in 2004, although the EU’s writ extends only to the south). But the Turkish-Cypriot minority, harbouring bitter memories of intercommunal fighting that racked the island in the 1960s and ’70s, is wary of giving up protection from Turkish troops, some 30,000-40,000 of whom are stationed in the north. The three guarantor powers, which have been involved in the latest round of talks, must approve any security arrangements. Recep Tayyip Erdogan, Turkey’s mercurial president, may be a stumbling block. He needs the support of Turkish nationalists in parliament for a set of proposed domestic constitutional changes, and they may balk at concessions on Cyprus.

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Cyprus talks end amid divisions over security

by Arthur Beesley

Financial Times
January 13, 2016

Turkey’s president Recep Tayyip Erdogan insisted on his country’s right to maintain troops in Cyprus “forever” after talks in Geneva to reunite the Mediterranean island broke up amid sharp divisions over security arrangements.

After the most intensive effort for years to resolve Cyprus’s longstanding division along ethnic lines, differences over Turkey’s presence on the island seemed more entrenched than at the start of this week’s round of negotiations, officials at the talks in Geneva said.

Mr Erdogan said that pulling out all 30,000 Turkish troops in northern Cyprus was out of the question. “We will be there forever,” Mr Erdogan said in Istanbul on Friday.

Cyprus has been split since 1974, when Turkey invaded and occupied its northern third in response to an Athens-inspired coup aimed at uniting the island with Greece.

A UN buffer zone divides the breakaway Turkish-Cypriot state, recognised only by Ankara, from the Greek-Cypriot state, an EU member. Negotiators for the Greek Cypriot and Turkish Cypriot communities plan a fresh effort next week to break the logjam.

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Greece sends ship to Lesbos to help freezing migrants

by Kerin Hope

Financial Times
January 11, 2017

A Greek navy vessel arrived at the island of Lesbos on Wednesday to provide emergency shelter for 500 refugees and migrants living in unheated tents days after the Aegean Islands were hit by snowstorms and sub-zero temperatures.

The navy said the landing craft had been equipped with beds, mattresses and blankets to cater for asylum seekers from the Moria camp.

“We don’t know yet how long they’ll be on the ship . . . but everyone aboard will be staying a warm and secure environment,” a spokesman said.

The leftwing Syriza government is trying to defuse criticism over its slow response to the latest challenge in looking after 62,000 asylum seekers, mainly from Syria, Afghanistan, Pakistan and Iraq.

More than 40,000 refugees were stranded in Greece when countries along the Balkan migrant route to Germany abruptly shut their borders a year ago.

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Cyprus deal carries rewards and risks

by Tony Barber

Financial Times
January 10, 2017

Should this week’s talks on a Cyprus settlement succeed there would be a host of reasons to welcome the outcome. There are, however, just as many grounds to be cautious about a breakthrough.

Nicos Anastasiades, the Greek Cypriot president of the internationally recognised government of Cyprus, and Mustafa Akinci, the head of the self-proclaimed Turkish Cypriot breakaway state in the north, are in Geneva to try to solve one of the world’s most intractable diplomatic disputes. The east Mediterranean island’s split dates to Turkey’s invasion in 1974, launched after a military junta in Athens tried to unite Cyprus with Greece.

But the political separation of the island’s two communities began in the early 1960s, soon after Cyprus won independence from British colonial rule. For more than five decades, a UN peacekeeping force has served as a buffer between Greek and Turkish Cypriots.

The reasons to welcome a settlement start with the nearby Middle East. A Cyprus solution would help the US, its European allies and friendly governments to concentrate on what they see as the regional menace of Isis and violent Islamist extremism.

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Turkish airmen’s asylum case poses quandary for Greece

by Kerin Hope

Financial Times
January 9, 2017

Eight Turkish military officers who flew their helicopter to Greece to seek asylum after last year’s coup attempt are posing a dilemma for Alexis Tsipras, the Greek prime minister, as their fight against extradition draws to a close.

Turkish President Recep Tayyip Erdogan’s administration wants the six army search-and-rescue pilots and two technicians to be extradited on charges of attempting to overthrow the government. Greece’s supreme court is due to hear the men’s appeals this week.

Mr Tsipras has told Mr Erdogan that “putschists are not welcome in Greece”. But he and his leftwing Syriza-led government will face harsh criticism at home and Europe if the extradition goes ahead, which the Greek government could force through whatever the supreme court’s ruling.

In a telephone interview, a spokesman for the group said they strongly deny complicity in the coup attempt in Turkey in July.

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‘Moment of truth’ arrives for Cyprus as reunification talks begin

by Arthur Beesley

Financial Times
January 9, 2017

Cypriot leaders started the most intense effort in years to reunite the Mediterranean island on Monday as the UN said “the moment of truth” had arrived to settle decades of ethnic division.

Nicos Anastasiades, the Greek Cypriot president, and Mustafa Akinci, his Turkish Cypriot counterpart, began talks in Geneva after several previous failed reunification attempts. Greek, Turkish and British leaders will join the negotiations on Thursday.

“It is going to be difficult but not impossible,” said Espen Barth Eide, the former Norwegian minister who is UN chairman of the Geneva negotiation, on Monday. “We are now in the final moment.”

Cyprus has been split along ethnic lines since 1974, when Turkey invaded and occupied its northern third in response to an Athens-inspired coup aimed at uniting the island with Greece. A UN buffer zone divides the breakaway Turkish-Cypriot state, recognised only by Ankara, from the Greek-Cypriot state, an EU member.

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Η Απελευθέρωση της Ελλάδας

του Αριστείδη Ν. Χατζή

Τα Νέα
6-8 Ιανουαρίου 2017

Απόλυτος σεβασμός προς την νομιμότητα. Υποταγή τυφλή εις τους νόμους της χώρας. Ουδείς συμβιβασμός, ουδεμία συναλλαγή ούτε με τα ανώτερα ούτε με τα κατώτερα στρώματα της κοινωνίας. Αντίστασις εις πάσαν δημαγωγίαν, είτε άνωθεν είτε κάτωθεν προερχομένην. Η κυβέρνησις να είναι το μέσον και ουχί ο σκοπός. Να μη θυσιασθή ουδεμία των ιδεών, τας οποίας θεωρώ ωφελίμους εις την χώραν. Να εγκαταλείψω μάλλον την αρχήν παρά να κατέλθω εις συμβιβασμούς, οίτινες ατιμάζουσι τας κυβερνήσεις και εισίν εμπόδια εις την πρόοδον των λαών.
[Ελευθέριος Βενιζέλος (10 Οκτωβρίου 1910)]

Στις 6 Οκτωβρίου 1910 ο Ελευθέριος Βενιζέλος σχηματίζει την πρώτη του κυβέρνηση, αν και έχει εκλεγεί για πρώτη φορά βουλευτής πριν από δύο μόλις μήνες, ενώ το κόμμα που ίδρυσε (Κόμμα Φιλελευθέρων) εκπροσωπείται στη Βουλή από ελάχιστους βουλευτές. Αφού λάβει ψήφο εμπιστοσύνης θα προκηρύξει εκλογές στις 28 Νοεμβρίου, θα θριαμβεύσει και θα κυριαρχήσει στην ελληνική πολιτική ζωή μέχρι το 1933. Δεν υπάρχει αμφιβολία ότι ο Ελευθέριος Βενιζέλος είναι η μεγαλύτερη πολιτική προσωπικότητα της Ελλάδας του 20ου αιώνα, όπως δεν υπάρχει αμφιβολία ότι μπορεί να του ασκηθεί αυστηρή αλλά δίκαιη κριτική για πολλές από τις επιλογές του. Όμως από την αρχή της πολιτικής καριέρας του στην Ελλάδα υπόσχεται ότι θα παλέψει με τον λαϊκισμό και τη δημαγωγία. Ότι θα κάνει αυτό που νομίζει ότι είναι το σωστό μακροπρόθεσμα για τη χώρα και δεν θα συμβιβαστεί υποχωρώντας μπροστά στο πολιτικό κόστος. Η ιστορία μας διδάσκει ότι αυτό έκανε. Κάποιες επιλογές του ήταν ορθές (οι περισσότερες) και κάποιες λανθασμένες. Σχεδόν σε κάθε περίπτωση ο ελληνικός λαός τον εμπιστεύτηκε (με τη μοιραία εξαίρεση των εκλογών του 1920) και ο Βενιζέλος δικαίωσε αυτή την εμπιστοσύνη.

Ο λόγος που θυμίζω εκείνη την περίοδο, έναν αιώνα μετά, δεν είναι βέβαια για να αναπολήσουμε ή να σας πείσω για την ανάγκη χαρισματικών ηγετών. Αλλά για να σας θυμίσω ότι στην ιστορία της νεότερης και σύγχρονης Ελλάδας, υπήρξαν σπουδαίοι εκσυγχρονιστές πολιτικοί, που προχώρησαν μπροστά, κάνοντας περισσότερες μεταρρυθμίσεις από συμβιβασμούς και πέτυχαν έτσι να αλλάξουν τη χώρα. Και ο ελληνικός λαός τους εμπιστεύθηκε και τους βοήθησε αν και δεν ήταν πάντα εύκολο. Από τον Αλέξανδρο Μαυροκορδάτο μέχρι τον ανιψιό του Χαρίλαο Τρικούπη κι από τον Ελευθέριο Βενιζέλο μέχρι τον Κωνσταντίνο Καραμανλή, η Ελλάδα προχώρησε και ξεπέρασε το τέλμα, ορισμένες φορές ακόμα και με εντυπωσιακά άλματα. Ήταν ηγέτες με μεγαλύτερο ή μικρότερο χάρισμα, με περισσότερες ή λιγότερες ικανότητες. Όμως τους διέκρινε κάτι που τους ξεχωρίζει από τους υπόλοιπους: είχαν ένα, πολύ ξεκάθαρο στο μυαλό τους, σχέδιο για την πορεία της χώρας. Ένα σχέδιο, που ήταν σαφέστατα εκσυγχρονιστικό και βασίζονταν σε ένα όραμα για την Ελλάδα, αδιαπραγμάτευτα ευρωπαϊκό. Δεν ήταν διαχειριστές, ήταν ηγέτες, που δεν αντιμετώπιζαν με δέος το πολιτικό κόστος, αλλά μόνο την αδυναμία να πείσουν τον ελληνικό λαό. Γι’ αυτό και πέτυχαν σε τόσο μεγάλο βαθμό.

Για να καταλάβετε τη σημασία, όχι τόσο του ηγέτη (αν και ο ηγέτης είναι πάντα σημαντικός) όσο του πολιτικού προγράμματος, διαβάστε ξανά το κείμενο του Βενιζέλου και μετά σκεφτείτε τι είδος διακυβέρνησης έχει ανάγκη σήμερα η χώρα μας και τι είδος διακυβέρνησης υφίσταται.

Η σημερινή κυβέρνηση είναι το αποτέλεσμα μιας τερατογένεσης. Είναι μια κυβέρνηση που έχει υιοθετήσει πλήρως την ιδεολογία της αντιμεταρρύθμισης σχεδόν στα πάντα, από την οικονομία μέχρι την παιδεία. Είναι ταυτόχρονα μια κυβέρνηση που υποχρεώνεται, σχεδόν βίαια, να υιοθετήσει μεταρρυθμιστικές πολιτικές στις οποίες δεν πιστεύει και κάνει ό,τι μπορεί για να υπονομεύσει. Είναι μια κυβέρνηση που με εκπληκτικό τρόπο κατορθώνει να συμπυκνώσει όλη την παθογένεια της μεταπολίτευσης: τον καιροσκοπισμό, την περιφρόνηση στους θεσμούς, τον χυδαίο λαϊκισμό, τον κομματισμό και τον νεποτισμό και κυρίως την πολιτική μυωπία. Είναι ταυτόχρονα μια κυβέρνηση ανίκανη και μια κυβέρνηση που δεν φιλοδοξεί να είναι ικανή γιατί η ιδεολογία της είναι η πάση θυσία διατήρηση του status quo. Είναι μια κυβέρνηση που ανέδειξε η απελπισία στην οποία οδήγησε τον ελληνικό λαό η διπλή αποτυχία του παλιού πολιτικού συστήματος: του συστήματος που μας οδήγησε στην κρίση και που δεν κατάφερε να μας διασώσει από αυτήν. Είναι ταυτόχρονα μια κυβέρνηση-άλλοθι για τις ενοχές του ελληνικού λαού. Που στήριξε το απαξιωμένο πολιτικό σύστημα για τρεις δεκαετίες και τώρα προσπαθεί να κρυφτεί πίσω από το δάκτυλό του, δηλαδή τη δύσμορφη καρικατούρα αυτού του πολιτικού συστήματος.

Η χώρα μας έχει βρεθεί αρκετές φορές στην ιστορία της σε αυτό το σημείο που ο Στάθης Καλύβας (Καταστροφές και Θρίαμβοι, 3η εκδ. 2016) ονομάζει «μεγάλες καταστροφές επικών διαστάσεων» που είναι όμως το αποτέλεσμα «υπερφιλόδοξων εγχειρημάτων». Όμως, σύμφωνα με τον Καλύβα, αυτές οι καταστροφές οδήγησαν αργότερα παραδόξως σε θριάμβους. Αλλά η ιστορία ποτέ δεν μας υπόσχεται ότι θα αντιγράψει τον εαυτό της. Ο ελληνικός λαός και οι ηγεσίες του έχουν την ευθύνη.

Στην αυγή λοιπόν της νέας χρονιάς, σχεδόν 200 χρόνια από τον αγώνα για την ελληνική ανεξαρτησία, η χώρα μας θα πρέπει να παλέψει και πάλι για να απελευθερωθεί. Θα πρέπει να ελευθερώσει την πολιτική, την οικονομία και την κοινωνία από όλα τα βαρίδια που την περιορίζουν και την εμποδίζουν να απογειωθεί.

Θα πρέπει να πετάξει από πάνω της τα θλιβερά υπολείμματα του παλαιοκομματισμού, της αντιμεταρρυθμιστικής αντίδρασης, του θεσμικού συντηρητισμού. Θα πρέπει να απαλλαγεί από τις προκαταλήψεις της κατά της Δύσης, του ορθολογισμού, της ελεύθερης ανταγωνιστικής αγοράς, της τεχνολογίας και της καινοτομίας. Θα πρέπει να πετάξει στα σκουπίδια τη μισαλλοδοξία, την ξενοφοβία, τον εθνικισμό, τη συνωμοσιολογία. Μόνο αν απελευθερωθεί η Ελλάδα από τα βαρίδια της οπισθοδρόμησης και μετατραπεί σε μια πραγματικά ανοιχτή κοινωνία θα έχει ελπίδες όχι μόνο να ξεπεράσει την κρίση αλλά και να θριαμβεύσει. Διαφορετικά την περιμένουν νέες μεγάλες αλλά και μικρές καταστροφές. Ακόμα χειρότερα, την περιμένει το τέλμα χωρίς προοπτική. Αυτό που βιώνουμε σήμερα.

* Ο Αριστείδης Χατζής είναι αναπληρωτής καθηγητής Φιλοσοφίας Δικαίου και Θεωρίας Θεσμών στο Πανεπιστήμιο Αθηνών. Το βιβλίο του Φιλελευθερισμός θα κυκλοφορήσει στη νέα σειρά «Μικρές Εισαγωγές» των Εκδόσεων Παπαδόπουλος στα τέλη Ιανουαρίου.

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Turkey’s Coup and Europe’s Rule of Law

by Apostolos Doxiadis

Wall Street Journal
January 5, 2017

The urgent order from their commander was to pick up casualties from an “emergency situation in the center of Istanbul.” As the responding members of three Turkish search-and-rescue teams approached Vatan Avenue in their Black Hawk helicopters, they encountered gunfire so intense that only one of the three helicopters could land and collect the injured soldiers. All three then evacuated to nearby Topkule base.

There, they were instructed by their commander not to return to their home base as it was “unsafe.” A few minutes later Topkule came under attack, with incoming fire aimed at the helicopters. Eight officers escaped in one Black Hawk to a nearby forest, where they turned to their iPads for news.

It was July 15, 2016. A coup was under way, but little else was known. It wasn’t even clear to them for which side, if any, the three Black Hawk crews had just flown their mission.

The officers repeatedly called their commander for further instructions, but without success. When they saw on the news scenes of killings and lynchings of soldiers and officers by “enraged citizens,” they decided to flee, choosing to go to Greece because, as they said, “It’s a European country.” They eventually told me their story in a series of interviews conducted through their lawyer from the detention center here where they are being kept.

To these eight, like hundreds of others who sought asylum in European Union countries in July, “European” represents a certain set of values. The expectation was that they would find safety in the EU until the chaos in Turkey died down.

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For Greece and Turkey, an Old Rivalry Flares

by Nikos Konstandaras

New York Times
January 5, 2017

Eight Turkish military officers who may or may not have been involved in the attempted coup against President Recep Tayyip Erdogan last July are now at the center of a tense standoff between Greece and Turkey. At a time when Greece’s economy is still in limbo and Turks are caught between an increasingly authoritarian government and a surge in terrorist attacks, neither country can afford such a distraction. Yet the two neighbors find themselves at odds once again.

The men — two majors, four captains and two noncommissioned officers — turned up in the northern Greek town of Alexandroupolis in a military helicopter the day after the attempted coup. They have claimed that they were not knowingly involved in the rebellion — that they followed orders but were not aware a coup was in progress — but fled to escape persecution, asking for political asylum.

The government in Athens, one of the first to condemn the coup attempt while it was developing, was flustered. On the day the men turned up in Greece, Turkey’s foreign minister, Mevlut Cavusoglu, spoke by telephone with his Greek counterpart, Nikos Kotzias, and demanded their extradition. On Twitter, he wrote that Mr. Kotzias told him “that eight traitors who fled to Greece will be returned to Turkey as soon as possible.” The Greek Foreign Ministry said the asylum request would be examined on the basis of “the provisions of Greek and international law,” but “it will be borne very seriously in mind that the arrested parties stand accused in their country of violating constitutional legality and attempting to overthrow democracy.”

Since then, the officers have become a touchstone by which many Greeks are testing the independence of their own judiciary and their country’s democratic principles. Those Greeks feel that even if the eight were involved in trying to topple a legitimate government, they should not be sent back to face a judicial system that, they fear, cannot guarantee fair trials. For the Turkish government, however, the eight are traitors, and their flight to Greece was in itself a provocation.

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Greece’s Most-Wanted Terrorist, on Run Since 2012, Is Arrested and Charged

by Iliana Magra

New York Times
January 5, 2017

She was a leader of an anarchist group called Revolutionary Struggle. She helped organize, officials say, a car bombing near the country’s central bank. Later, the authorities say, she rented a helicopter using a fake name and then tried to hijack it in an effort to rescue her imprisoned partner.

On Friday, the anarchist leader, Panagiota Roupa, was charged with theft, forgery and participating in a terrorist organization. She was arrested on Thursday in a house in Ilioupoli, a middle-class suburb southeast of Athens, where she was living under an assumed identity. Her 6-year-old was taken into protective custody.

“Be careful with my son,” she told the officers, according to Theodoros Chronopoulos, the chief spokesman for the national police.

Greek officials called Ms. Roupa, 47 — known by her nickname, Pola — the country’s “No. 1 most-wanted” terrorist. With her partner, Nikos Maziotis, she was a leader of Revolutionary Struggle, which carried out a string of bombings and shootings targeting the police and others starting in 2003, and fired an antitank grenade at the United States Embassy in Athens in 2007. The attacks caused several injuries, but no deaths.

“She is the No. 1 most-wanted domestic terrorist, as she has been crucial in managing the Revolutionary Struggle, but more specifically in recruiting,” Mr. Chronopoulos said in a phone interview.

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How Greece’s Troubled Economy Could Turn Around in 2017

by Nicholas Economides

Fortune
January 3, 2017

Violating the terms of its bailout program, the Greek government recently announced that it will distribute a sizeable “Christmas gift” to Greek pensioners even though this requires additional borrowing from the EU since the Greek budget is not balanced and Greece cannot borrow from money markets. The move has prompted the EU finance ministers to freeze implementation of debt restructuring. Greece is at the brink again.

This is the modern-day, Greek economic tragedy. But unlike the three-acts ancient Greek tragedies, we’ve seen many acts and often the horrible events happen on stage. Of the main actors, the Greek government repeatedly threatens with suicide elections; the IMF tries to apply the same rules to all countries irrespective of development level; the EU bureaucrats paint a rosy picture with no grounding in reality or economics, and German Finance Minister Wolfgang Schaeuble keeps reading the same austerity rulebook no matter what the circumstances. Even worse, there is practically no dialogue among the actors – they deliver their monologues past each other, each trying to please a different chorus. How did we get here (again), is there hope, and, more importantly, and how does it end?

After two large bailouts in 2010 and 2012 from the EU and the IMF, and after a negotiated haircut of €100 billion off its bonds, Greece was close to recovery in 2014. It had reversed the 2010 15-plus percent deficit and achieved a small primary surplus (before paying interest), reached growth after four years of recession, and even issued new bonds. However, the fiscal consolidation did not happen through spending cuts but rather through large increases in taxation, resulting in a multi-year recession. With Greeks having lost 25% of their income, and unemployment at 25%, disaffected voters brought to power a tiny, radical left party in early 2015.

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'Patients who should live are dying': Greece's public health meltdown

by Helena Smith

Guardian
January 1, 2017

Rising mortality rates, an increase in life-threatening infections and a shortage of staff and medical equipment are crippling Greece’s health system as the country’s dogged pursuit of austerity hammers the weakest in society.

Data and anecdote, backed up by doctors and trade unions, suggest the EU’s most chaotic state is in the midst of a public health meltdown. “In the name of tough fiscal targets, people who might otherwise survive are dying,” said Michalis Giannakos who heads the Panhellenic Federation of Public Hospital Employees. “Our hospitals have become danger zones.”

Figures released by the European Centre for Disease Prevention and Control recently revealed that about 10% of patients in Greece were at risk of developing potentially fatal hospital infections, with an estimated 3,000 deaths attributed to them.

The occurrence rate was dramatically higher in intensive care units and neonatal wards, the body said. Although the data referred to outbreaks between 2011 and 2012 – the last official figures available – Giannakos said the problem had only got worse.

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Greece: A question of independence

by Jim Brunsden & Kerin Hope

Financial Times
December 29, 2016

As Yannis Stournaras, the governor of the central bank of Greece, settled into his seat for the three-hour flight from Athens to Frankfurt, he felt a sense of relief that one of the many problems in his in-tray was about to be resolved.

Attica Bank, the country’s fifth-largest lender, was poised to install a new management team he thought was capable of turning round the struggling lender. The only step left was for Attica’s board to officially approve the appointment of Theodoros Pantalakis, a former chairman of Agricultural Bank of Greece, as its new chief executive.

When he landed in the German city that afternoon in early September, however, he realised something had gone wrong. While he was in the air, the government in Athens reversedthe decision to award the job to Mr Pantalakis. It was his introduction to a web of allegedly related events, ranging from a raid on his wife’s business to an unsuccessful bid for TV rights backed by Attica loans.

According to sources, government figures arranged with the Engineers and Public Contractors Pension Fund (TSMEDE), Attica’s largest shareholder, to hand the job instead to Constantine Makedos, a civil engineer with little banking knowledge. Attica has close ties to Syriza, Greece’s ruling party, through links with the trade union that controls TSMEDE.

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Greece’s New Year of Living Dangerously

by Yannis Palaiologos

Wall Street Journal
December 21, 2016

If last year was the year of upheaval and survival for Alexis Tsipras, this year has been the year of the slow grind. As we near the end of 2016, Mr. Tsipras finds himself squeezed—by Germany and the International Monetary Fund, by Turkey and the refugee crisis, by his false promises and collapsing popularity—to the point of political extinction.

The pace of decline in the Greek prime minister’s fortunes is remarkable. Coming into the final quarter of the year, the government appeared to have a narrative and a plan. In early October it put the finishing touches on the first review of its third bailout program—albeit a year later than initially expected. Mr. Tsipras and his economic team then set the ambitious target of finalizing the second review by the Dec. 5 meeting of the eurozone finance ministers. This would have cleared the way for the European Central Bank to buy Greek government bonds under its quantitative-easing program, sending a strong signal of confidence to investors.

There were warning signs, of course, that all would not go smoothly. Mr. Tsipras’s government ministers continued, for instance, to obstruct central planks of the bailout program, especially the privatization of state-owned assets. But doubters were told to ignore the noise. A cabinet reshuffle in early November, sidelining some members of this internal resistance, was an encouraging sign.

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The drawn-out drama of Greek debt has no end in sight

by Kerin Hope

Financial Times
December 19, 2016

In Athenian cafés where politics are discussed, a furious debate rages over when in 2017 Greece is likely to hold the next general election.

The question might seem premature, given that the current government of Alexis Tsipras, prime minister and leader of the leftwing Syriza party, is only 14 months into its four-year term.

However, as café analysts point out, the average lifespan of administrations since the country plunged into an economic abyss in 2009 is below two years.

“It [the election] will be early spring or early autumn next year. I’m betting on autumn,” says Miltiades, a civil servant who claims to have predicted correctly the timing and outcome of three recent elections. “Regardless of when it happens, it’s likely there’ll be a change of government,” he adds.

Some observers argue that the country’s political instability reflects the unwillingness of successive Greek governments to take decisive “ownership” of reforms despite urging by their main creditors, the eurozone countries and the International Monetary Fund.

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Greek asset sell-offs begin to attract foreign investors

by Kerin Hope

Financial Times
December 19, 2016

Stergios Pitsiorlas admits without hesitation that Greece has a problem with attracting foreign investors. “There’s a culture here that’s not friendly to investors and it’s deep-rooted,” he says. “But it’s beginning to change.”

To underline his point, Mr Pitsiorlas lists half a dozen disposals of state-controlled companies, infrastructure and chunks of real estate that were completed while he served as executive chairman of the Hellenic Republic Asset Development Fund (Taiped), the country’s privatisation agency.

All were eventually approved by the Greek parliament in spite of strong resistance from hard-left cabinet ministers in the Syriza-led government, trade unions and local municipalities.

Promoted recently to deputy economy minister for investment, Mr Pitsiorlas is optimistic that the country may finally be turning a corner. “There is serious interest now in Greece,” he says. Manufacturing is among the areas of interest, “as wages have fallen significantly during the crisis”. The fact that the country’s two biggest privatisation deals are now being implemented has given an overall boost to investor confidence, Mr Pitsiorlas argues.

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Tsipras walks tightrope of reform

by Kerin Hope

Financial Times
December 19, 2016

The fiery rhetoric against austerity is gone, at least for now. A more composed Alexis Tsipras says he welcomes foreign investment as “mutually beneficial” for business and for the country.

The prime minister and leader of the leftwing Syriza party is anxious to see Greece return to borrowing on international capital markets in 2017 after a three-year gap.

He has sacked some, though not all, of the far leftists in his cabinet who opposed an ambitious new €50bn privatisation programme agreed with the Greece’s creditors, the eurozone bloc and the International Monetary Fund.

Syriza’s policymaking has turned upside down since mid-2015 when voters in a referendum rejected tough new bailout proposals, heightening fears that Greece would crash out of the euro.

Mr Tsipras capitulated within days, signing up to a €86bn third bailout that carries harsh conditions. Nonetheless, Syriza won a snap general election in September last year and immediately renewed an unlikely coalition with the rightwing nationalist Independent Greeks (Anel) party formed after its first electoral victory in January 2015.

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The drawn-out drama of Greek debt has no end in sight

by Tony Barber

Financial Times
December 19, 2016

The geopolitical, economic and moral themes of the Greek debt crisis are engrossing. They make it one of the great international dramas of the early 21st century. But 2016 was the year when much of the audience lost interest and turned its attention elsewhere.

Britain’s vote to leave the EU, Matteo Renzi’s defeat in Italy’s constitutional reforms referendum and Donald Trump’s US presidential election victory were compelling theatrical spectacles. The repercussions will be profound for the UK, Europe and the post-1945 US-led liberal world order.

By contrast, spectators of the Greek drama feel cheated. It is a play that seems stuck in its third or fourth act, still a long way from either a happy or unhappy ending and not as likely to shake the world as seemed possible in 2015.

For the drama’s failure to reach a denouement, blame the scriptwriters. These include Greece’s political and administrative classes, the nation’s eurozone partners and the International Monetary Fund. Year after year, each contributes a farrago of actors’ lines and stage directions. Yet the curtain never falls and the play drags interminably on.

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Hangover cure and clutching at straws drive Greece’s export sales

by Kerin Hope

Financial Times
December 19, 2016

The challenges faced by Greece’s many small companies have mounted as the financial crisis has gone on. The country’s manufacturers in particular have been hit hard by falling domestic sales and a desperate lack of bank credit to finance export drives.

“Small producers are among the worst hit by capital controls and the squeeze on bank liquidity, especially companies that have to import raw materials,” says Kostis Michalos, chairman of the Athens chamber of commerce and industry.

Yet small companies in sectors such as food and beverages and specialised plastic products are improving their international competitiveness by targeting niche markets.

The makers of Tuvunu, a low-calorie soft drink, uses Greek mountain tea, a local herb, as the raw material for making a rival to international iced-tea brands, doing away with the need for imported raw materials.

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Tsipras will put pensioner bonus to Greek parliament

BBC News
December 14, 2016

The Greek Prime Minister Alexis Tsipras has refused to back down over his plans to give poor Greek pensioners a pre-Christmas bonus.

A government official said Mr Tsipras would ask parliament on Thursday to approve the payment, worth €617m (£517m) in total.

Earlier, eurozone lenders suspended their recently agreed short-term debt-relief plan for Greece.

They said they had not been asked to approve the bonuses plan.

The European Stability Mechanism (ESM), the body that helps eurozone governments in trouble, said it would now be scrutinising the proposed handout.

"Following recent proposals by the Greek government to spend additional fiscal resources for pensions and VAT, our governing bodies have put their decisions temporarily on hold," a spokesman for the ESM said.

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IMF denies it is trying to force more austerity in Greece

by Jim Brunsden

Financial Times
December 12, 2016

Senior International Monetary Fund officials have rejected claims that the organisation is seeking to impose more austerity on Greece, in a sign of tension over whether the fund will join the eurozone’s €86bn bailout of the country.

In a blog post published on Monday afternoon, Poul Thomsen, director of the IMF’s European department, and Maurice Obstfeld, the fund’s chief economist, say that their main worries are that Greece is pursuing policies that are “unfriendly to growth” and that country’s debt is “highly unsustainable”.

The post lays bare the gulf between eurozone and IMF visions of what the Greek bailout programme should look like. It also shows the level of frustration at the fund over what is sees as misrepresentation of its stance by leading eurozone policymakers.

Recent discussions have “spurred some misinformation about the role and views of the IMF”, the officials said. “We have not changed our view that Greece does not need more austerity at this time.”

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The IMF is Not Asking Greece for More Austerity

by Maurice Obstfeld & Poul M. Thomsen

iMFdirect
December 12, 2016

Greece is once again in the headlines as discussions for the second review of its European Stability Mechanism (ESM) program are gaining pace. Unfortunately, the discussions have also spurred some misinformation about the role and the views of the IMF. Above all, the IMF is being criticized for demanding more fiscal austerity, in particular for making this a condition for urgently needed debt relief. This is not true, and clarifications are in order.

The IMF is not demanding more austerity. On the contrary, when the Greek Government agreed with its European partners in the context of the ESM program to push the Greek economy to a primary fiscal surplus of 3.5 percent by 2018, we warned that this would generate a degree of austerity that could prevent the nascent recovery from taking hold. We projected that the measures in the ESM program will deliver a surplus of only 1.5 percent of GDP, and said this would be enough for us to support a program. We did not call for additional measures to achieve a higher surplus. But contrary to our advice, the Greek Government agreed with the European institutions to temporarily compress spending further if needed to ensure that the surplus would reach 3.5 percent of GDP.

We have not changed our view that Greece does not need more austerity at this time. Claiming that it is the IMF who is calling for this turns the truth upside down.

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Greece Heads Toward New Crisis in Debt Saga as Support for Tsipras Slumps

by Nektaria Stamouli & Marcus Walker

Wall Street Journal
December 12, 2016

Greece’s crisis is approaching a potential breaking point after a year of relative calm, as a government with declining political stamina confronts creditors’ unyielding demands.

The ruling left-wing Syriza party, grappling with slumping popularity, is considering the option of calling snap elections in 2017, as it loses hope of winning concessions on debt relief or austerity from the eurozone and International Monetary Fund.

No decision for elections has been made, said Greek officials, who added that they would review the state of negotiations in January, after pressing creditors again to show more flexibility.

Elections would allow Syriza—if not Greece—to escape from the pressures of an unpopular bailout program whose strained math has eventually brought down every Greek government since the crisis began in 2009. Syriza’s leader and Prime Minister Alexis Tsipras, like his predecessors, is struggling to meet strict fiscal targets in a recession-scarred country weary of austerity.

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