Fragile Balkans’ future depends on Macedonia deal

by Tony Barber

Financial Times
May 7, 2018

If the definition of progress is that a country no longer names its capital’s airport after a warrior king who died 2,300 years ago in Babylon, then there is surely hope for the Balkans — the source of many a modern European conflict. In February, Macedonia’s reformist leadership reversed the previous government’s bombastic nationalism and changed the name of Alexander the Great airport to Skopje International. The ice began to melt in one of post-Communist Europe’s most vexed disputes.

On the highway into Skopje, capital of the former Yugoslav republic, large green signs tell of more change. The road no longer bears Alexander’s name but is called Friendship Highway. Macedonian leaders consider these relabelling exercises to be not cosmetic but genuine concessions to Greece. For 27 years, Athens has accused its northern neighbour of laying claim to Greece’s territory, cultural heritage and identity by using Macedonia as a name and Alexander as a state symbol.

Negotiations aimed at finding a compromise on Macedonia’s name are approaching a climax. The foreign ministers of Greece and Macedonia have met 20 times. Should a deal be struck, it would send a rare signal to other quarrelling Balkan states and communities — Serbia and Kosovo, for example, or the Muslims, Croats and Serbs of Bosnia and Herzegovina — that even the most painful historical wounds heal with treatment.

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Greek banks face €15.5bn hit to capital under stress tests

by Martin Arnold & Kerin Hope

Financial Times
May 5, 2018

Greece’s four biggest banks would take a €15.5bn hit to their average capital in a future economic downturn, according to the results of the European Central Bank’s stress test of the country’s main lenders.

The ECB’s health check of the Greek banking system is designed to determine if any of the banks need extra equity before the country enters talks on leaving its eight-year bailout programme.

Senior Greek officials said the outcome of the exercise meant there was “no immediate need for a capital increase by any bank”. However, one official said that while the banks were out of immediate danger they needed to clean up their balance sheets and several were likely to raise capital soon — notably Piraeus Bank, which emerged as a laggard in the tests.

“The stress test have gone as well as we could expect,” said one official, adding that they would ease Greece’s return to borrowing on international markets.

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Achieving an inclusive and sustainable recovery in Greece

by Mauro Pisu & Tim Bulman

OECD
April 30, 2018

Greece is finally recovering from a deep depression. In 2017 GDP expanded by 1.3%, according to initial estimates, and is projected to accelerate to 2% in 2018 and 2.3% in 2019 (Figure 1). Labour market reforms have improved competitiveness and exports are leading the expansion. Overall the economy is becoming more open. Exports rose from 24% of GDP in 2008 to 34% in 2017. Employment is rising strongly while the external and fiscal imbalances are being addressed. Public finances are outperforming European Stability Mechanism (ESM) Stability Support programme’s targets, helping to restore fiscal credibility. Financial markets are taking notice, with bond spreads falling and agencies upgrading their ratings of Greece’s public debt.

Despite these positive developments, the long crisis has left deep scars in the society that have yet to heal. GDP per capita is still 25% below its pre-crisis level. The public debt is still high. Wages are low. Though poverty has stabilised, it remains near a record high, especially among the young and families.

The OECD’s 2018 Economic Survey of Greece suggests that maintaining the reform momentum and strengthening reform ownership will be essential to sustaining the recovery and moving towards a more inclusive and prosperous society. Keeping the reform momentum is crucial to tackle the three key challenges highlighted in the 2018 Survey: Improving debt sustainability, sustaining job growth and reducing poverty, boosting investment.

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Read the OECD 2018 Economic Survey for Greece

Relief for Greece? The debt dilemma facing creditors

by Jim Brunsden, Mehreen Khan & Kerin Hope

Financial Times
April 26, 2018

Greece is approaching a momentous moment: the end of eight years of international bailouts that forced the country into unprecedented belt-tightening in exchange for a cash lifeline from eurozone governments and the International Monetary Fund.

But even as the August 20 end date for Greece’s support programme looms into view, Athens knows the next few weeks will be crucial in determining relations with its creditors and the scale of its debt repayments for years, if not decades, to come.

Eurozone finance ministers will gather in Sofia on Friday to press ahead with negotiations that are supposed to deliver a political deal by June on an “exit package” for Greece. It is intended to ensure the country can smoothly return to the sort of normal market financing that most nations enjoy.

But that will require eurozone governments to tackle something they have avoided for years: how much debt relief Athens will be allowed.

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Greece’s Creditors Close to Compromising on Debt

by Viktoria Dendrinou

Bloomberg
April 21, 2018

Greece’s creditors are getting closer on a deal to ease the country’s debt burden, according to Eurogroup President Mario Centeno.

Greece’s 86-billion euro ($106-billion) bailout program is set to run out in August, and creditors are working on finding a compromise on debt repayments that would help to manage the country’s financing needs after it stops receiving international aid. A debt deal would also allow the International Monetary Fund to participate in the current bailout.

“The positions today are much closer than they used to be before,” Centeno, who is Portugal’s finance minister and chairs the meetings of his euro-area counterparts, said in an interview in Washington. “We still have a final mile to go but there is a positive sentiment around the table so I think that reflects a true willingness to be part of the program.”

Further easing Greek debt is a key precondition for the Washington-based IMF before it can participate in the country’s program. While the IMF has co-financed Greece’s first two bailouts it hasn’t yet activated its third one, arguing the euro area must arrange for more debt sustainability. But the participation of the fund, even a few months before the end of the bailout, is important for some countries including Germany, who see the IMF coming on board as a seal of approval that will offer credibility to the bailout.

A “committed presence” by the IMF will also help with market confidence, Centeno said.

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Greek parliament ends probe into bribery allegations

by Kerin Hope

Financial Times
April 19, 2018

Greece's parliament has ended a probe into allegations that 10 senior politicians, including two former prime ministers, the governor of the central bank and the country's current EU commissioner, accepted millions of euros in bribes from the Swiss drug producer Novartis.

An all-party parliamentary committee decided late Wednesday night that it was not competent to pursue the case.

The committee will hand back the case to a special prosecutor to investigate possible money-laundering by the 10 accused, a parliamentary spokesperson said. An anti-corruption prosecutor has already ordered bank accounts belonging to the politicians to be opened as part of the probe.

All those accused have denied wrongdoing, claiming they were targeted by the leftwing Syriza government in a drive to undermine the credibility of its political opponents.

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Tsipras Fights on All Fronts as Greece Is Back in the Spotlight

by Eleni Chrepa

Bloomberg
April 16, 2018

Consider what Greek Prime Minister Alexis Tsipras is up against.

As Greece prepares to free itself from an eight-year European bailout, its 43 year-old premier is confronting challenges at home and abroad. On the domestic front: preparations for post-bailout economic life and the first general election since the end of the program, including feuds with both allies and rivals. On the foreign-policy front: increased tensions with traditional rival Turkey and regional instability stemming from a dispute over a neighboring country’s name.

Tsipras’s ability to navigate through all this could determine just how stable the country and its region will be in coming years, experts say, and the European Union, the U.S. and the North Atlantic Treaty Organization are all watching with interest.

“The worst problem for Tsipras, for the government, but also for Greece is the evolving ‘rogueness’ of Turkey,” said Aristides Hatzis, a professor of law and economics at the University of Athens. “Diminishing American influence on the region is a destabilizing factor and the stakes are very high,” Hatzis said, adding that Greece is not a primary concern for Turkey, but a part of an overall plan by President Recep Tayyip Erdogan to establish hegemony in the region.

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How to Solve the Greek Debt Problem

by Jeromin Zettelmeyer, Emilios Avgouleas, Barry Eichengreen, Miguel Poiares Maduro, Ugo Panizza, Richard Portes, Beatrice Weder di Mauro, & Charles Wyplosz

Peterson Institute for International Economics
Policy Brief 18-10
April 2018

Greece’s debt currently stands at close to €330 billion, over 180 percent of GDP, with almost 70 percent owed to European official creditors. The fact that Greece’s public debts must be restructured is by now widely accepted. What remains controversial, however, is the extent of debt relief needed to make Greece’s debt sustainable.

This Policy Brief argues that the debt relief measures outlined by the Eurogroup will not be sufficient to restore the sustainability of Greece’s debt. At the same time it shows that Greece’s debt sustainability can in fact be restored without aggravating moral hazard—i.e., encouraging future governments in Greece and elsewhere in the euro area to take risks in the belief that they will be bailed out—and within the framework of EU law, in particular Article 125 of the Lisbon Treaty, which prohibits EU members from assuming liability for the debts of other members.

It concludes that only conditional face value debt relief, in combination with the measures already considered by the Eurogroup, would restore Greece’s debt sustainability with reasonable confidence. Furthermore, if the debt relief is structured in a way that creates incentives for additional fiscal adjustment, as proposed in this Brief, the amount of face value debt relief required could be modest—on the order of 10 to 15 percent of the outstanding official debt.

Read the PDF

Uber to suspend service in Greece after new legislation

Reuters
April 5, 2018

Ride-hailing service Uber said on Thursday it would suspend its licensed service in Greece after the approval of local legislation which imposes stricter regulation on the sector.

Uber, which operates a licensed service in the Greek capital, has faced opposition from local taxi drivers who accuse it of taking their business.

“New local regulations were voted on recently with provisions that impact ride-sharing services,” Uber said in a blog post. “We have to assess if and how we can operate within this new framework and so will be suspending uberX in Athens from next Tuesday until we can find an appropriate solution.”

Uber operates two services in Athens: UberX, which uses professional licensed drivers, and UberTAXI, which uses taxi drivers.

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Lignite mining: Greece’s dirty secret - in pictures

Photographs and research by Anna Pantelia

Guardian
March 23, 2018

Mining for lignite - or brown coal - in Greece is a huge industry. Together with Germany and Poland, the country accounts for more than one-third of the world’s coal production. But for residents of villages in the extraction areas of West Macedonia, it has many impacts, from displacement to health problems.

Thick dust suspended in the atmosphere makes it hard to see the sun over Ptolemaida, a city 500 kilometres north-west of Athens in the West Macedonia region, known for its brown coal (lignite) mines and power stations.

Kostas works as a guard for the state-owned Public Power Corporation (PPC), like his father before him. “My father died of cancer when I was 12,” he says. “Four other men from his shift lost their lives from cancer.”

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Independent report on the Greek official debt

by Emilios Avgouleas, Barry Eichengreen, Ugo Panizza, Miguel Poiares Maduro, Richard Portes, Beatrice Weder di Mauro, Charles Wyplosz & Jeromin Zettelmeyer

CEPR Policy Insight No 92
March 20, 2018

Greece’s third economic programme has been relatively successful, but before it can return to private market financing, the country will require more official debt relief. This Policy Insight asks how much debt relief is required and how it should be delivered. Any debt relief package for Greece that wishes to avoid shifting the burden of repayment several generations into the future will need to include some degree of face-value debt relief.

Download the Paper (PDF)

Bribery allegations dog Greek elite

by Kerin Hope

Financial Times
March 18, 2018

One witness reports that a smartly-dressed Greek executive working for a Swiss pharmaceuticals group wheeled a suitcase into the office of Greek Prime Minister Antonis Samaras. In the case: €2m in large-denomination notes.

On another occasion the same executive is said to have handed a briefcase containing €1m to Yannis Stournaras, then finance minister and now central bank governor, in his sixth-floor office.

These allegations of unabashed bribe-taking by former high-ranking government officials in Greece have emerged from a healthcare scandal being probed by an anti-corruption prosecutor, who has placed three anonymous whistleblowers in a witness protection scheme. The bribery allegations were leaked to Greek media ahead of a parliamentary investigation into the affair.

Mr Samaras and Mr Stournaras strongly deny wrongdoing. They say they are victims of a drive by the leftwing Syriza government of Alexis Tsipras, prime minister, to take control of the country’s judiciary and use legal means to discredit political opponents.

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Greece Is Quietly Backsliding on Reform

by Phyllis Papadavid

Bloomberg
March 14, 2018

Greece’s planned August exit from its third European Stability Mechanism bailout has triggered investor optimism. Its July 2017 bond issuance, the first in three years, was oversubscribed, as were subsequent issuances in February of this year. And yet financial investors should curb their optimism. Greece’s return to the markets, and its economic recovery, are likely to be a bumpy and slow -- especially if it continues to delay key reforms.

Greece’s growth appears to have stabilized at a low rate; some take that as a sign of normalization. The problem with this optimism is that it’s not clear where the future drivers of growth will come from. Household consumption has recovered somewhat, but at an average 0.65 percent growth in 2017, it remains weak by any measure. And with further tax increases and pension cuts planned, it’s hard to see any scope for further acceleration.

No news isn’t necessarily good news when it comes to Greece. Quietly, the government has backtracked on important reform efforts such as privatizing key industries, where it continues to miss its targets. In Athens I drive by the abandoned Ellinikon airport regularly, and its state is a sore reminder of how Greece has long failed to capitalize on its assets. A stalled recovery will mean no real boost in revenues to fund investments. Its debt dynamics will also continue to result in a higher cost of financing.

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Greek Regulator Probes Piraeus Ex-Head for Laundering Breaches

by Christos Ziotis

Bloomberg
March 13, 2018

Piraeus Bank SA property deals involving managers including Former Chairman Michalis Sallas may have cost the bank 6.4 million euros ($7.9 million), according to a report by Greece’s Anti Money-laundering Authority.

In the report, a copy of which was reviewed by Bloomberg, the regulator said it looked at the bank’s sale of five properties to a Cypriot firm in 2016 and found that “there are strong indications that Mr. Sallas and other members of Piraeus management who participated in the deals are guilty of malfeasance.” Sallas, who led the firm for a quarter of a century until he stepped down in July 2016, disputes the report’s findings and denies any wrongdoing.

The properties -- which had been sold in 2003 to companies “linked to Sallas or members of his family” and then repurchased in 2006 by Piraeus -- were offloaded to the Cypriot company in 2016 using loans from the bank, the report said. The transactions, with funds going through a series of intermediate companies, showed the lender was “breaching prudent banking methods,” resulting in a financial hit for the bank, the regulator said.

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Greek Superleague suspended after team owner invades pitch with a gun

by Helena Smith

Guardian
March 12, 2018

Greece’s Superleague has been suspended indefinitely and the country threatened with a ban from world football as the government scrambled to contain the fallout from the extraordinary scenes on Sunday when the gun‑toting oligarch owner of Paok Salonika stormed on to the pitch in a fit of fury to challenge a goal.

Athens’ leftist-led administration, facing widespread criticism of the lawlessness into which the country’s league has sunk, said all top-flight games would be brought to an immediate halt.

“We have decided to suspend the championship indefinitely,” the deputy sports minister, Giorgos Vassiliadis, said after holding two hours of emergency talks with the prime minister, Alexis Tsipras. “The most important thing is that rules apply to everyone. We are in communication with Uefa and the championship will not resume unless there is a new and clear framework, agreed by all, to move forward with rules and regulations.”

Speaking hours after the announcement of an arrest warrant for Paok’s proprietor, Ivan Savvidis, the politician insisted the government would not renege on its decision whatever the “political cost”. He said: “We are not going back, we will continue the fight for transparency and a better football.”

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Greek parliament throws out Syriza probe request after angry debate

by Kerin Hope

Financial Times
March 9, 2018

Greece’s parliament has thrown out a request by the centre-right opposition for a probe of three health ministers from the ruling Syriza party as tensions mounted in a dispute over alleged bribe-taking by senior politicians.

The New Democracy party made the proposal in retaliation against a parliamentary investigation launched this week of two former prime ministers, the central bank governor, Greece’s current EU commissioner and six former health ministers for allegedly taking bribes from Novartis, the Swiss drugs company.

All 10 politicians have strongly denied the accusations. Several argued the case lacked validity because it was based on second-hand testimony by unnamed protected witnesses.

Lawmakers from Syriza and its coalition partner, Independent Greeks, turned down the opposition proposal in a late night vote after a day of angry debate.

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Greece and the Troika – Lessons from International Best Practice Cases of Successful Price (and Wage) Adjustment

by Ansgar Belke & Daniel Gros

European Journal of Comparative Economics
Volume 14, No. 2 (2018)

This paper reviews cases of successful price and wage adjustment in Australia, Latvia and the newly-formed German states and contrasts them with the Greek experience under the Troika programme. Latvia stands out as having had the quickest adjustment in wages. By contrast, before the crisis, Greek wages appeared to have been largely insensitive to labour market conditions, but this changed with the programme. The authors find that the reaction of wages to unemployment in Greece under the programme was increasingly similar to that observed in Germany and Portugal (a case that has attracted less attention). A priori it is likely that the change in wage behaviour in Greece was due to the labour market reforms imposed under the programme. But this cannot be proven beyond doubt.

Read the Paper (PDF)

Greece's "Clean Exit" from the Third Bailout: A Reality Check

by Miranda Xafa

Centre for International Governance Innovation
March 2, 2018
CIGI Policy Brief No. 124

With Greece and its creditors aligned in their desire to avoid a fourth bailout, a smooth exit from the current program appears likely in August after completion of the fourth review; however, several more steps are necessary before Greece exits the program. Greek Prime Minister Alexis Tsipras may try to capitalize on a smooth exit from the program by calling early elections in the fall of 2018, before politically painful cuts in pensions take effect. The “twin deficits” in the fiscal and external accounts have all but disappeared, but fiscal imbalances have migrated to private sector balance sheets. Tax arrears and non-performing loans remain at record-high levels while growth disappointed in 2017. These challenges test Tsipras’s promise to make Greece “normal” again. Without further reform to improve the entrepreneurial climate and attract investment, the Greek economy risks being trapped in a low-growth equilibrium.

Download the Policy Brief (PDF)

The inconvenient truths about Greece

by Theodore Pelagidis & Michael Mitsopoulos

Brookings
March 1, 2018

As Greece seemingly returns to normal, everybody in Athens, Washington, and Brussels hopes to put the whole affair in the rear view mirror, possibly because they know that, at the height of the crisis, neither Greece nor Europe dealt with their respective weaknesses.

But how can this be, when so much has been done—so many pieces of legislation adopted in Europe to deal with the crisis, so many mechanisms created, and so many measures imposed on the mostly reluctant Greeks?

Europe has done rather little to update the structure of its governance to deal with the core issues that exposed it to the crisis, whether in terms of the shakiness of the European Union or with respect to the struggle to enforce EU law evenly in all member states to facilitate “convergence in institutions.” And Greece has done little to offer quality governance to the Greeks in line with an idealized European state.

Which brings us to the inconvenient truths about the supposed “Greek success story.” The average size of Greek firms remains small, a product of many longstanding structural weaknesses at the national level that served as an almost insurmountable barrier to growth. The fallout from this can still be observed in the weak private sector job market, weak innovation and export activity, the “missing tax base,” and a persistently high consumption to GDP ratio. The adjustment programs have failed to put Greece on a trajectory that clearly separates it from these negative metrics that characterize the years until the eruption of the crisis.

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Greek central bank governor repeats call for post-bailout safety net

by Kerin Hope

Financial Times
February 26, 2018

Greece’s central bank governor has again urged the government to seek a precautionary credit line after the current €86bn bailout ends in August to reduce borrowing costs on international financial markets.

Yannis Stournaras told the annual meeting of shareholders of the Bank of Greece that “such an arrangement would provide secure access to financing for Greek banks and the public sector after the [bailout] programme ends.”

“The possibility of making use of a preventive support programme shouldn’t be over-dramatised . . . these European mechanisms were created to be used when they are needed,” Mr Stournaras added.

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Greece wraps up port privatisation after three years

by Kerin Hope

Financial Times
February 23, 2018

Greece’s parliament has ratified the €1.1bn privatisation of the northern Greek port of Thessaloniki, with a sale to to a consortium of German, French and Russian-Greek companies.

The disposal of OLTH, operator of the port, takes the form of a combined share sale and concession deal, and was agreed under terms of Greece’s international bailout programme. It took three years to complete.

The Hellenic Republic Asset Development Fund, the country’s privatisation agency, is now moving ahead with the disposal of the Alexandroupolis port in northeastern Greece and nine other regional ports that are 100 per cent state-owned.

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A Modern Greek Tragedy

by Adam Tooze

New York Review of Books
March 8, 2018

On January 25, 2015, after five years of debt crisis and economic and social decline that left half the country’s young people unemployed, the Greek electorate handed power to the most radical coalition to govern a European country in decades. Under the leadership of the youthful Alexis Tsipras, the Coalition of the Radical Left (Syriza) won 36.3 percent of the vote, qualifying it for the fifty-seat bonus awarded to the party with a plurality. To the horror of bien pensant opinion in Berlin and Paris, it chose as its partner in government a right-wing nationalist party, the Independent Greeks (ANEL).

In Greece the left was jubilant. The memory of the heroic anti-Nazi resistance, the civil war, and the students who rose up against the dictatorship of the colonels in the 1970s was vindicated. Syriza was the toast of the radical chic from Berlin to Brooklyn. Centrists were bemused. Had such left-wing enthusiasm not had its day? NATO hawks were up in arms. With Ukraine and Syria in mind, columnists fretted over Syriza’s possible ties to Moscow. The oligarchs who controlled much of the Greek media were on the warpath. Tens of billions of euros fled Greek bank accounts.

Meanwhile, Greece’s new finance minister, the ferociously charismatic and thoroughly Anglophone Yanis Varoufakis, became a global celebrity. His glamorous lifestyle, motorcycle, and tight T-shirts delighted the media. In Brussels, European officials still fume about his disruptive impact on their staid proceedings. In Greece he would face charges of treason. The appearance this fall of Varoufakis’s memoir, Adults in the Room, stirs old memories. The legendary Greek-French filmmaker Costa-Gavras has pronounced himself so “enraged by the violence and indifference of the Eurogroup members [i.e., the eurozone finance ministers], especially the German side, to the…unsustainable situation in which the Greek people live,” that he will turn Varoufakis’s exposé into a film.

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Greek parliament backs Novartis probe

by Kerin Hope

Financial Times
February 22, 2018

Greece’s parliament has voted to investigate allegations that 10 senior politicians, including two former prime ministers, the country’s EU commissioner and the governor of the central bank, accepted bribes from the Swiss drugmaker Novartis.

Those accused strongly denied wrongdoing in formal speeches during a heated debate that lasted more than 20 hours.

Several argued they had been targeted as political enemies of the ruling leftwing Syriza party, which brought the case to parliament.

Alexis Tsipras, the prime minister, said the vote marked a “break with the past system of arrogance, greed and no transparency.”

A special parliamentary committee will carry out the probe.

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Novartis Bribery Case in Greece Threatens to Bolster Populists

by Eleni Chrepa

Bloomberg
February 21, 2018

Greek lawmakers begin discussions Wednesday on the alleged role of former senior government officials in a Novartis AG bribery case, which is part of a drug-overpricing scandal that’s estimated to have cost the country about 23 billion euros ($28.7 billion).

The case has snared 10 politicians, including former Finance Minister and current Bank of Greece Governor and European Central Bank Governing Council member Yannis Stournaras. All have denied wrongdoing. The Greek parliamentary hearing comes after another ECB Governing Council member, Ilmars Rimsevics of Latvia, was detained over the weekend by the country’s anti-corruption agency on suspicion of securing bribes. He has denied the charges and refused to step down.

The Novartis case in Greece is part of a global pharmaceuticals industry scandal and investigates the Swiss drug-maker’s part in allegedly inflating drug and vaccine prices. The bribery investigation, which has also drawn in two former prime ministers and a European Union commissioner, is roiling the political landscape in Greece as the country prepares for an exit from its bailout program. The case threatens to deepen the public’s disillusionment with established political parties and bolster groups on the extreme, observers said.

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Your Next Truffle May Be Coming From Greece

by Larissa Zimberoff

Bloomberg
February 20, 2018

So you’re dining at a fancy restaurant and choose to splurge on some truffles to top off your repast. The server steps up and presents the vaguely ugly tuber. As the pungent slices rain down on your main course, the waiter announces that these truffles didn’t come from Italy, the traditional provenance of this decadent garnish. They hail from Greece.

Don’t be shocked—be glad. Italians have successfully positioned their product as the most luxurious under the forest floor. But white Alba truffles—tuber magnatum pico—also grow magnificently well in Greece. Even Aristotle mentions them in his writings, but they never made it into the local cuisine. Unlike Italy’s truffles, which have been dug up and eaten for centuries, Greece’s truffles have remained largely undisturbed. At least they did until the Athens-based culinary exporter Eklekto saw their potential for the U.S. market.

But there’s an additional reason to embrace Greek truffles. Usually, countless middlemen touch an Italian truffle before it makes it to market, increasing the consumer’s chances of getting a counterfeit version. Eklekto partners Peter Weltman and George Athanas say they work only with a small group of Greek foragers and know exactly where the product is from. Apart from the forager working with his trusty dog, Weltman and Athanas are the only people that touch the truffles before export, the company says.

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Greece seeks to calm Brussels’ bailout fears

by Kerin Hope

Financial Times
February 18, 2018

Greece’s finance minister has said his country will not need to be subject to tight monitoring once its bailout programme ends in August, insisting the concerns of EU partners are misplaced as it can be trusted to manage its finances safely.

Euclid Tsakalotos says that Greece’s new economic growth plan, to be unveiled in April, will assuage fears in Brussels and Washington that the leftwing Syriza government will roll back unpopular economic reforms as soon as bailout constraints are lifted.

“We want as ‘clean’ an exit as possible [from the bailout],” Mr Tsakalotos said in an interview with the Financial Times, using Syriza’s term for drawing a line under eight years of austerity that has seen Greece’s output shrink by about one-quarter and an exodus of some 450,000 young skilled workers to other EU countries.

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These Are the World’s Most Miserable Economies

by Michelle Jamrisko & Catarina Saraiva

Bloomberg
February 15, 2018

Rising prices are more of a threat to the global economy this year than joblessness, according to Bloomberg’s Misery Index, which sums inflation and unemployment outlooks for 66 economies.

Venezuela marks its fourth year as the world’s most miserable economy, with a score that’s more than three times what it was in 2017. Thailand again claimed “least miserable” status, though the nation’s unique way of calculating unemployment makes No. 2 Singapore worth noting. Elsewhere, Mexico looks to make big strides this year as inflation becomes more manageable, while Romania absorbs more misery for the opposite reason.

The Bloomberg Misery Index relies on the age-old concept that low inflation and unemployment generally illustrate how good an economy’s residents should feel. Sometimes, of course, a low tally can be misleading in either category: Persistently low prices can be a sign of poor demand, and too-low joblessness shackles workers who want to switch to better jobs, for instance.

The results largely signal a global economic outlook that remains bright overall: Economists are penciling in 3.7 percent year-on-year growth for the world in 2018, matching last year’s pace that was the best since 2011, according to the Bloomberg survey median.

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Greece’s ruling party backs graft probe into top politicians

by Kerin Hope

Financial Times
February 12, 2018

Lawmakers from Greece’s ruling leftwing Syriza party have backed a call by prime minister Alexis Tsipras for a parliamentary probe into allegations that 10 top politicians accepted bribes from the Swiss pharmaceuticals company Novartis.

Two former prime ministers, the central bank governor and a former health minister now serving as the EU’s commissioner for home affairs, were among those named in a report by Greece’s anti-corruption prosecutor on corruption in the state health service.

Six other former ministers and undersecretaries of health are also accused of taking bribes from Novartis between 2001 and 2015 in return for illegally raising drug prices and giving the Swiss company privileged access to the Greek market. All those accused strongly denied wrongdoing.

“Our only aim is to reveal the truth — it is others who resort to “fake news” . . . We have a responsibility to stop the squandering of public money,” Mr Tsipras told Syriza lawmakers on Monday.

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Greece wraps up seven-year bond sale, raises €3bn

by Kerin Hope

Financial Times
February 8, 2018

Greece has wrapped up the sale of a seven-year bond after a 48-hour delay blamed on international market turbulence, raising €3bn at a yield of 3.5 per cent.

The issue marked the first time since 2014 that the country has raised new money. A five-year bond issue last July raised €3bn, about half of which involved swapping existing debt for longer-dated paper.

“We proved today . . . that not only can we tap the markets and raise new money but we can do that in circumstances that are not ideal,” said Euclid Tsakalotos, the finance minister.

Demand for the paper exceeded €6bn, with longer-term investors showing interest as well as hedge funds, according to bankers in Athens.

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Greece delays bond sale as markets reel

by Kerin Hope & Kate Allen

Financial Times
February 6, 2018

Greece has temporarily delayed its plan to tap the bond markets for the first time since last summer, as bond investors mull this week’s market turbulence.

Greece is seeking to raise seven-year debt and is aiming for a yield of 3.33 to 3.4 per cent, according to people familiar with its plans.

Those familiar with the deal initially expected bookbuilding to begin as early as today. “It was all due to be wrapped in one day — Tuesday,” one source said.

A banker working on the deal who was not authorised to speak to the press said: “Clearly nothing is happening today. Whether we wait a day or a few days — nothing has been decided.”

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Cyprus president Anastasiades defeats leftist challenger

by Helena Smith

Guardian
February 4, 2018

Greek Cypriots have re-elected Nicos Anastasiades as their eighth president in what is seen as a ringing endorsement of his stable leadership over the past five years.

The 71-year-old conservative won a second five-year term on Sunday with 56% of the vote. His opponent, the leftist-backed independent Stavros Malas, took 44%.

There were scenes of jubilation in Nicosia as news of the incumbent’s 12-point lead reached the campaign headquarters of Anastasiades’ Democratic Rally party (Dysi). Supporters poured on to the streets holding Cypriot, Greek and party flags, chanting slogans and honking horns. “Victory is a beautiful thing,” said Christos Papamichael, a Dysi activist.

Addressing followers soon after, the leader vowed to reactivate peace talks aimed at reconciling Cyprus’ Greek and Turkish communities.

“The biggest challenge we face is reunifying our country. I will continue to work with the same determination in a bid to achieve our common goal – ending foreign occupation and reunifying our state. There are no winners or losers, just Cyprus.”

Anastasiades had long been the frontrunner of a lacklustre electoral campaign marked by voter abstention.

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Greek protesters take to streets in battle over Macedonia’s name

by Kerin Hope

Financial Times
February 4, 2018

Hundreds of thousands of demonstrators gathered outside the Greek parliament on Sunday to protest against the leftwing Syriza government’s attempt to settle a decades-long dispute with Greece’s northern neighbour over rival claims to the name Macedonia.

Protesters waved Greek flags and shouted “Hands off Macedonia” as the 92-year-old composer Mikis Theodorakis, Greece’s best-known cultural figure, made a rare public appearance to appeal for national unity to counter what he described as a “threat to our territorial integrity”.

“There is one Macedonia and it is, was and always will be Greek,” said the former leftwing activist and culture minister, who has become an outspoken nationalist.

Macedonia and Greece have been at loggerheads for almost 30 years over the name issue, since Macedonia declared independence in 1991 from the collapsing Yugoslav federation. Athens raised objections within weeks, claiming the name implied a territorial claim on Greece’s own region of Macedonia.

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Athens ventures into hostile territory over Macedonia name

by Kerin Hope

Financial Times
February 2, 2018

Against the backdrop of a warrior-like statue of Alexander the Great on horseback, retired general Frangoulis Frangos gave a crowd of more than 300,000 in Thessaloniki, the northern Greek capital, the message they had come to hear.

“Macedonia is only Greek and will remain so,” he declared.

Mr Frangos, a burly former army chief of staff, is rallying popular opposition to a new effort by Alexis Tsipras, Greece’s prime minister, to solve one of the country’s most intractable foreign policy disputes: what to call Greece’s northern neighbour, which is officially known as FYROM (Former Yugoslav Republic of Macedonia).

Macedonia and Greece have been at loggerheads for almost 30 years over the name issue, since Macedonia declared independence in 1990 from the collapsing Yugoslav federation. Athens raised objections within weeks, claiming the name implied a territorial claim on Greece’s own region of Macedonia.

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The crisis in Greece: The semi-rentier state hypothesis

by Asteris Huliaras & Dimitris Sotiropoulos

London School of Economics & Political Science
Hellenic Observatory
Discusion Papers on Greece and Southeast Europe
GreeSE Papers # 120
January 2018

This article offers an alternative explanation of the ‘Greek crisis’ by using the rentier-state theory. Past explanations referred to domestic pitfalls of the Greek economic development or to external constraints such as the incomplete architecture of the Eurozone. Without rejecting these interpretations, we offer a complementary interpretation underlining the facility and large scale with which external funds have flowed into Greece. This pattern was reminiscent of cases of resource-rich countries of the developing world and have created a semi-rentier state. External resources have spread a ‘rentier mentality’ among state actors and a ‘get-rich-quick mentality’ among business entrepreneurs and interest groups. Political decisions were characterised by risk-averse attitudes, while private actors spent their energy in seeking political protection rather than in initiating new enterprises. Three factors that played a significant role in shaping the Greek crisis and continue to plague Greece are foreign loans, EU funds and tax evasion.

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Greece to tap markets for 7-year debt

by Kerin Hope

Financial Times
January 29, 2018

Greece is to bring a seven-year bond to market in the next two weeks, in what would be its first debt-raising since its return to the capital markets last summer.

Greece aims to raise up to €3bn in seven-year paper, to be followed by a three-year bond and a 10-year bond in the coming months, according to a source familiar with the situation.

It had originally planned to come to the market earlier this month, but was delayed because the government still has to complete some final reforms before the EU signs off on its review of Greece’s third bailout, the source said.

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ECB Interventions in Distressed Sovereign Debt Markets: The Case of Greek Bonds

by Christoph Trebesch & Jeromin Zettelmeyer

Peterson Institute for International Economics
January 2018
Working Paper 18-1

The authors study central bank interventions in times of severe distress (mid-2010), using a unique bond-level dataset of European Central Bank (ECB) purchases of Greek sovereign debt. ECB bond buying had a large impact on the price of short and medium maturity bonds, resulting in a remarkable “twist” of the Greek yield curve. However, the effects were limited to sovereign bonds actually bought. The study finds little evidence for positive effects on market quality or spillovers to close substitute bonds, credit default swap markets, or corporate bonds. The paper’s findings attest to the power of central bank intervention in times of crisis but also suggest that in highly distressed situations, this power may not extend beyond assets actually purchased.

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Greece set to win plaudits but not next tranche of bailout cash

by Jim Brunsden, Mehreen Khan & Kerin Hope

Financial Times
January 21, 2018

Eurozone finance ministers were set to hail Greece’s recent steps to improve its public finances on Monday — but also to hold off on giving Athens a full bill of health it seeks as it prepares to return to financial markets.

In Mário Centeno’s first meeting as president of the eurogroup, the finance ministers will confirm that Athens has adopted the vast majority of 113 economic reforms the country needs to take under this phase of its €86bn bailout.

The measures range from labour market reform to removing bureaucratic obstacles blocking a €7bn tourism and leisure project in Athens.

For Greece to receive its next allocation of bailout money, estimated at €6.7bn, a further check will need to take place in early February to ensure that the remaining measures have been completed. But at Monday’s meeting ministers will say the recent progress in effect closes the latest review of the bailout.

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Greek parliament approves reform package in face of protests

by Kerin Hope

Financial Times
January 15, 2018

Greek lawmakers on Monday approved an omnibus package of labour, energy and fiscal reforms needed to wrap up the penultimate review of its €86bn bailout, as police clashed with leftwing demonstrators outside the parliament building.

The protests were prompted by a controversial labour reform that requires unions to win the support of 50 per cent of their membership before calling a strike. Public transport and government offices shut down on Monday as workers stayed away in protest against the move.

Protestors also objected to the launch of electronic auctions to dispose of properties that banks have already foreclosed on, as well as looming cuts in social benefits to be decided later this year.

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How Greece sleepwalked off a cliff in 2009, in black and white

by Yiannis Mouzakis

Macropolis
January 15, 2018

Nine years since facing bankruptcy and subsequently having experienced the most severe economic crisis in its modern history, which took away a quarter of the economy and employment, a country should at least have identified the reasons that it found itself in such a mess.

A self-respecting political system burdened by the responsibility of chronic shortcomings should have reached a consensus, which would ensure that future generations will never face a similar calamity.

Greece, though, is not a normal country and certainly does not have a political elite that respects itself, or anyone else.

All these years, Greeks have been fed a diet of half-truths, conspiracy theories and witch-hunts that mainly aimed at deflecting the attention and discouraging any serious debate about what happened in 2009.

All sorts of ridiculous claims have been thrown around, from a global conspiracy to steal the country’s “rich natural resources” to scapegoating the head of the statistical office even though he hadn’t even started the job when the events unfolded.

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Greece: suspension of protection grant after first-ever government appeal against positive asylum decision

European Council on Refugees and Exiles
January 12, 2018

The Administrative Court of Appeal of Athens has accepted a request by the Greek Ministry of Migration Policy for a provisional order to suspend a decision of the Appeals Committee granting refugee status to a Turkish soldier, pending the outcome of judicial review proceedings against the decision. The highly unorthodox order, issued on grounds of public interest to avoid risks of disruption of diplomatic relations with Turkey, follows the first-ever challenge of an Appeals Committee decision by the government before the court. The soldier has been arbitrarily detained following the order.

“The case is a blow not only to the right to asylum, but also to the rule of law and human rights, which the judiciary will once again try to remedy,” said Eleni Koutsouraki, lawyer of the Greek Council for Refugees who represent the applicant.

The applicant was among a group of eight soldiers arriving in Greece following the attempted coup d’état of 15 July 2016 in Turkey. While their extradition upon Turkey’s request was blocked by the Greek Supreme Court due to risks of ill-treatment, his asylum application was rejected by the Asylum Service on grounds of commission of a “serious non-political crime” under the exclusion clauses of Article 1F of the Refugee Convention on the basis that the acts committed were disproportionate to the political aim pursued. The Appeals Committee noted, however, that no documents in the case file contained evidence of the appellant’s participation in the attempted coup d’état, the killings of civilians or the attempted murder of the Turkish President.

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Macedonia says new push underway to resolve naming dispute with Greece

by Kerin Hope

Financial Times
January 9, 2017

The Republic of Macedonia’s deputy prime minister for European affairs said on Tuesday that a new push was underway to settle a 25-year-old dispute with Greece over the country’s name.

After a meeting with Greek foreign minister Nikos Kotzias in Athens, Bujar Osmani said both sides were committed to resolve the issue within six months.

They have already agreed that Macedonia, known internationally as Fyrom (Former Yugoslav Republic of Macedonia), should adopt a “composite” name.

According to diplomats, this would most likely be either “New Macedonia” or, in a geographical reference, Vardarska Macedonia. The use of a composite name would avoid confusion with Greece’s own region of Macedonia.

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Hedge Fund Sees Juice in Greek Rally as Yields Hit 2006 Low

by Todd White & Sid Verma

Bloomberg
January 9, 2018

One of Western Europe’s most dramatic bond-convergence trades this decade -- Greece over Germany -- looks like it will reward investors yet again in 2018.

London hedge fund Algebris Investments is among those betting economic momentum will take the country’s borrowing costs even closer to Germany’s after the Mediterranean country’s 10-year yield spread narrowed by about 44 basis points this month alone. Algebris says it may shrink by as much as 75 basis points.

Greece’s economic recovery and speculation the country may exit its bailout program this year are coinciding with strong risk appetite, driving down borrowing costs.

“Greece has been one of our strongest views in 2017 and 2016,” said Alberto Gallo, a portfolio manager and head of macro strategies at Algebris Investments. The firm has cashed out on some of its positions even though it continues to favor the trade, he said.

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Turkish officer’s asylum ‘temporarily’ suspended by Greek court

by Kerin Hope

Financial Times
January 8, 2018

A Greek court has accepted an unusual government request to “temporarily” suspend the granting of political asylum to one of eight Turkish officers who flew an army helicopter to Greece in July 2016 after an attempted military coup in Turkey.

The court cited the “public interest…and the interests of the officer himself” in its decision. Suleyman Ozkaynakçi, the co-pilot of the helicopter, was ordered to be held in custody until a full hearing of the case on February 15.

Greece’s independent asylum authority granted asylum to the officer in December, 10 months after its supreme court rejected Turkey’s extradition request for the eight officers. They all applied for asylum in Greece.

The asylum authority said in its ruling there was no evidence that Ozkaynakçi participated in the coup, and that Turkey was seeking his extradition for political reasons.

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The New Greek Oligarchy

by Alexander Clapp

American Interest
January 5, 2017

Ivan Ignatyevich Savvidis has played many unusual roles in his life—one of the great tobacco tycoons of Eurasia, a member of Russia’s Duma, a confidante of Vladimir Putin —but it is his latest one that is now sounding off alarm bells throughout Europe. Savvidis is the parvenu of Greece’s oligarchic scene. Since the onset of the economic crisis, he has effectively seized personal ownership over vast sectors of Thessaloniki, Greece’s second city and its maritime gateway to the Balkans. The fire sale of old state assets—an auctioning process ordained by the European Union as part of its enforcement of economic austerity, but which has become overwhelmingly rigged by vested political interests within Greece—has given Savvidis a rare opportunity to invest hundreds of millions of euros into his ancestral homeland. A soccer team, a grand luxury hotel, a tobacco conglomerate, a water-bottling company, a fleet of beach resorts, a television station, a trio of newspapers, great stretches of coastline and blocs of Thessaloniki real estate, the port of Salonika and its industrial warehouses: these are but a few of the holdings that Savvidis has quietly acquired in the last eight years. The buying spree has lately given rise to a strange new coinage across the newspaper headlines and streets of his adopted city: Ivanaptiksi, “prosperity emanating from Ivan.”

This slow-motion conquest, taking place hundreds of kilometers from Athens in a city that makes few international headlines, has now begun to raise serious questions. How has a man worth $760 million on paper invested close to half of that amount in Greece in less than a decade? Allegations now being openly raised by the European press, along with concerns publicly voiced by the American ambassador in Athens, suggest that Ivan Savvidis is not what he appears to be: Masquerading as the financial savior of Thessaloniki, the theory runs, he is in fact a conduit of Putinist interests in the Aegean.

Seen in this light, virtually all of Savvidis’s business deals and public undertakings in Greece seem to serve Moscow’s agenda. His dealings with the center-right New Democracy party—marrying off his niece to its general secretary, pitting its various clans against one another, peeling off the loyalties of its elected constituents through purported bribery all across northern Greece—appear an effort to sow division within the party most bent on Greece’s continued membership in the European Union. His purchase of Thessaloniki’s port seems a move to stymy NATO’s naval access to the interior of the Balkans, a region at the convergence of Russian and American spheres of influence. The millions of euros Savvidis has donated to the monasteries of Mount Athos for the construction of new churches act simultaneously as a Russian investment of soft power in a no-man’s land of international authority and financial transparency.

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Greece risks complacency as its eight-year bailout cycle ends

by Tony Barber

Financial Times
January 4, 2018

Like Prometheus, the mythological titan, Greece has been chained to a rock since 2010, its liver gnawed by pitiless foreign creditors as punishment for having sparked the eurozone debt crisis. So runs a certain national narrative. But just as the heroic Hercules rescued Prometheus, so Alexis Tsipras — in his own eyes, at least — is the leader who will achieve Greece’s salvation in 2018 by ending an eight-year cycle of bailouts and restoring the nation’s sovereignty.

It represents an extraordinary turnround for Mr Tsipras. He took office in January 2015 as the most radical leftist prime minister of a European democracy in the post-1945 era. An intransigent opponent of the creditors, he abhorred their stranglehold on Greek economic policy. His foolhardiness almost caused Greece to crash out of the eurozone. Then at the eleventh hour he reversed course and started doing the creditors’ bidding. His surrender kept Greece in the currency union.

Barring some unforeseen turmoil in domestic politics or global markets, Greece will leave its third bailout, this one worth €86bn, in August. European governments and EU institutions will declare that Mr Tsipras and his government have done enough, by maintaining a fiscal surplus and carrying out economic reforms, to justify an exit. To everyone’s relief, this will, in principle, draw the curtain on the acute phase of a crisis that has dragged on for eight years of the eurozone’s 19-year existence.

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Is Greece Ready for a Ronald Reagan or Margaret Thatcher?

by Dan Mitchell

International Liberty
December 27, 2017

I’ve written that it’s theoretically possible for Greece to pay its debts and restore prosperity.

After all, it’s simply a matter of obeying fiscal policy’s Golden Rule and reforming a suffocating tax system.

But I’ve always figured none of that will happen because Greek voters would never vote for a government that favors Reagan-style or Thatcher-style economic reforms.

Simply stated, there are too may Greek people living off the state. But that’s just part of the problem. An even bigger obstacle to reform is that the people have decided that it’s morally acceptable to mooch off the government.

As a result, I’ve assumed that Greece has passed a tipping point because the moral foundation of Greek society has been corroded by dependency. And it’s very difficult to put that toothpaste back in the tube.

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Check, please: How much Alexis Tsipras's first months cost Greece

by Yiannis Mouzakis

MacroPolis
December 20, 2017

This time last year, Alexis Tsipras was in the awkward position of having missed his main objectives and found himself at odds with Greece’s creditors over his decision to hand out a 13th pension.

The conflicting interests of key stakeholders in Greece’s programme did not converge and the last Eurogroup of 2016 did not lead to the conclusion of the second review. Instead, it dragged on until June this year. Most critically, the main goal of being included in the European Central Bank’s QE programme was missed as the ECB required assurances about the country’s long-term debt sustainability and Germany was not willing to discuss even the medium-term debt relief measures, which were eventually pushed back to the end of the programme in 2018.

The months that followed were ridden with uncertainty and the economy slowed down. To seal a deal at last June’s Eurogroup, Tsipras agreed to additional fiscal measures worth 2 percent of GDP in the form of pension cuts and tax hikes for 2019 and 2020, mostly to appease the fiscal concerns of the International Monetary Fund.

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The Greek Experiment: Can an Economy Be Wiped Out by Taxation?

by Dan Mitchell

International Liberty
December 16, 2017

Greece has confirmed that a nation can spend itself into a fiscal crisis.

And the Greek experience also has confirmed that bailouts exacerbate a fiscal crisis by enabling more bad policy, while also rewarding spendthrift politicians and reckless lenders (as I predicted when Greece’s finances first began to unravel).

So now let’s look at a third question: Can a country tax itself to death? Greek politicians are doing their best to see if this is possible, with a seemingly endless parade of tax increases (so many that even the tax-loving folks at the IMF have balked).

At the very least, they’ve pushed the private sector into hospice care.

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Greek Bond Yields Fall to Lowest Since 2006

by Christopher Whittall

Wall Street Journal
December 15, 2017

The yield on 10-year Greek government bonds closed Friday below 4% for the time since 2006, the latest sign of investor optimism over the outlook for the formerly troubled economy.

The 10-year yield declined to 3.93% from 4.096% on Thursday, according to Tradeweb. Yields fall as prices rise. That compares to a high of 37% during the eurozone crisis in 2012 when Greece defaulted on its debt, and 7.86% in February.

Earlier this year, the Greek government reached a deal with its international creditors over its bailout package, sparking a sharp rally in the bonds. That enabled the country to return to capital markets in July with its first debt sale in three years. The rally has accelerated in recent sessions, with the yield dipping below 5% for the first time in years on Dec. 5.

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Erdogan wraps up tense Greece visit with trip to Thrace

by Kerin Hope

Financial Times
December 8, 2017

Turkish President Recep Tayyip Erdogan wrapped up a tense visit to Greece on Friday with a brief trip to the northeastern region of Thrace, the home of a Muslim minority of mainly ethnic Turkish descent.

“Erdogan, Erdogan, our leader,” shouted a crowd of several hundred people outside a mosque in Komotini where the Turkish leader attended midday prayers.

Later, Mr Erdogan addressed members of the minority at a Greek state highschool where most lessons are taught in Turkish. He also met with community representatives, including Muslim MPs from the governing left-wing Syriza party and Muslim religious leaders, before flying back to Ankara.

In Athens, Mr Erdogan on Thursday accused Greece of historic discrimination against the minority, asserting that the per capita income of the ethnic Turkish community was more than 80 per cent lower than that of other Greek citizens.

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Outspoken Erdogan shocks hosts on visit to Greece

by Kerin Hope

Financial Times
December 8, 2017

Greece has been left smarting after Recep Tayyip Erdogan used the first visit by a Turkish head of state in 65 years to make outspoken remarks on bilateral disputes between the two neighbours

During a two-day visit Mr Erdogan’s comments on minority rights, Cyprus and the treaty that defines the Greek-Turkish relationship visibly shocked Prokopis Pavlopoulos, his Greek counterpart, and put Alexis Tsipras, the prime minister, on the defensive at a joint news conference.

Mr Erdogan publicly rehearsed a series of bilateral grievances that at their most extreme have brought the two Nato allies and Aegean neighbours to the brink of war.

Athens had billed Mr Erdogan’s visit as an opportunity to consolidate bilateral ties and perhaps make progress towards reducing the continued flow of refugees and migrants from Turkey to the eastern Greek islands. While refugee arrivals have shrunk since last year’s deal between Ankara and the EU, Greek officials are concerned about an rise in numbers over the past six months.

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Greece Just Witnessed Something It Hasn’t Seen Since 2006

by Marcus Bensasson

Bloomberg
December 4, 2017

Greece’s economy expanded for a third straight quarter for the first time in more than a decade, providing a foundation for the country’s attempts to exit its bailout program next year.

Gross domestic product grew 0.3 percent in the three months through September after expanding a revised 0.8 percent in the previous quarter, the Hellenic Statistical Authority said in a statement on Monday. From a year earlier, GDP grew 1.3 percent.

Greece’s government and representatives of the country’s creditor institutions on Saturday agreed on a set of economic overhauls the country must undertake in exchange for fresh loans. The payout, supplemented by more bond market forays next year, will help the government build a cash buffer as it seeks to prepare for its bailout exit when the current program expires in August 2018.

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Greece’s Dangerous Budget Surplus

by Yannis Palaiologos

Wall Street Journal
December 3, 2017

At first glance, Greece’s traumatic 2015 bailout—its third in five years—appears to be working. The government’s budget is back in surplus, excluding debt service, after the years of deficits that contributed to the country’s first crisis in 2010. The radical leftist prime minister, Alexis Tsipras, now touts the “restoration of Greece’s fiscal credibility.” As recently as 2014 he savaged his predecessor, who achieved much lower surpluses, for “austerity.”

The only problem is that the bailout is not in fact working, if you think the goal should be to restore Athens to sound public finances and to offer Greeks economic hope for the future.

The European Commission’s autumn forecast predicts eurozone economic growth of 2.2% this year, the fastest in a decade. But Greece is falling further behind. It was originally projected to grow by as much as 2.7% in 2017. Six months ago, the EU’s number crunchers reduced that forecast to 2.1%. Last month they cut it further, to 1.6%.

This anemic performance is caused both by excessively demanding fiscal targets and by persistent structural impediments to investment. On both fronts, Greece’s creditors are complicit in the country’s continuing woes.

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Greek central bank chief cleared over personal assets statement

by Kerin Hope

Financial Times
December 3, 2017

Greece’s central bank governor has been cleared by a Greek parliamentary audit committee of charges that he made false statements about his personal assets while serving as finance minister between 2012 and 2014.

Yannis Stournaras last month requested a fresh audit of his asset statements made between 2012 and 2014 after Documenta, a pro-government weekly newspaper, revived an earlier accusation in Hot Doc, an investigative magazine, concerning his family’s summer home on the Aegean island of Syros.

Documenta wrote that Mr Stournaras failed in 2012 and 2013 to declare alterations carried out at his property on Syros that increased its value.

“The new audit showed that everything [concerning the Syros property] took place according to the law . . . There is no outstanding legal or political issue,” a person involved in the parliamentary procedure said on Sunday.

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Greece hopes reforms deal will smooth bailout exit

by Kerin Hope

Financial Times
December 3, 2017

Greece has reached agreement with its international creditors on reforms required to release the next loan tranche under its current bailout, boosting the leftwing Syriza government’s hopes of achieving a smooth exit from the €86bn programme next August.

“The [EU and IMF bailout monitors’] visit is completed, we have closed the [technical] agreement,” Euclid Tsakalotos, finance minister, said after the week-long talks ended on Saturday.

An EU statement confirmed that a deal — which includes energy sector reforms and fiscal and structural measures bringing Greece in line with eurozone counterparts — had been reached. It must be approved by eurozone finance ministers, who are due to meet on Monday.

Since the creditors’ third review of progress made by Athens was launched in October, the Syriza government has shown greater willingness than previously to make compromises.

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