Tag Archives: Greek bailout

Milking Greece

When there are riot police in full gear standing in front of the Finance Ministry to protect it from disabled protesters riding wheelchairs and using walking frames, you can be pretty sure your country is heading in a worrying direction.

The protest by disabled Greeks, including Paralympians, who face cuts to their benefits as part of the latest austerity package, was just an entrée ahead of the main course of protests and strikes expected over the next couple of weeks as the governments gets closer to sealing the 11.5 billion euros of spending cuts the troika has demanded.

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The Greek crisis: an economic problem, not a moral quandary

Like clockwork, crucial talks between Greece and its lenders have been prefaced by a gaggle of European politicians questioning Athens’s commitment to its bailout targets and its place in the eurozone. Accusations have ranged from a Greece being a “bottomless pit,” to the government, in place for about two months, lacking the will to implement the troika’s program. There has even been a suggestion — if reports are correct — that Athens has failed to cut wages and public spending.

Misdirection, misinformation and downright lies have never been in short supply since Greece’s debt crisis began. Some of the recent comments about Greece have slotted into this regular pattern. Greece can be justly criticized about the slow pace of reforms but there is no basis for raising doubts about its efforts to meet — albeit haphazardly — the fiscal targets set by the European Commission, European Central Bank and International Monetary Fund.

To suggest that Greece is in a constant struggle to meet the troika’s fiscal goals because of indifference rather than due to the deteriorating state of the economy or because of the political difficulty of passing unprecedented — by eurozone standards — austerity measures is pure subterfuge. There is little evidence to back up such a claim. Even a cursory glance at the economic indicators proves that Greece has cut both wages and public spending. It may have fallen short in other areas, but in terms reducing expenditure, there can be no doubt that Greece is doing its bit.

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Role reversal in the Greek crisis

Illustration by Manos Symeonakis for Cartoon Movement http://www.cartoonmovement.com/p/6035

So, let’s get this straight: When Antonis Samaras was the leader of New Democracy in opposition, he resisted the terms of the EU-IMF bailout to such an extent that it destabilized one government and checked the progress of another. When Evangelos Venizelos was finance minister, he opposed the austerity measures demanded by the troika but found that he had to abandon his theoretical objections when faced with the real intransigence of Greece’s lenders.

A few months on and Samaras — now prime minister — is having to accept a new round of spending cuts to satisfy the troika, while Venizelos — now PASOK leader — is the one arguing that further austerity will exacerbate the recession, even though he approved the size of the cuts when he was finance minister.

Confused? It doesn’t stop there. For the last two-and-a-half years, no top representative of the eurozone or International Monetary Fund has visited Greece. Over the past few days, European Commission President Jose Manuel Barroso has been to Athens and Eurogroup chief Jean-Claude Juncker has made plans to visit on August 22.

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Who will hear Greece’s cry?

European Commission President Jose Manuel Barroso was in Athens on Thursday. It was the first visit to Greece by the head of any of the troika elements since the country agreed its first bailout in May 2010. Greece’s isolation within Europe could not be highlighted or summed up in a better way.

Barroso brought kind words of support and messages about growth, which the Greek government will treat as a useful display of solidarity in these difficult and lonely times. But the EC chief’s visit was eclipsed by the presence of the top troika officials in Athens.

Greece’s immediate fate rests in the hands of these three men. The words this trio includes in their review of the Greek program, due by the beginning of September, is likely to determine whether eurozone leaders and the IMF board approve the release of more loan installments.

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Straight lines are useful sometimes

If the new Greek government is attempting to bamboozle the country’s lenders into submission with its tactical meandering, who knows, it might have struck on a great idea. If it’s trying to convince the Greek people it’s capable of dealing with the economic crisis, then performing more sudden turns than Fernando Alonso going through the Monaco chicanes is just not going to cut it.

Within a week, the three parties who campaigned on a pre-election platform of renegotiation, renegotiation, renegotiation suddenly decided that the bailout terms are fine as they are for now. Then, they changed their minds again and decided it would be best to bring up the issue of changes to the loan deal in talks with the troika later this month.

Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras caused consternation last week when they suggested there would be no Greek bid to renegotiate the bailout, without making it clear whether this meant abandoning efforts or simply putting them off. There is logic to the strategy of putting aside the renegotiation issue in the sense that the coalition government can draw a line under what has happened in the past, express its commitment to meeting fiscal and reform targets and allow a little time for trust with its lenders to be restored and goodwill credits that could be subsequently cashed in to be amassed.

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Mythmakers and problem solvers

Illustration by Manos Symeonakis for Cartoon Movement http://www.cartoonmovement.com/p/6035

A few years ago, Greece’s slogan for attracting tourists was “Live your myth in Greece.” The onset of the economic crisis seems to have given license to some people to make up their own myths about Greece. At regular intervals since 2009, they have ignored the complexities and various – domestic and international – causes of the Greek crisis to boil it down to a stodge of clichés, stereotypes, falsehoods and misinterpretations (accidental and deliberate).

It was alarming to hear an intelligent man like European Central Bank executive board member Joerg Asmussen apparently became the latest member of this burgeoning group of politicians, policy makers, journalists and experts engaging in mythmaking. “It is difficult to convince people in countries like Estonia and Slovakia, where the average wage is 1,000 euros to lend to a country where the average wage in the public sector is about 3,000 euros,” he is reported to have told an audience at the Economist conference in Athens earlier this week.

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Can Greece and its lenders speak the same language?

Greece’s coalition government appears to be paring down its expectations for any substantial renegotiation of its bailout terms. Athens is concerned about the absence of the necessary goodwill among its eurozone partners to support an overhaul of the loan agreement. Yet, all Greek economic indicators, including the ones that point to another worse-than-expected contraction this year, scream for a substantial reworking of the package.  The government’s only hope is that after almost three years of talking at cross purposes, Greece and the key European players quickly discover a way to speak a common language.

Ahead of this week’s European Union leaders’ summit and the latest visit from the troika inspectors, due to start on Sunday, the nascent coalition was steeling itself for tough negotiations with its lenders. There was a fundamental flaw to its strategy, though. Greece was preparing for political bartering when its partners were only interested in an economic discussion. Continue reading