Tag Archives: Jean-Claude Juncker

Greece’s debt problem is eminently solvable. How about imminently?

The speed with which the eurozone’s key players reacted to Greece’s coalition government narrowly winning a vote on the latest austerity and reform package was impressive. If they could show the same haste and purpose in addressing the economic capitulation threatening to undermine Greek society and politics, we might be in for better days.

Even before 153 out of 300 Greek MPs had voted in favor of the legislation last Wednesday, which foresees more than 18 billion euros of cuts and tax hikes over the next four years, European Economic and Monetary Affairs Commissioner Olli Rehn admitted that Greek debt was not sustainable but that the most obvious method for tackling this problem, restructuring, was not an option.

A few hours after the vote, having seen the three-party coalition in Athens stagger over the finishing line, German Finance Minister Wolfgang Schaeuble said Greece would not immediately receive the 31.5-billion-euro loan tranche, which it had been expecting since the summer to recapitalize its wheezing banks and moisten the lips of its liquidity-parched market. The eurozone, it seems, has developed a dangerous penchant for self-harm.

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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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A moment of freedom

Like a reality TV star who can’t remember applying to take part in the show, ordinary, respectable Greek people have had all their dirty laundry aired in public over the past couple of years. It’s unlikely that the citizens of any other nation on earth have undergone such intense scrutiny as the Greeks. Everybody knows what the Greeks earn, what they pay in taxes, how they live, how much their wages have been reduced, how many hours they work, how much vacation time they have, what they spend their money on, how they vote and what their most personal fears are.

Much of this is to be expected as a result if the mess that Greece got itself into and the unprecedented loan packages that it has received. But the line must be drawn somewhere. These loans come with extreme conditionality. Just as Greeks’ personal lives are pored over, so the bailouts dictate not just economic policy but a whole range of other policies down to the finest details. This is the quid pro quo of the loan deals: Greece receives money in return for certain fiscal measures and structural reforms. Nowhere does the agreement dictate how people should vote in a free election.

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Memorandum II: The sequel – Dude, where’s my state?

Illustration by Manos Symeonakis

As Greece draws breath after voting for a new package of austerity measures likely to pave the way for another loan agreement with the European Union and the International Monetary Fund, this might be an opportune moment to identify one of the key faults with the first memorandum signed last year. Because, like a Hollywood sequel which follows a dire original, Memorandum II is likely to make us want to look away in horror.

There is plenty in the medium-term fiscal plan, or MTFP as it’s known in sequel speak, about reducing public spending. Greece plans to save more than 14 billion euros by 2015. This means, among other things, that the public sector wage bill will be cut by 770 million euros this year, 600 millon in 2012, 448 million in 2013, 300 million in 2014 and 71 million in 2015.

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Rating the rating agencies

Illustration by Manos Symeonakis

“If we really want to rub their faces in it, then the only way is to increase revenues and for every Greek to pay the taxes they are supposed to. If that happens, then we won’t need Moody’s or anybody else.” In his own inimitable style, Deputy Prime Minister Theodoros Pangalos’s blew open in Parliament on Friday an issue of public debate while displaying all the subtlety of a bulldozer trying to open a safe.

Although he was more forthright than others, the veteran PASOK politician was expressing an opinion that reflected the mood of many voters and MPs. His comments came just a few days after Moody’s, one of the three credit rating agencies that have been observing the Greek economy with the intensity a menacing stalker, downgraded Greece’s debt — already at junk status — by three notches, to B1 from Ba1 and suggested Athens would not be able to repay its debt without some form of restructuring. Moody’s also downgraded six Greek banks in the same week.

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