Category: Greek Debt

Greek Prime Minister optimistic about deal

4/6/2015

Greek flag

Returning to his usual optimistic view, Greek Prime Minister Alexis Tsipras claimed that talks in Brussels on the Greek debt crisis had been "constructive" and said that "an agreement is in sight".

Nevertheless, Tsipras also said that Greece had rejected some of the proposals put forward by its creditors. Even head of the Eurogroup of finance ministers, Jeroen Dijsselbloem and chief of the European Commission Jean-Claude Juncker termed the talks "very good".

However, there is still no agreement.

Greece had hoped to have an agreement and funds released to pay for a 300 million euro payment due to the International Monetary Fund(IMF) this Friday June 5. Prime Minister Tsipras promised that Greece would make the payment.

French President Francois Hollande also expressed optimism about a deal telling reporters “It is a matter of a few days or even hours from a possible settlement." Yet talks are set to resume in a few days with no deal as yet. By that time, Greece will be even shorter of cash and more desperate as it will have made the IMF payment. Labour Minister Panos Skouletis maintained that there was no more room for Greece to compromise further. However, it may be forced to do so as it runs out of means to pay the remainder of it debts and other obligations to the end of this month when the loan agreement runs out. A deal is needed to release the final funds from the loan.

Not everyone was optimistic, Deputy Shipping Minister, Thodoris Dritsas said that proposals by Juncker during the recent meetings fell "beneath expectations in every way". There may be strong opposition within the ruling Syriza party to any further concessions and even to those already granted. Many leftists are upset that the government refuses to discuss any Plan B that would develop policies to face a situation where no deal was possible. Alexis Mitropoulos, a senior official within Syriza said: "[Juncker] took on the dirty work and conveyed the most vulgar, most murderous, toughest plan when everyone hoped that the deal was closing. And that at a time when we were finally moving towards an agreement we all want because we rule out a rift leading to tragedy.”

One important issue, that of budget surpluses appears to be on the verge of being solved. Greece will be asked to target a budget surplus of 1 per cent this year and 2 per cent next. Greece has proposed a 0.8 per cent surplus this year and 1.5 per cent next.

The Greek government has so far resisted pension cuts demanded by creditors and also labor market reforms. Taxation issues also appear divisive. A deal still appears to be at least a number of days ahead. A deal must be reached by about the middle of June to allow time for it to pass through various legislatures.

Sources:
http://www.euronews.com/2015/06/02/eurogroup-head-dampens-greece-s-enthusiasm-over-debt-deal/
http://www.euronews.com/2015/06/02/greek-debt-crisis-no-room-for-more-compromises-says-athens-minister/
http://www.nytimes.com/2015/06/04/business/international/greek-debt-tsipras-juncker-imf-european-commission.html?_r=0

0 Comments

Greek prime minister blames creditors for lack of deal

1/6/2015

0 Comments

Greek Prime Minister Alexis Tsipras

Although formerly expressing continuous optimism that Greece and it creditors the "institutions" or Troika as they were formerly called, would soon reach a deal, Alexis Tsipras, the Greek Prime Minister, lashed out at creditors whose intransigence he blames for failure to reach a deal by yesterday.

In the French newspaper Le Monde Tsipras said: “The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance. It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

There are signs that leftist members of Syriza are becoming impatient with both prime minister Tsipras and the finance minister Yanis Varoufakis as they abandon former red lines on taxation and privatization.

Tsipras announced that he was willing to give way even further on anti-austerity demands. Polls show that a majority of Greeks are in favour of reaching a deal even if anti-austerity demands are not met.

The issue of pension and wage cuts have been red lines so far that have kept creditors from agreeing to a deal.

The creditors insist the austerity measures in the original agreement be agreed to and implemented.

Tsipras spoke by telephone with German Chancellor, Angela Merkel as well as French President Francois Hollande on Sunday evening. All agreed on the need for a quick agreement.Leftist members of Syriza were incensed when Varoufakis appointed Greek-American economist Elena Panaritis as Greece's representative for the International Monetary Fund (IMF). Panaritis had earlier represented the pro-bailout Pasok party as an honorary MP.

Some 43 Syriza members including deputy prime minister Yannis Dragasakis signed a petition opposing the appointment. In spite of the cash crunch Greece faces , the Economy Minister George Stathakis said that Greece had internal resources that would allow it to make a 305 million euro payment to the IMF on June 5. Nevertheless, it is becoming more and more difficult for Greece to meet debt payments without more cash making a quick agreement a necessity. At the same time many in Syriza want the party to adopt a Plan B that would develop strategies for the way forward, or perhaps "outward", should the government fail to reach a deal acceptable to the party.

Sources:
http://uk.reuters.com/article/2015/05/30/uk-eurozone-greece-voutsis-idUKKBN0OF0AC20150530

http://www.telegraph.co.uk/finance/economics/11636411/IMF-openly-warns-of-Grexit-as-judgment-day-approaches.html

http://www.reuters.com/article/2015/05/31/eurozone-greece-idUSL5N0YM0RI20150531

http://www.theguardian.com/business/2015/may/31/greece-alexis-tsipras-lambasts-absurd-proposals-creditors-for-debt-deal-failure

0 Comments

Greece makes loan payment but still no deal

12/5/2015

1 Comment

ECB Euro symbol

Greece yesterday began payment of 750 million euros ($834 million) in debt interest owed to the International Monetary Fund (IMF) The move was made to show eurozone finance ministers meeting in Brussels that Greece would meet its debt payments.

The Greek government has had to borrow from pensions funds and local governments as well as dipping into its reserves at the IMF to meet the payment. After the Brussels meeting, the finance ministers said that there had been progress in the talks but there was more work needed to reach a final deal. No further cash was released. There are 7.2 billion euros left to be disbursed but the creditors are insisting that the conditions stipulated in the original agreement including reforms to the labor market and pensions must be met before any further funds are released.

The Eurogroup issued a statement that said in part: "We welcomed the progress that has been achieved so far ... At the same time, we acknowledged that more time and effort are needed to bridge the gaps on the remaining open issues." Jeroen Dijsselbloem, of the group said that more time was needed to reach a deal but that there were both time constraints and liquidity constraints but he hoped an agreement could be made before money ran out.

The Greek Finance Minister Yanis Varoufakis said that Greece had only a few weeks before it would face a liquidity crisis and default on payments. The IMF is said to be already working on a contingency plan to deal with a potential Greek default. Greece has not received any payouts from its bailout loan since last August.

The talks between Greece and its creditors have now been ongoing for more than three months with little progress reported until recently. Finance minister Varoufakis noted that there had been progress on privatization and tax reform. As Varoufakis notes, the progress had been mostly because of concessions by the Greek government including on issues that were supposed to be "red lines" not to be crossed. Nevertheless he said that the discussion including his own with Wolfgang Schaeuble, the hard line German finance minister had been the friendliest yet.

Somewhat surprisingly Schaeuble said that it might make sense for a referendum to be held on any deal that was reached so as to give the Greek government a mandate to go ahead with painful austerity demands. Previously the EU has been opposed to any such move as destabilizing markets. Schaeuble's position fits in with that of Syriza MP Costas Lapavitsas that any deal needs a clear mandate from the Greek people. As any deal is bound to break election pledges there could be rebellion within the party even if a referendum were to be passed by the Greek electorate. Polls show that Greeks are so anxious to stay within the eurozone that they want to do so even if Greek anti-austerity demands are not met.

Even it Greece is able to make it through to the end of June when the present bailout ends, it will face huge payments in July and August to the European Central Bank. While press reports emphasize the negative consequences of default and abandoning the eurozone currency union, history shows that results of leaving a currency zone vary considerably with some results causing considerable hardship but others almost immediate benefits.

Sources:
http://www.nytimes.com/2015/05/11/business/dealbook/imf-and-central-bank-loom-large-over-greeces-debt-talks.html
http://www.theguardian.com/business/2015/may/11/greece-repays-750m-loan-instalment-to-imf-early
http://www.theguardian.com/business/live/2015/may/11/eurozone-finance-ministers-meeting-greece-deadline-live#block-5550ae3fe4b00a7880f44731
http://www.theguardian.com/business/live/2015/may/11/eurozone-finance-ministers-meeting-greece-deadline-live#block-5550ee7ae4b0cbc5d999a83f
http://www.aljazeera.com/news/2015/05/150511192445041.html
http://www.ft.com/intl/cms/s/0/ddb97ae8-f899-11e4-be00-00144feab7de.html#ixzz3ZvglInOT

1 Comment

German president supports demand for war reparations

3/5/2015

1 Comment

Angela Merkel

Joachim Gauck, the president of Germany, expressed his support for demands by Greece that Germany provide reparations for destruction and damage caused during the Nazi occupation of Greece during World War II. In an interview in the Sueddeutsche Zeitung Gauck said that Germany should consider its historical responsibility to Greece:

"We are not only people who are living in this day and age but we're also the descendants of those who left behind a trail of destruction in Europe during World War Two -- in Greece, among other places, where we shamefully knew little about it for so long.It's the right thing to do for a history-conscious country like ours to consider what possibilities there might be for reparations."

For the most part Germany has ignored or rejected the Greek demand for $312 billion dollars approximately in reparations. German officials argue that reparation was already paid in 1960. In April, vice-chancellor and economy minister, Sigmar Gabriel said the demand was stupid. He said that the Greeks were simply trying to get some leeway from its euro zone creditors as they tried to reach a deal for releasing more funds. The issue, Gabriel, said has nothing to do with conditions for further financial aid. While Gabriel may be right about that, reparations payment could help keep Greece afloat while negotiations for a deal are completed, and the payments might also be used as a carrot to entice Greece to agree to further pension cuts and raise taxes, requirements that have been regarded as "red lines" by the Greek government not to be crossed so far.

The presidency in Germany is mostly a ceremonial post and Gauck has little power but even Chancellor Angela Merkel agreed that Germany had to deal with some sensitivity with the issue of the Nazi occupation of Greece during the Second World War:

“One can’t draw the line on history.We see this in the discussion in Greece and also in other European countries. We Germans do have a special responsibility to deal in an aware, sensitive and knowledgeable way with what we perpetrated under Nazism.”

While Merkel insists on recognizing the long lasting wounds caused by Nazi actions, she did not go on to address Greek demands for further war reparations. The German government claims the matter of reparations was closed with Europe's acceptance in 1990 of the treaty uniting East and West Germany. While reparations might provide a way to provide Greece with vital cash to stave off a default while negotiations were ongoing, German officials seem unlikely to actually make any further payments as it probably would cause a political uproar in Germany and might not lead Greece to change its position on reducing pensions and increasing taxes. In fact, if Greece gets the cash it needs, it might have less incentive to yield to the demands of its creditors.

Sources:
http://www.voanews.com/content/greece-says-it-wont-request-financial-bailout/2746021.html
http://www.reuters.com/article/2015/05/01/us-eurozone-greece-germany-reparations-idUSKBN0NM43J20150501
http://www.dw.de/german-president-gauck-raises-prospect-of-world-war-two-reparations-for-greece/a-18424011
http://www.bloomberg.com/news/articles/2015-05-02/merkel-says-germany-can-t-cut-off-nazi-past-cites-greece

1 Comment

Noam chomsky on Greek debt crisis

29/4/2015

2 Comments

Noam Chomsky (Duncan Rawlinson)

Noam Chomsky is a famous American linguist, philosopher and cognitive scientist but is also known for his political commentaries and activism for social justice. Most of his career was spent at the Massachusetts Institute of Technology (MIT). Chomsky is now 87 but still regularly comments on recent events. In a 2005 poll, Chomsky was voted the "world's top public intellectual".

Chomsky sees hopeful signs in the rise of such parties as Podemos in Spain, Syriza in Greece but also in independence movements in Latin America that are all fighting against disastrous economic policies saying: “Hopefully there is finally an uprising of the people against the devastating economic and social policies deriving from the bureaucracy and the banks, and this is promising. It must be." In an earlier interview on Democracy Now, described the EU reaction to the election of Syriza as "extremely savage". Given that control of events so far has been in the hands of the banks and EU bureaucracy it seems unlikely that any debt will be written off.

In an interview with Euronews, Chomsky argued that Greek debt should be written off just as happened with German debt in 1953, eight years after World War II. He also claimed that EU austerity policies inflicted on Greece were ruining the country. Chomsky is hardly alone in the belief that EU policies hurt Greece. Many liberal economists such as Paul Krugman have expressed similar views.

Chomsky noted that the Syriza-led government had an election mandate to change policies that led to 50 per cent of young people being unemployed and almost 40 per cent of Greeks living below the poverty line. When asked about other countries also facing huge debt loads such as Spain and Portugal, Chomsky maintained that their debt too should be written off.

Related reading
EU FInance Ministers make plans for greek default

Sources:
Greek Reporter
Noam Chomsky

2 Comments

<<Previous

Greek Prime Minister optimistic about deal

Greek prime minister blames creditors for lack of deal

Greece makes loan payment but still no deal

German president supports demand for war reparations

Noam chomsky on Greek debt crisis

Ken Hanly

Archives

Categories

Greek Prime Minister optimistic about deal

Greek prime minister blames creditors for lack of deal

Greece makes loan payment but still no deal

German president supports demand for war reparations

Noa﻿m chomsky on Greek debt crisis

Ken Hanly

Archives

Categories

Noam chomsky on Greek debt crisis