23/02/2105
Most of the analysis concerning Friday's agreement focuses on the 'climbdown' by Greece in the face of tough opposition from Germany and particularly, German finance minister, Wolfgang Schaeuble. The fact is that SYRIZA's policy is to remain part of the Eurozone definitely weakened its negotiating stance, while willingness to go back to the Drachma may have given Greece a stronger negotiating hand. A contrarian view of the outcome of Friday's talks might be that Schaeuble was actually helping Greece and Tsipras by his outright, public rejection of the Greek proposals for Friday's Eurogroup meeting. What seems to have been agreed is very similar to what was being proposed on Thursday and SYRIZA had definitely rowed back on most of its demands at that stage. Had Schaeuble said on Thursday that the proposals were a basis for discussion, and the outcome was Friday's agreement anyway, then Tsipras would have been hammered back home for getting hardly anything. The stance taken by Schaeuble made him an 'ally' of Tsipras, as Greece is seen to have taken on the EU and, on the surface anyway, been given the opportunity to define its own programme of reforms, rather than having it foisted on them from outside. Even Schaeuble's remarks that this would be difficult to sell to Greek voters gives an indication he is aware of what he is doing. Many in the EU, like the commission and members of the Eurogroup were taken by surprise by Schaeuble's total rejection of the Greek proposals but there may have been another reason behind it - an attempt to help the Greek Prime Minister to sell the agreement at home by being the 'bad boy'.
21/02/2013
The link below outlines a key issue facing Syriza - the high level corruption that has been endemic in Greece for decades. A great deal of progress can be made if this is reduced. it is probably impossible to eradicate totally in Greece, no more than in any other EU country but if business is transacted on an ethical basis, it leaves less scope for corruption and graft. The estimated annual loss to the Greek economy of €20bn tells its own story. It is these aspects of the economy, if tackled successfully, which can deliver the necessary growth, employment and revenue streams for Greece to fulfil its commitments.
The article mentions 'a bloated Civil Service' and it is this area that I believe will cause SYRIZA big problems. SYRIZA's stated objective is to make the public service more efficient as well as making Greece more business friendly, by eliminating obstacles to business start-ups. If this is dealt with on the basis of process re-engineering, for example, then it is likely to lead to big job reductions in the public service and massive movement of public servants from one department to another. This will be a huge undertaking ( if it is undertaken) and, taking into consideration the level of external supervision by 'the institutions', will be subject to strict targets and milestones, as was the 2012 bailout memorandum. This is one aspect of reform that will test the internal resolve of SYRIZA to the limit, due to having to tackle one of its key areas of support - the Public Service. However, if inefficiency is to be addressed, it will be critical to re-organise the Public Service on the basis of more eGovernment and one-stop-shop operations for public services as well as less red tape, documentation and general bureaucracy. An efficient Public Service means less time spent interfacing with the Public Service, leaving more time for people to engage in productive economic activity.
One can only hope that SYRIZA will tackle these issues successfully, otherwise investors will be very reluctant to take a chance on Greece. If Syriza fails, it is difficult to see how the problems of Greece can be solved, other than by exiting the Eurozone. Therefore, as the article points out, it is Europe's responsibility to support the new government in its endeavours as much as it is Syriza's responsibility to fulfil its obligations to the people of Greece and Europe.
http://www.nytimes.com/2015/02/21/opinion/in-greece-focus-on-justice.html?_r=0
21/02/2015
The agreement reached last night between Greece and the Eurogroup is in the true traditions of the EU - 11th hour consensus. Opinion is divided about who gained or lost in the process, which is a good thing because both sides can claim victories of sorts. It was summed up well in the comment "Greece gets to pick its own austerity". This is a key point, in that SYRIZA can begin to implement the type of reforms necessary to turn the economy around. The necessary measures were not introduced by the previous two governments and as a result, the effect on the economy was worse than anticipated. The real positive aspect is that a government, for the first time since the crisis began in 2008, has questioned and opposed the prevailing austerity orthodoxy and come away with something. This may have a knock-on effect in other bailout countries, where it seems to voters that centrist governments achieved no concessions in terms of their bailout agreements. The ball is in SYRIZA's court now and I believe there is a fair amount of goodwill behind them so there are grounds for optimism. If SYRIZA fail to deliver, then the picture would be very bleak, with an exit from the Eurozone the likely outcome. The article below is very informative about the situation and the necessity for Greece to regain the trust of its EU partners.
http://coppolacomment.blogspot.gr/2015/02/greece-and-eu-question-of-trust.html?showComment=1424508591444
20/02/2015
It appears the notion that German policy is pro Grexit is gaining traction. Paul Krugman believes this to be the situation and points out that if Greece is forced out this means German policy is also "objectively pro Golden Dawn".
http://krugman.blogs.nytimes.com/2015/02/19/insert-german-curse-word-here/?smid=tw-share&_r=0
19/02/2015
It's being reported that Germany has rejected the latest proposal to resolve the deadlock in the Greek debt talks. It appears that Germany is doing the talking for the other 17 Eurozone members, as they appear to have gone remarkably silent. Lots of discussion has centred around the fact that other governments, particularly those in countries who implemented austerity measures in return for bailouts, were opposed to any concessions to Greece. However, it would seem that this may not be the case considering the fact that they had very little time to carefully assess the proposals. Perhaps Germany is sending a message to the other countries, such as Ireland, Portugal and Spain, that there will be no tolerance for any deviation from the austerity policies imposed under the bailout agreements. Another scenario is that the Eurogroup agrees at tomorrow's meeting to accept the Greek proposals and of course Germany is off the hook for any fallout if Greece doesn't deliver.
It must be extremely difficult and frustrating for the Greek Government and its finance minister to be negotiating under these circumstances. They have made a number of significant concessions since the beginning of the process but Germany blocks everything without even a discussion. It is impossible to negotiate with someone who just says 'no' and insists on adhering to the status quo, which is widely regarded as a failure. The Greek negotiating position is honourable, unlike in the past, and it is always better to adopt an 'honest broker' stance because you can walk away with your conscience intact if a deal is not reached.
On the one hand, the situation arouses suspicions that Germany wants to push Greece out of the Eurozone. However, while there may be financial turmoil following a Greek exit, it might also lead to the unravelling of the Eurozone altogether. A Greek exit and fast recovery would undoubtedly trigger the emergence of political parties or policies calling for similar action in other financially-stressed or periphery countries. If one country can exit successfully, so can others. On the other hand, if Greece defaults on its debt Germany will be a big loser as it is the largest creditor. Taking that fact into consideration, it's hard to see why Germany is being so tough because if Greece is forced to leave the Eurozone, it will likely default on its debts and Germany will lose big bucks.
As ever with European politics, everything is messy but things could get messier.
19/02/2015
A new president has been elected in Greece by a large majority in parliament. Prokopis Pavlopoulos is a member of New Democracy and was supported by ND along with the New Government for the role. It must be remembered that the reason for the last election was the failure to agree a successor to outgoing president, Karolos Papoulias. We can see the new president in 'action' in the video (he's the person with the white hair), where he sits presidentially and aloof during the attack by Ilias Kasidiaris, a Golden Dawn MP. Kasidiaris threw a glass of water on Rena Dourou (SYRIZA) and then he hit Liana Kanelli, a Communist Party MP. The president's role does not involve interfering with the 'political process', so he should settle in quite easily, based on his previous experience.
https://www.youtube.com/watch?v=Nte1UtRww_k
18/02/2015
The article below by Michael Taft from Unite trade union supports the argument that some countries don't want Greece to have any success in the negotiations with the Eurogroup. The stance taken by SYRIZA is in stark contrast to that taken by the Fine Gael / Labour coalition in Ireland. It should be noted that the current Irish government campaigned against the bailout prior to the general election in 2011, as did New Democracy, the majority coalition party in its 2012 Greece election campaign. Both governments went on to implement the terms of the bailouts in Ireland and Greece. Greece now has a new government, elected on the basis of opposition to the Greek bailout memorandum and so far, it has done just that. SYRIZA may have to compromise in the negotiations but no new austerity measures will be introduced.
Hopefully, the election of SYRIZA will start a debate on the type of society Europeans want, one where the interests of the citizens takes priority over the 'discipline' of the markets. Politicians in Europe need to take back control of the economic issues affecting their respective countries and not allow banks, financial institutions, hedge funds and ratings agencies to dictate national economic policy. This can be done by effective regulation. Without doubt, this would be strongly lobbied against, particularly by the UK. It is paradoxical that the 'financial industry', which produces nothing tangible, lectures countries about increasing productivity, increasing growth and cutting costs in areas and economies that actually produce goods.
It is illogical for the Irish Government to oppose the efforts being made by the Greek Government, as a shift in EU policy will benefit all of Europe.
http://tinyurl.com/m94l56j
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18/02/2015
It's being reported that Greece has requested a four-month bailout extension. There is talk that it will be resisted by Germany, as it is viewed there as 'more money without reforms'. It will be unfortunate if the EU rejects this offer from Greece. The Greek position on the memorandum is that it has failed and there is no point continuing to run the Country under its terms. There is also resistance to a Greek deal from other bailout countries, such as Spain, Ireland and Portugal. The logic here being that centre right parties in these countries, who are currently implementing or have implemented austerity measures, do not want a more favourable deal for a left wing governed Greece.
(comment on David McWilliams article in the Irish Independent 18/02/2015)
Greece's biggest enemy now is the Spanish Prime Minister, Rajoy, who is behind in the polls to Podemos, another left-wing party. He wants SYRIZA to be crushed. While SYRIZA may be known as the Radical Coalition of the Left, there is nothing radically left wing about its proposals. They make economic sense. The difficulty, as always with Greece, is can SYRIZA deliver on its proposals, where previous governments failed. The measures contained in the bailout memorandum have destroyed the Greek economy and any responsible government would oppose the continuation of this failed policy. Hopefully, Greece is given a chance because all the language from the EU up to now is stick to the terms of the memorandum. SYRIZA will not continue to govern under this agreement.
It is probably Angela Merkel's call now whether to go with Greece's proposal or not. No one can say what the effects of a Greek default and exit from the Euro currency would be. The US government allowed Lehman Brothers to fail in September 2008 and there was a massive global financial crisis as a result. Lehman Brothers was a bank and the estimates of the cost of its failure were way off the mark. Greece is a country and, considering the inter-connectedness of banks in the EU, it is impossible to gauge the effect of a Greek exit from the Eurozone and a subsequent default.
We are continuously told that the next meeting 'is the one' where it will all be decided so it would appear that Friday is the day - but as always with the EU, who knows?
17/02/2015
Yesterday's discussions at the Eurogroup meeting broke up suddenly and it looks likely that a deal that was on the table was altered. The German finance minister, Wolfgang Schaeuble, was quoted as saying before the talks that he was pessimistic because the Greek government hadn't moved. It must be pointed out that neither has he changed his stance either, so under circumstances like that it is difficult to get an agreement. The report below from Paul Mason gives an insight into what went on and it looks ugly. If this is a reflection of what happened it certainly says a lot about the Irish government's position in relation to Greece. It is unfortunate that we can be so tough with a country that's struggling badly, yet so meek when it comes to representing the interests of Irish people when dealing with Ireland's creditors. It will look even worse than it does already for the government parties if Greece achieves any concessions, so it's throw a country to the wolves - we want to be re-elected.
http://tinyurl.com/nfe5da6
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16/02/2105
It is reported in today's Irish Times (Arthur Beesley) that the Greek Government has not presented its proposals at the negotiations with the EU in the form of a single document. This is very disappointing (if true), as economic reform on the scale required needs a coordinated plan. In the past, what has been lacking in Greece is 'joined-up thinking', a necessary ingredient for national economic reform. An example of this disjointed planning is mentioned on the main page of this blog (http://melinnakis.blogspot.gr) on the day it was first published three years ago. It relates to the proposal to reduce VAT for anyone using a credit card to pay for goods. SYRIZA has been waiting in the wings for the past two and a half years to govern Greece and has had plenty of time to come up with an overall plan to reform the economy. The fear now is that if the plan is not formed in a single document, all the elements are not in place. This could lead to internal squabbling over measures that have not been agreed within the party. With all the 'noise' surrounding the talks, it's hard to know who's telling the truth but the EU negotiators and national leaders have been saying they want Greece to give them proposals. The Greek Government has said it will need six months breathing space and Alexis Tsipras is quoted today ( Ekathimerini) as saying "Greece will [then], in six months time, be a completely different country". This implies that the plan is ready and it will take six months to implement it. It remains to be seen if a plan is presented to the Eurogroup at today's meeting.
15/02/2015
There are reports that today SYRIZA has agreed with Greece's creditors that a 'National Reform Plan' is necessary to sort out the economy. In the Daily Developments section of the blog ( http://melinnakis.blogspot.gr ) reference has been made to this on many occasions over the past two years. The conclusion has always been that it would be impossible for either New Democracy or PASOK to implement the kind of changes necessary to reform the Greek economy and indeed, Greek society itself. One of the conditions for accession to the EU is a "properly functioning market economy" and in many respects that is not the situation in Greece. Vested interests, including trade unions, have continuously blocked reforms that had a direct impact on them. In the case of trade unions, on their members or in the case of businesses, market reforms, closed shops and restrictive practices. This is a significant factor in the cumulative negative effects of the bailout memorandum in Greece.
It is probable that SYRIZA can manage to get some reforms through, especially on the market side of the economy but whether the trade unions can be brought onside is another matter. It has long been argued here that the only way out of the problems in Greece is to have a Social Partnership between the Government, Employers Organisations and Trade Union Organisations. The economy needs to be opened up and made more competitive but, as a quid quo pro, the industrial relations legislation needs to be revised, particularly in relation to strikes. Previous governments since 2009 had little chance, if any, of achieving this but perhaps SYRIZA, which has no political baggage, will be able to begin the process in the context of a National Reform Plan i.e. a roadmap to economic reform.
http://tinyurl.com/no62q5w
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15/02/2015
Some Irish MEPs ( 6 out of 11) have have come out in support of Greece's efforts to deal with its debt problems and the difficulties facing the Greek people. The article rightly accuses Enda Kenny of suggesting that SYRIZA should backtrack on promises made during the election campaign. This is not surprising coming from An Taoiseach, as that's exactly what he did when he came into power. Independent and Sinn Féin MEPs outnumber Government and Fianna Fáil representatives in the European parliament. That's not surprising either, because they are paying the price for, in the former's case, deceit of the Irish electorate and the latter's, wrecking the Irish economy.
http://tinyurl.com/otog4xl
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11/02/2105
It seems that Germany is totally opposed to any solution to the Greek debt problem, apart from the implementation of the agreed memorandum of 2012. It is widely acknowledged that this memorandum was a failure and caused major damage to the Greek economy and employment levels. The IMF itself and many leading economists have pointed out the flaws in the programme so it's hard to figure out why some countries insist on the continuation of this flawed strategy.
It must be acknowledged that the two previous Greek governments (PASOK:2009 and ND coalition 2012) did not carry out many of the measures designed to reorganise the economy in Greece. This argument has been made many times in this blog under the 'Daily Developments' section.
http://melinnakis.blogspot.gr
It is probable, taking the hegemony in Greek politics into consideration, that neither of the previous two governments would ever have taken the measures necessary to restructure the Greek economy. The political connections to big business families, the media and the shipping industry, as well as the influence of interest groups such as trade unions, made it almost impossible for major reform to take place.
However, SYRIZA was never in government before and has no allegiance to any individual or group, apart from the trade unions. It is reasonable to assume that SYRIZA will tackle the corruption and major tax evasion without fear or favour. Therefore, it is incumbent on the powers that be in Europe to give SYRIZA, firstly a genuine hearing and secondly, an opportunity to carry out its programme if it is viable.
Apart from dealing with the issues above, there are obstacles in the way of Greece when it comes to growth. It takes a long time to set up a business due to a raft of bureaucracy. This needs to change. It has long been argued on this site that the industrial relations environment also needs a major overhaul. Business likes certainty and if people can just walk off the job, investors will not be inclined to risk their money where this type of uncertainty exists. Social partnership between the government, employers and trade unions is the way forward. If a proper framework can be agreed, it will provide the stability to encourage investment in the economy, resulting in the much sought after growth.
Finally, today the Irish Finance Minister, Michael Noonan, has reiterated his stance about no debt write off for Greece. He is concerned that it would leave "a hole" in European Countrys' balance sheets, which from an national accounting perspective, is a reasonable argument. However, he does make a point about 'parking' the debt, where little or no interest is paid. This would certainly be a help and perhaps also an indication that it may be possible to work out a solution that is acceptable to both sides. It starts today.
10/02/2105
There is no doubt that Simon Coveney's comments on the Greek debt situation is orchestrated. Immediately, EU finance ministers were out of the traps saying Ireland would not benefit from a deal on Greece. It is obvious now what side Ireland will be on when it comes to the discussions, opposition to any concessions to Greece. Thick politicians being played like a violin by the 'aristocrats' of Europe. If the irish government had any idea about negotiation it would have said nothing on the Greek situation and looked for some crumb from its EU masters to stay onside. However, that type of skill, Machiavellian as it is, does not exist within the realms of Irish politics. The capabilities of irish politicians are in relation to 'parish pump' politics, survival within the party and funeral attendance.
http://tinyurl.com/mgkqvw3
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09/02/2015
Simon Coveney has said "Ireland wasn't nobbled by the Troika over support for Greek debt relief call". In other words the debt conference. My comment on this article is below.
There is no doubt that Ireland was 'leaned on' in relation to the debt conference. Whatever about Michael Noonan, Joan Burton was in favour of it so the opposition of both tells its own story. I read that the exposure of Ireland to the Greek bailout is €350m. I'm certain that if the debt conference had taken place, Ireland would have gained more than it would lose. The speech by Alexis Tsipras in the Greek parliament last night has brought Greece closer to leaving the Eurozone and probably the EU, unless there is a positive effort to come to an agreement. I don't see our spineless politicians doing much to help the Greeks.
Of course Simon Coveney also stated in the interview that if Greece gets a deal, Ireland will want exactly the same. By saying this, it puts further obstacles in Greece's path and reveals exactly where Fine Gael stands. It's almost like the Irish government doesn't want a deal for Greece because they will look bad in the eyes of Irish people for not doing what Greece is doing.
In the meantime, SYRIZA is not backing down, although Tsipras' speech in Parliament last night is a pre-negotiating stance. It may be that SYRIZA is trying to get the EU to deal with this issue fast. The more the measures of the memorandum are rolled back, the harder it will be to get an agreement. Therefore, Tsipras is gambling that this will force the EU to begin discussions quickly and it will also smoke them out to see if they actually want to cut a deal with Greece. Tsipras has left room for manoeuvre by indicating that the changes will be introduced 'over time' and the SYRIZA programme is a 4-year programme. This will be a very important week for Greece and the EU and Wednesday's meeting of finance ministers should reveal whether a deal is possible. But there again, with the EU and its decision-making record in the past, you never know.
08/02/2105
There is a quote from an unnamed European official (probably unelected) in the article below which proves the point that most people are aware of. In the majority of European countries, national governments don't make the decisions that count. The language employed is interesting as it would remind Irish people of the testosterone-fueled alpha male language used by Anglo Irish Bank executives during the unfolding financial crisis in Ireland and Anglo. The quote is in relation to the refusal of the ECB to accept Greek Government bonds as collateral:
"One European official described it as a "gentle kick in the n***" for Yanis Varoufakis, the Greek finance minister, who has been touring European capitals with Mr Tsipras to make Syriza's case."
"The idea was to remind the new government that, regardless of the Greek elections, it will be other people who make this decision. This is a fact of political life in the eurozone."
http://tinyurl.com/kb9yyby
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07/02/2015
The knives are out for SYRIZA from the European apologists as can be seen from the link to an article in the Irish Independent below. However, it is hard to see SYRIZA backing off to any great extent, even if it means Greece leaving the Euro or, more likely, SYRIZA resigning from government. The previous Greek government left a poison pill behind them by opting for a two-month extension to the bailout programme, instead of the six months on offer from the EU and its partners. SYRIZA will refuse to govern the country under the terms of the existing bailout agreement and have already stated that. The real issue is that people in Europe, especially those in the bailout countries, know in their hearts that they are being screwed by Germany. Most (like Ireland) don't want to do anything about it but the Greeks do and they deserve our support.
http://tinyurl.com/q2hoejg
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06/02/2015
Most of the analysis concerning Friday's agreement focuses on the 'climbdown' by Greece in the face of tough opposition from Germany and particularly, German finance minister, Wolfgang Schaeuble. The fact is that SYRIZA's policy is to remain part of the Eurozone definitely weakened its negotiating stance, while willingness to go back to the Drachma may have given Greece a stronger negotiating hand. A contrarian view of the outcome of Friday's talks might be that Schaeuble was actually helping Greece and Tsipras by his outright, public rejection of the Greek proposals for Friday's Eurogroup meeting. What seems to have been agreed is very similar to what was being proposed on Thursday and SYRIZA had definitely rowed back on most of its demands at that stage. Had Schaeuble said on Thursday that the proposals were a basis for discussion, and the outcome was Friday's agreement anyway, then Tsipras would have been hammered back home for getting hardly anything. The stance taken by Schaeuble made him an 'ally' of Tsipras, as Greece is seen to have taken on the EU and, on the surface anyway, been given the opportunity to define its own programme of reforms, rather than having it foisted on them from outside. Even Schaeuble's remarks that this would be difficult to sell to Greek voters gives an indication he is aware of what he is doing. Many in the EU, like the commission and members of the Eurogroup were taken by surprise by Schaeuble's total rejection of the Greek proposals but there may have been another reason behind it - an attempt to help the Greek Prime Minister to sell the agreement at home by being the 'bad boy'.
21/02/2013
The link below outlines a key issue facing Syriza - the high level corruption that has been endemic in Greece for decades. A great deal of progress can be made if this is reduced. it is probably impossible to eradicate totally in Greece, no more than in any other EU country but if business is transacted on an ethical basis, it leaves less scope for corruption and graft. The estimated annual loss to the Greek economy of €20bn tells its own story. It is these aspects of the economy, if tackled successfully, which can deliver the necessary growth, employment and revenue streams for Greece to fulfil its commitments.
The article mentions 'a bloated Civil Service' and it is this area that I believe will cause SYRIZA big problems. SYRIZA's stated objective is to make the public service more efficient as well as making Greece more business friendly, by eliminating obstacles to business start-ups. If this is dealt with on the basis of process re-engineering, for example, then it is likely to lead to big job reductions in the public service and massive movement of public servants from one department to another. This will be a huge undertaking ( if it is undertaken) and, taking into consideration the level of external supervision by 'the institutions', will be subject to strict targets and milestones, as was the 2012 bailout memorandum. This is one aspect of reform that will test the internal resolve of SYRIZA to the limit, due to having to tackle one of its key areas of support - the Public Service. However, if inefficiency is to be addressed, it will be critical to re-organise the Public Service on the basis of more eGovernment and one-stop-shop operations for public services as well as less red tape, documentation and general bureaucracy. An efficient Public Service means less time spent interfacing with the Public Service, leaving more time for people to engage in productive economic activity.
One can only hope that SYRIZA will tackle these issues successfully, otherwise investors will be very reluctant to take a chance on Greece. If Syriza fails, it is difficult to see how the problems of Greece can be solved, other than by exiting the Eurozone. Therefore, as the article points out, it is Europe's responsibility to support the new government in its endeavours as much as it is Syriza's responsibility to fulfil its obligations to the people of Greece and Europe.
http://www.nytimes.com/2015/02/21/opinion/in-greece-focus-on-justice.html?_r=0
21/02/2015
The agreement reached last night between Greece and the Eurogroup is in the true traditions of the EU - 11th hour consensus. Opinion is divided about who gained or lost in the process, which is a good thing because both sides can claim victories of sorts. It was summed up well in the comment "Greece gets to pick its own austerity". This is a key point, in that SYRIZA can begin to implement the type of reforms necessary to turn the economy around. The necessary measures were not introduced by the previous two governments and as a result, the effect on the economy was worse than anticipated. The real positive aspect is that a government, for the first time since the crisis began in 2008, has questioned and opposed the prevailing austerity orthodoxy and come away with something. This may have a knock-on effect in other bailout countries, where it seems to voters that centrist governments achieved no concessions in terms of their bailout agreements. The ball is in SYRIZA's court now and I believe there is a fair amount of goodwill behind them so there are grounds for optimism. If SYRIZA fail to deliver, then the picture would be very bleak, with an exit from the Eurozone the likely outcome. The article below is very informative about the situation and the necessity for Greece to regain the trust of its EU partners.
http://coppolacomment.blogspot.gr/2015/02/greece-and-eu-question-of-trust.html?showComment=1424508591444
20/02/2015
It appears the notion that German policy is pro Grexit is gaining traction. Paul Krugman believes this to be the situation and points out that if Greece is forced out this means German policy is also "objectively pro Golden Dawn".
http://krugman.blogs.nytimes.com/2015/02/19/insert-german-curse-word-here/?smid=tw-share&_r=0
19/02/2015
It's being reported that Germany has rejected the latest proposal to resolve the deadlock in the Greek debt talks. It appears that Germany is doing the talking for the other 17 Eurozone members, as they appear to have gone remarkably silent. Lots of discussion has centred around the fact that other governments, particularly those in countries who implemented austerity measures in return for bailouts, were opposed to any concessions to Greece. However, it would seem that this may not be the case considering the fact that they had very little time to carefully assess the proposals. Perhaps Germany is sending a message to the other countries, such as Ireland, Portugal and Spain, that there will be no tolerance for any deviation from the austerity policies imposed under the bailout agreements. Another scenario is that the Eurogroup agrees at tomorrow's meeting to accept the Greek proposals and of course Germany is off the hook for any fallout if Greece doesn't deliver.
It must be extremely difficult and frustrating for the Greek Government and its finance minister to be negotiating under these circumstances. They have made a number of significant concessions since the beginning of the process but Germany blocks everything without even a discussion. It is impossible to negotiate with someone who just says 'no' and insists on adhering to the status quo, which is widely regarded as a failure. The Greek negotiating position is honourable, unlike in the past, and it is always better to adopt an 'honest broker' stance because you can walk away with your conscience intact if a deal is not reached.
On the one hand, the situation arouses suspicions that Germany wants to push Greece out of the Eurozone. However, while there may be financial turmoil following a Greek exit, it might also lead to the unravelling of the Eurozone altogether. A Greek exit and fast recovery would undoubtedly trigger the emergence of political parties or policies calling for similar action in other financially-stressed or periphery countries. If one country can exit successfully, so can others. On the other hand, if Greece defaults on its debt Germany will be a big loser as it is the largest creditor. Taking that fact into consideration, it's hard to see why Germany is being so tough because if Greece is forced to leave the Eurozone, it will likely default on its debts and Germany will lose big bucks.
As ever with European politics, everything is messy but things could get messier.
19/02/2015
A new president has been elected in Greece by a large majority in parliament. Prokopis Pavlopoulos is a member of New Democracy and was supported by ND along with the New Government for the role. It must be remembered that the reason for the last election was the failure to agree a successor to outgoing president, Karolos Papoulias. We can see the new president in 'action' in the video (he's the person with the white hair), where he sits presidentially and aloof during the attack by Ilias Kasidiaris, a Golden Dawn MP. Kasidiaris threw a glass of water on Rena Dourou (SYRIZA) and then he hit Liana Kanelli, a Communist Party MP. The president's role does not involve interfering with the 'political process', so he should settle in quite easily, based on his previous experience.
https://www.youtube.com/watch?v=Nte1UtRww_k
18/02/2015
The article below by Michael Taft from Unite trade union supports the argument that some countries don't want Greece to have any success in the negotiations with the Eurogroup. The stance taken by SYRIZA is in stark contrast to that taken by the Fine Gael / Labour coalition in Ireland. It should be noted that the current Irish government campaigned against the bailout prior to the general election in 2011, as did New Democracy, the majority coalition party in its 2012 Greece election campaign. Both governments went on to implement the terms of the bailouts in Ireland and Greece. Greece now has a new government, elected on the basis of opposition to the Greek bailout memorandum and so far, it has done just that. SYRIZA may have to compromise in the negotiations but no new austerity measures will be introduced.
Hopefully, the election of SYRIZA will start a debate on the type of society Europeans want, one where the interests of the citizens takes priority over the 'discipline' of the markets. Politicians in Europe need to take back control of the economic issues affecting their respective countries and not allow banks, financial institutions, hedge funds and ratings agencies to dictate national economic policy. This can be done by effective regulation. Without doubt, this would be strongly lobbied against, particularly by the UK. It is paradoxical that the 'financial industry', which produces nothing tangible, lectures countries about increasing productivity, increasing growth and cutting costs in areas and economies that actually produce goods.
It is illogical for the Irish Government to oppose the efforts being made by the Greek Government, as a shift in EU policy will benefit all of Europe.
http://tinyurl.com/m94l56j
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18/02/2015
It's being reported that Greece has requested a four-month bailout extension. There is talk that it will be resisted by Germany, as it is viewed there as 'more money without reforms'. It will be unfortunate if the EU rejects this offer from Greece. The Greek position on the memorandum is that it has failed and there is no point continuing to run the Country under its terms. There is also resistance to a Greek deal from other bailout countries, such as Spain, Ireland and Portugal. The logic here being that centre right parties in these countries, who are currently implementing or have implemented austerity measures, do not want a more favourable deal for a left wing governed Greece.
(comment on David McWilliams article in the Irish Independent 18/02/2015)
Greece's biggest enemy now is the Spanish Prime Minister, Rajoy, who is behind in the polls to Podemos, another left-wing party. He wants SYRIZA to be crushed. While SYRIZA may be known as the Radical Coalition of the Left, there is nothing radically left wing about its proposals. They make economic sense. The difficulty, as always with Greece, is can SYRIZA deliver on its proposals, where previous governments failed. The measures contained in the bailout memorandum have destroyed the Greek economy and any responsible government would oppose the continuation of this failed policy. Hopefully, Greece is given a chance because all the language from the EU up to now is stick to the terms of the memorandum. SYRIZA will not continue to govern under this agreement.
It is probably Angela Merkel's call now whether to go with Greece's proposal or not. No one can say what the effects of a Greek default and exit from the Euro currency would be. The US government allowed Lehman Brothers to fail in September 2008 and there was a massive global financial crisis as a result. Lehman Brothers was a bank and the estimates of the cost of its failure were way off the mark. Greece is a country and, considering the inter-connectedness of banks in the EU, it is impossible to gauge the effect of a Greek exit from the Eurozone and a subsequent default.
We are continuously told that the next meeting 'is the one' where it will all be decided so it would appear that Friday is the day - but as always with the EU, who knows?
17/02/2015
Yesterday's discussions at the Eurogroup meeting broke up suddenly and it looks likely that a deal that was on the table was altered. The German finance minister, Wolfgang Schaeuble, was quoted as saying before the talks that he was pessimistic because the Greek government hadn't moved. It must be pointed out that neither has he changed his stance either, so under circumstances like that it is difficult to get an agreement. The report below from Paul Mason gives an insight into what went on and it looks ugly. If this is a reflection of what happened it certainly says a lot about the Irish government's position in relation to Greece. It is unfortunate that we can be so tough with a country that's struggling badly, yet so meek when it comes to representing the interests of Irish people when dealing with Ireland's creditors. It will look even worse than it does already for the government parties if Greece achieves any concessions, so it's throw a country to the wolves - we want to be re-elected.
http://tinyurl.com/nfe5da6
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16/02/2105
It is reported in today's Irish Times (Arthur Beesley) that the Greek Government has not presented its proposals at the negotiations with the EU in the form of a single document. This is very disappointing (if true), as economic reform on the scale required needs a coordinated plan. In the past, what has been lacking in Greece is 'joined-up thinking', a necessary ingredient for national economic reform. An example of this disjointed planning is mentioned on the main page of this blog (http://melinnakis.blogspot.gr) on the day it was first published three years ago. It relates to the proposal to reduce VAT for anyone using a credit card to pay for goods. SYRIZA has been waiting in the wings for the past two and a half years to govern Greece and has had plenty of time to come up with an overall plan to reform the economy. The fear now is that if the plan is not formed in a single document, all the elements are not in place. This could lead to internal squabbling over measures that have not been agreed within the party. With all the 'noise' surrounding the talks, it's hard to know who's telling the truth but the EU negotiators and national leaders have been saying they want Greece to give them proposals. The Greek Government has said it will need six months breathing space and Alexis Tsipras is quoted today ( Ekathimerini) as saying "Greece will [then], in six months time, be a completely different country". This implies that the plan is ready and it will take six months to implement it. It remains to be seen if a plan is presented to the Eurogroup at today's meeting.
15/02/2015
There are reports that today SYRIZA has agreed with Greece's creditors that a 'National Reform Plan' is necessary to sort out the economy. In the Daily Developments section of the blog ( http://melinnakis.blogspot.gr ) reference has been made to this on many occasions over the past two years. The conclusion has always been that it would be impossible for either New Democracy or PASOK to implement the kind of changes necessary to reform the Greek economy and indeed, Greek society itself. One of the conditions for accession to the EU is a "properly functioning market economy" and in many respects that is not the situation in Greece. Vested interests, including trade unions, have continuously blocked reforms that had a direct impact on them. In the case of trade unions, on their members or in the case of businesses, market reforms, closed shops and restrictive practices. This is a significant factor in the cumulative negative effects of the bailout memorandum in Greece.
It is probable that SYRIZA can manage to get some reforms through, especially on the market side of the economy but whether the trade unions can be brought onside is another matter. It has long been argued here that the only way out of the problems in Greece is to have a Social Partnership between the Government, Employers Organisations and Trade Union Organisations. The economy needs to be opened up and made more competitive but, as a quid quo pro, the industrial relations legislation needs to be revised, particularly in relation to strikes. Previous governments since 2009 had little chance, if any, of achieving this but perhaps SYRIZA, which has no political baggage, will be able to begin the process in the context of a National Reform Plan i.e. a roadmap to economic reform.
http://tinyurl.com/no62q5w
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15/02/2015
Some Irish MEPs ( 6 out of 11) have have come out in support of Greece's efforts to deal with its debt problems and the difficulties facing the Greek people. The article rightly accuses Enda Kenny of suggesting that SYRIZA should backtrack on promises made during the election campaign. This is not surprising coming from An Taoiseach, as that's exactly what he did when he came into power. Independent and Sinn Féin MEPs outnumber Government and Fianna Fáil representatives in the European parliament. That's not surprising either, because they are paying the price for, in the former's case, deceit of the Irish electorate and the latter's, wrecking the Irish economy.
http://tinyurl.com/otog4xl
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11/02/2105
It seems that Germany is totally opposed to any solution to the Greek debt problem, apart from the implementation of the agreed memorandum of 2012. It is widely acknowledged that this memorandum was a failure and caused major damage to the Greek economy and employment levels. The IMF itself and many leading economists have pointed out the flaws in the programme so it's hard to figure out why some countries insist on the continuation of this flawed strategy.
It must be acknowledged that the two previous Greek governments (PASOK:2009 and ND coalition 2012) did not carry out many of the measures designed to reorganise the economy in Greece. This argument has been made many times in this blog under the 'Daily Developments' section.
http://melinnakis.blogspot.gr
It is probable, taking the hegemony in Greek politics into consideration, that neither of the previous two governments would ever have taken the measures necessary to restructure the Greek economy. The political connections to big business families, the media and the shipping industry, as well as the influence of interest groups such as trade unions, made it almost impossible for major reform to take place.
However, SYRIZA was never in government before and has no allegiance to any individual or group, apart from the trade unions. It is reasonable to assume that SYRIZA will tackle the corruption and major tax evasion without fear or favour. Therefore, it is incumbent on the powers that be in Europe to give SYRIZA, firstly a genuine hearing and secondly, an opportunity to carry out its programme if it is viable.
Apart from dealing with the issues above, there are obstacles in the way of Greece when it comes to growth. It takes a long time to set up a business due to a raft of bureaucracy. This needs to change. It has long been argued on this site that the industrial relations environment also needs a major overhaul. Business likes certainty and if people can just walk off the job, investors will not be inclined to risk their money where this type of uncertainty exists. Social partnership between the government, employers and trade unions is the way forward. If a proper framework can be agreed, it will provide the stability to encourage investment in the economy, resulting in the much sought after growth.
Finally, today the Irish Finance Minister, Michael Noonan, has reiterated his stance about no debt write off for Greece. He is concerned that it would leave "a hole" in European Countrys' balance sheets, which from an national accounting perspective, is a reasonable argument. However, he does make a point about 'parking' the debt, where little or no interest is paid. This would certainly be a help and perhaps also an indication that it may be possible to work out a solution that is acceptable to both sides. It starts today.
10/02/2105
There is no doubt that Simon Coveney's comments on the Greek debt situation is orchestrated. Immediately, EU finance ministers were out of the traps saying Ireland would not benefit from a deal on Greece. It is obvious now what side Ireland will be on when it comes to the discussions, opposition to any concessions to Greece. Thick politicians being played like a violin by the 'aristocrats' of Europe. If the irish government had any idea about negotiation it would have said nothing on the Greek situation and looked for some crumb from its EU masters to stay onside. However, that type of skill, Machiavellian as it is, does not exist within the realms of Irish politics. The capabilities of irish politicians are in relation to 'parish pump' politics, survival within the party and funeral attendance.
http://tinyurl.com/mgkqvw3
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09/02/2015
Simon Coveney has said "Ireland wasn't nobbled by the Troika over support for Greek debt relief call". In other words the debt conference. My comment on this article is below.
There is no doubt that Ireland was 'leaned on' in relation to the debt conference. Whatever about Michael Noonan, Joan Burton was in favour of it so the opposition of both tells its own story. I read that the exposure of Ireland to the Greek bailout is €350m. I'm certain that if the debt conference had taken place, Ireland would have gained more than it would lose. The speech by Alexis Tsipras in the Greek parliament last night has brought Greece closer to leaving the Eurozone and probably the EU, unless there is a positive effort to come to an agreement. I don't see our spineless politicians doing much to help the Greeks.
Of course Simon Coveney also stated in the interview that if Greece gets a deal, Ireland will want exactly the same. By saying this, it puts further obstacles in Greece's path and reveals exactly where Fine Gael stands. It's almost like the Irish government doesn't want a deal for Greece because they will look bad in the eyes of Irish people for not doing what Greece is doing.
In the meantime, SYRIZA is not backing down, although Tsipras' speech in Parliament last night is a pre-negotiating stance. It may be that SYRIZA is trying to get the EU to deal with this issue fast. The more the measures of the memorandum are rolled back, the harder it will be to get an agreement. Therefore, Tsipras is gambling that this will force the EU to begin discussions quickly and it will also smoke them out to see if they actually want to cut a deal with Greece. Tsipras has left room for manoeuvre by indicating that the changes will be introduced 'over time' and the SYRIZA programme is a 4-year programme. This will be a very important week for Greece and the EU and Wednesday's meeting of finance ministers should reveal whether a deal is possible. But there again, with the EU and its decision-making record in the past, you never know.
08/02/2105
There is a quote from an unnamed European official (probably unelected) in the article below which proves the point that most people are aware of. In the majority of European countries, national governments don't make the decisions that count. The language employed is interesting as it would remind Irish people of the testosterone-fueled alpha male language used by Anglo Irish Bank executives during the unfolding financial crisis in Ireland and Anglo. The quote is in relation to the refusal of the ECB to accept Greek Government bonds as collateral:
"One European official described it as a "gentle kick in the n***" for Yanis Varoufakis, the Greek finance minister, who has been touring European capitals with Mr Tsipras to make Syriza's case."
"The idea was to remind the new government that, regardless of the Greek elections, it will be other people who make this decision. This is a fact of political life in the eurozone."
http://tinyurl.com/kb9yyby
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07/02/2015
The knives are out for SYRIZA from the European apologists as can be seen from the link to an article in the Irish Independent below. However, it is hard to see SYRIZA backing off to any great extent, even if it means Greece leaving the Euro or, more likely, SYRIZA resigning from government. The previous Greek government left a poison pill behind them by opting for a two-month extension to the bailout programme, instead of the six months on offer from the EU and its partners. SYRIZA will refuse to govern the country under the terms of the existing bailout agreement and have already stated that. The real issue is that people in Europe, especially those in the bailout countries, know in their hearts that they are being screwed by Germany. Most (like Ireland) don't want to do anything about it but the Greeks do and they deserve our support.
http://tinyurl.com/q2hoejg
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06/02/2015
The criticism of the new Greek government throughout Europe is very unfortunate. Holland and Finland in general and Germany in particular, have taken a very hardline stance against SYRIZA and its efforts to find a solution to the problems facing Greece. Under the present circumstances it is doubtful if Greece can ever pay off its debts and a fundamental restructuring of the economy is necessary to stimulate meaningful growth in a country where anti-competitive practices are endemic. This is one reason why the memorandum had such a drastic effect in Greece. The Greeks had their incomes slashed by a combination of horizontal wage and pension cuts, combined with increased taxes, such that demand fell through the floor, GDP shrank by 25% and unemployment reached a record 28%.
It is hard to understand how prices continued to rise in Greece, despite a drop in labour costs. Moreover, prices are still rising despite lower energy costs in the past six months. One would imagine that all these savings would be passed on to the consumer but this has not happened, so obviously the savings are being added to profit margins. The previous government promised to tackle restrictive practices and cartels operating in Greece but failed. This is the reason why the memorandum has had a profound effect in Greece - prices didn't fall in line with incomes and most people are worse off than was ever visualised by Greece's debtors.
Whether Greece's debtors like it or not, it was Greek politicians who caused this mess, and by their actions up to now have exacerbated the situation. The message from Europe from before the election in January was "we want familiar faces", which reads New Democracy as the main party in government. This party, by refusing to take on the oligarchs and big business interests in Greece, is responsible for the plight of the Greek people now. Of course, the damage is done and continuing the current bailout agreement is senseless unless the agenda is to condemn Greece to permanent indebtedness and financial slavery.
It makes sense therefore, for SYRIZA to try a new approach, which on the surface, makes economic sense. The difficulty with situations like this is that one side is going to have to admit it was wrong. The EU will not admit it got things wrong and continues with the same mantra that the conditions of the bailout agreement must be adhered to. By doing this they avoid discussing alternatives. It would be interesting to hear a proper debate on the proposals being put forward by SYRIZA but the indications are that Europe (or at least the main players) are not prepared to discuss anything other than adherence to the failed memorandum.
The link below to Sony Kapoor's article contains a very reasonable analysis of the current situation and argues that Greece has done Europe a favour by highlighting the failure of austerity. It also mentions that Europe needs to re-orient itself now that some economies are beginning to recover. Finally, it says that SYRIZA should be given a chance for the sake of democracy, Greece and Europe itself.
http://tinyurl.com/knzl7ys
01/02/2015
It is obvious that SYRIZA will face many challenges as the new Government of Greece. There are the economic problems and dealings with the EU at the top of the agenda. However, one hurdle they may have to confront is resistance internally in Greece. Given the hegemony of two political parties, PASOK and New Democracy, alternatively governing Greece for the past 40 years, it is probable that the public service at senior management level consists, to a large degree, of supporters of one or other of these parties. It is reasonable to assume that efforts will be made to thwart any changes proposed by by the new government, especially if it impacts on the public service itself. On that basis, SYRIZA's task is akin to "minding mice at a crossroads".
01/02/2015
It may seem that SYRIZA are a disruptive force in political terms. Europe has conventions in relation to 'how things are done and SYRIZA has never agreed with how things have been done up to now in relation to the bailout of Greece. Therefore they are going about that by ignoring the conventions of European politics. An example of this is the stance of SYRIZA in relation to Moscow and the continuation of sanctions from Europe over Ukraine. The re-imposition of these sanctions requires unanimous agreement from member states, including Greece, and the response of the Greek government has rattled Briussels.
Many may view this as madness or inexperience but it should be noted that Yanis Varoufakis, the Minister for Finance, has co-authored a book on game theory "Game Theory: A Critical Text". There will be lots of threats from both sides over the coming days and weeks but if everyone approaches the problem with the intention of finding a solution then there is grounds for optimism.
31/01/2015
Yanis Varoufakis, the new Finance Minister of Greece, constructs a very interesting argument in relation to Germany's role in the Eurozone. In contrast to the previous post on 31/01/2015 below, he believes that Germany should adopt a policy of productive investment in peripheral European countries to produce the incomes that will allow these countries to pay off their debts, as well as stimulate demand in Europe, which German companies need to stay competitive. However, The role of the US (discussed in the article) was played while it had a relatively young population, whereas Germany has a negative birth rate and ageing population. So, while it may be the right thing to do, elderly German taxpayers, savers and pensioners are unlikely to support a 'risk-oriented' policy as outlined by Mr. Varoufakis.
Despite all this, the problem still remains that austerity does not work and this is patently obvious in the case of Greece. The unemployment rate is 25% and 50% for people under 25. The Irish 'miracle recovery' is a myth. Unemployment in Ireland would be much higher if the 300,000 people who emigrated over the past 5 years were still in Ireland. Add to that all the people on internships and training courses, who are taken off the live register and Ireland's unemployment figure would be much higher. Since the formation of the Common Market, Europe has regularly faced hurdles and challenges and the present crisis is another one. Hopefully, Europe can come together with some innovative thinking and initiatives, as it has in the past, to overcome the current difficulties and bring some hope to beleaguered countries, like Greece, where many are suffering poverty an deprivation.
http://tinyurl.com/l35ny6r
31/01/2015
The argument has often been made that Germany is the problem in relation to the EU debt crisis. Indeed, it has sometimes been argued that Germany should leave the Euro and leave the rest of the Eurozone in the currency. Paragraph 2 of the article below re-iterates that point that German economic policy is a contributing factor to the problems in the EU. Growth in the Eurozone is falling and deflation is a real problem. The ECB is trying to stimulate growth with a Quantative Easing (QE) programme, which is also opposed by Germany. The situation with Syriza is interesting because they are trying to change the policy direction of the EU, currently driven by Germany. Francoise Hollande also attempted to do the same and failed. It appears that many governments have been elected in Europe since the crisis began based on overturning, or not complying with, the austerity measures being imposed. However, none, including Ireland's coalition of Fine Gael and Labour, have succeeded. This has led to accusations of broken promises and U-turns in some countries, such as Ireland and Greece. Antonis Samaras was opposed to the memorandum but proceeded to implement it or at least legislate for its implementation. Ireland has almost fully implemented the terms of its memorandum and has 'exited' the bailout programme, although the Country is till being monitored by the EU and the IMF. So will Syriza buck the trend or do markets (and Goldman Sachs) rule the world ?
http://tinyurl.com/n89vnrt
29/01/2015
The attached article by Paul Mason of Channel 4 is an excellent analysis of the situation at the moment in relation to the new Syriza government and Europe's reaction to it. It deals mainly with economic issues but waves are also being created in relation to the government's foreign policies, particularly as regards Russia and its involvement in Ukraine. There are historical connections between Russia and Greece, which have always influenced Greek foreign policy in relation to Russia - a common religion (Orthodoxy) and the communists fighting the nazi occupation in Greece for example. However, the economic crisis and the humanitarian problems in Greece are the main focus of attention for Syriza at present.
http://tinyurl.com/jw9j7xw
Conventional political behaviour, in Europe especially, may be about to be turned on its head with the election of Syriza. If Europe abandons the Greeks, the whole European project will be open to question. Solutions will have to be found, or other citizens of Europe will be asking could the same thing happen to us if the economic crisis in Europe (which has not gone away) were to continue and or maybe get worse.
27/01/2015
SYRIZA elected to form the new government in a big anti-austerity vote. Somehow, being anti-austerity is akin to being anti poverty, neither problem being very likely to be solved. Alexis Tsipras deserves a shot and most people wish him well in what is certain to be a very difficult beginning to his term as Prime Minister. That being said, I cannot reconcile his immediate priorities of undoing the measures brought in by the previous government. Whatever about bringing the minimum wage back to €751 per month, it is the reversal of the changes in the public service that do not add up. While it will be obviously extremely difficult to contain costs under this measure, It will be impossible to improve public services because the re-hiring of public employees who lost their jobs will add to bureaucracy that exists already. One of the main problems is all the red tape. forms and processes that the simplest task requires in Greece and any chance of this being alleviated will disappear with these re-hirings. It is positive that the number of ministers will be reduced and government departments will be rationalised but the problem remains about the efficiency of public services.
In relation to growth, this has always been an issue in this blog. Where is the growth to come from? The revenue from tourism will only do so much and, apart from agriculture, Greece does not have an export-oriented economy. Even agriculture is not developed and one problem plaguing Greece over the past 10-15 years is agricultural imports, especially produce that could be grown locally.
The labour laws are inimical to attracting Foreign Direct Investment (FDI) and also act as a brake on indigenous and local companies expanding or starting up. The process involved in starting companies and businesses is further exacerbated by the 'Red Tape' and bureaucracy, a situation mentioned earlier, which is unlikely to change with the policy of re-hirings in the public service.
Greece is in a very difficult situation and it is hard to be optimistic but sometimes a person comes along, and to everyone's surprise, grows into the job and manages to turn things around. Perhaps if other bailout countries were to support Greece's new Prime Minister, a change of policy at EU level might emerge. One wonders if this support for a reduction in debt would be forthcoming, as most of Greece's debt (80%) is held by the ECB and EU governments. However, if the knock-on effect of reducing Greek debt benefited other periphery countries to a greater degree than the amount they are owed by Greece, who knows?
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