The Nation Newspaper

Tag: Greece

  • EU leaders urge Greece to compromise

    European Union leaders  have urged Prime Minister Alexis Tsipras to find a compromise with Greece’s euro-area creditors, as France and Germany prepared for negotiations on the sidelines of Thursday’s summit in Brussels.

    Tsipras met last week with Chancellor Angela Merkel, President Francois Hollande and European Central Bank President Mario Draghi. Also present will be Dutch Finance Minister Jeroen Dijsselbloem, who leads the euro-area finance ministers’ group that is the more usual forum for deliberating Greece’s predicament.

    “Don’t expect a solution, don’t expect a breakthrough,” Merkel told reporters on her way into the summit. Decisions on Greek aid are taken by finance ministers from the 19 euro nations “and it will remain that way,” she said.

    As Merkel and Hollande led a chorus of assurances that there are no plans to push Greece out of the euro, the country’s position within the currency union is getting increasingly uncomfortable. Bond yields jumped to their highest in almost two years after the ECB granted Greek officials only part of their request for more emergency funding, and the country could run out of money this month as debt payments and monthly salaries and pensions come due.

    Merkel, whose backing is needed because Germany is the biggest contributor to Greece’s 240 billion-euro ($255 billion) bailout, is returning to the center of the debate as the crisis deepens. She will meet with Tspiras again on Monday, this time in Berlin.

    Irish Prime Minister Enda Kenny predicted a difficult meeting ahead in Brussels.

    “The feeling among the political leaders is that Greece and Greek politicians have got to live up to their responsibilities here,” Kenny told reporters. “The prime minister asked for time and space and he’s been given that to come forward with sustainable and workable proposals, and obviously Greece needs to reflect on that very quickly now because time is running out.”

  • Greece seeks loan deal

    Greece has said it wants to reach a loan deal with its international creditors by the end of this month.

    With the country seemingly close to running out of cash, government spokesman Gabriel Sakellaridis said a deal was “required immediately”.

    Greece has to make a payment of €1.5billion (£1.09billion) to the International Monetary Fund (IMF) on June 5.

    Last week , the government raided its IMF reserves in order to pay €750m in debt interest on its existing loans.

    “A deal is required immediately, this is why we are talking about the end of May, to resolve these critical liquidity issues,” Gabriel Sakellaridis said.

    The Greek government, EU and IMF have been locked in negotiations for four months over economic reforms the IMF and EU say must be implemented before the latest €7.2billion tranche of the country’s bailout fund is released.

    The deadlock has created fresh fears that Greece will run out of cash.

    Issues still to be resolved are thought to include pension reform, deregulation of the labour market, and the re-hiring of 4,000 former civil servants.

    There have been suggestions Greece could default on loan repayments as early as the next €1.5billion payment due to the IMF.

    Greece faces a stringent repayment schedule in the coming months, and also needs to continue paying salaries and pensions.

    EU Commission spokesman Margaritis Schinas welcomed the commitment by the Greek government to bring the talks to a conclusion but said “more time and effort is needed to bridge the gaps on the remaining open issues in the negotiations”.

    “Constructive contacts are ongoing and progress is being made, even though still at a slow pace,” he added.

    He admitted Greece was likely to be one of the main topics of conversation at this week’s EU Eastern Partnership Summit in the Latvian capital, Riga.

    But he added that whatever happened there could be no “substitute for the need to bridge the gaps on the remaining issues that are being discussed”.

  • Greece seeks eurozone recognition of economic progress

    Greece is urging eurozone ministers meeting in Brussels to recognise progress made in talks, on the eve of a major repayment to the nternational Monetary Fund(IMF).

    Greece has said it will honour €750m (£544million, $834million) payment.

    No breakthrough is expected at the Brussels talks, as Greek ministers try to unlock €7.2billion in desperately needed bailout funds.

    But the Athens government wants a “clear confirmation of progress” to help free up some of the money.

    Although it has until the end of June to agree a new reform deal with creditors, it has run out of money and called on local governments and other public bodies to dig into cash reserves to help pay its debt interest instalments.

    Greece’s left-wing Syriza party is hoping a positive statement from Brussels would mean that part of the EU/IMF bailout money could be paid out and would enable the European Central Bank to restore liquidity to the country’s beleaguered banks.

     

  • Greece debt talks are too slow, says EC chief

    Greece debt talks are too slow, says EC chief

    European Commission (EC) President Jean-Claude Juncker has criticised the slow pace of progress in talks over Greece’s debt, since last month’s interim deal.

    Before meeting Greek Prime Minister Alexis Tsipras in Brussels, Mr Juncker said he was “not satisfied”.

    Mr Tsipras needs EU support for reforms to unlock vital funds, avoid possible bankruptcy and a eurozone exit.

    The leftist leader has pledged to end austerity – but his plans have met resistance from Greece’s EU creditors.

    Greece negotiated a four-month extension to its bailout last month after tense talks with creditors.

    Eurozone leaders are ready to extend help on Greece’s €240billion (£176billion; $272bilion) bailout until the end of June.

    To persuade the EU of its credit-worthiness, Greece has announced a series of reforms. But it also wants the EU to agree new terms for the long-term repayment of its debts.

    If no agreement is reached, Greece risks being unable to meet its obligations. Within the next two weeks alone, it needs €6illion (£4.3billion; $6.4billion) to pay its creditors.

  • Greece spends more on pensions than UK

    State pensions are one of the biggest expenses for the British government. However, new figures from the Organisation for Economic Cooperation & Development (OECD) showed that the United Kingdom (UK) spends less on pensions than most other developed countries.

    In 2011 Britain spent less than 12pc of its total government budget on state pensions, putting it below the 18pc average across OECD countries.

    The countries spending the highest proportion of their public money on pensions are Italy at 31.9pc, Greece at 28pc and Portugal at 26.4pc.

    This is down to these nations’ ageing populations and the economic meltdown they have suffered since the financial crisis, which has caused other state spending to shrink.

    Iceland spent the lowest proportion of its government funds on pensions in 2011, at 4.5pc.

    Tim Reay of accountancy firm PwC said countries in northern Europe tended to have smaller, “welfare-style” state pensions that benefited the poorest most. Across Southern Europe, however, state pensions were more generous and provided a percentage of people’s salary, much like a final salary private pension.

    According to the OECD, pension systems “differ substantially” across its member countries, but face the same main difficulty: remaining financially sustainable while delivering adequate pension income.

    In a report it said: “The economic crisis in 2008 developed into a fiscal crisis in many countries. These difficulties have led to substantial changes and reform of pensions.

    “The current need to reduce government debt to more sustainable levels and the high level of public pension expenditure in many OECD countries imply that additional pension reforms are likely to figure prominently on the policy agenda.”

    As a result of these challenges, most of the OECD countries have been very active in reforming their pension system over the past two-and-a-half years, it said.

     

    •Culled from Telegraph

  • Greece spends more on pensions than UK

    State pensions are one of the biggest expenses for the British government. However, new figures from the Organisation for Economic Cooperation & Development (OECD) showed that the United Kingdom (UK) spends less on pensions than most other developed countries.

    In 2011 Britain spent less than 12pc of its total government budget on state pensions, putting it below the 18pc average across OECD countries.

    The countries spending the highest proportion of their public money on pensions are Italy at 31.9pc, Greece at 28pc and Portugal at 26.4pc.

    This is down to these nations’ ageing populations and the economic meltdown they have suffered since the financial crisis, which has caused other state spending to shrink.

    Iceland spent the lowest proportion of its government funds on pensions in 2011, at 4.5pc.

    Tim Reay of accountancy firm PwC said countries in northern Europe tended to have smaller, “welfare-style” state pensions that benefited the poorest most. Across Southern Europe, however, state pensions were more generous and provided a percentage of people’s salary, much like a final salary private pension.

    According to the OECD, pension systems “differ substantially” across its member countries, but face the same main difficulty: remaining financially sustainable while delivering adequate pension income.

    In a report it said: “The economic crisis in 2008 developed into a fiscal crisis in many countries. These difficulties have led to substantial changes and reform of pensions.

    “The current need to reduce government debt to more sustainable levels and the high level of public pension expenditure in many OECD countries imply that additional pension reforms are likely to figure prominently on the policy agenda.”

    As a result of these challenges, most of the OECD countries have been very active in reforming their pension system over the past two-and-a-half years, it said.

     

    •Culled from Telegraph

  • Greece spends more on pensions than UK

    State pensions are one of the biggest expenses for the British government. However, new figures from the Organisation for Economic Cooperation & Development (OECD) have shown that the UK spends less on pensions than most other developed countries.

    In 2011 Britain spent less than 12pc of its total government budget on state pensions, putting it below the 18pc average across OECD countries.

    The countries spending the highest proportion of their public money on pensions are Italy with 31.9pc, Greece (28pc) and Portugal (26.4pc). This is due to their ageing populations and the economic meltdown they have suffered since the financial crisis, which has caused other state spending to shrink.

    Iceland spent the lowest proportion of its funds on pensions in 2011, at 4.5pc.

    Tim Reay of an accountancy firm, PwC, said countries in northern Europe tended to have smaller, “welfare-style” state pensions that benefited the poorest most. Across southern Europe, however, state pensions were more generous and provided a percentage of people’s salary, much like a final salary private pension.

    According to the OECD, pension systems “differ substantially” across  its member countries, but face the same main difficulty: remaining financially sustainable while delivering adequate pension income.

    In a report it said: “The economic crisis in 2008 developed into a fiscal crisis in many countries. These difficulties have led to substantial changes and reform of pensions.

  • Euro zone considers three bailout exit options for Greece

    Euro zone finance ministers will consider three options for what happens after Greece exits its bailout at the end of the year, seeking to balance the need to reassure investors with the demands of domestic Greek politics.

    The Greek government has staked its survival on exiting the bailout a year earlier, a move that will please voters hammered by austerity measures imposed by the EU and the IMF, but which has already rattled markets, pushing up Greek bond yields.

    Finance Minister Gikas Hardouvelis told Reuters he hoped for an interim period of up to a year after exiting the bailout during which Greece will still be get a financial safety net but would no longer be “micro-managed” by lenders.

    After two international bailouts totalling 240 billion euros since 2010, when private investors refused to lend to Athens any more, Greece wants to switch back to market financing from the start of next year.

    Markets reacted nervously to the plan, worried that Athens would have no longer have any financial back-up. Greek benchmark 10-year bond yields rose to 8.9 percent in late October from 5.6 percent in early September.

    Greece and euro zone finance ministers will therefore discuss  ways to provide Athens with fall-back financing to boost investor confidence, while addressing domestic political sensitivities.

    All three options to be discussed include a financial cushion, using 11 billion euros already granted to recapitalise Greek banks, but which turned out not to be needed, euro zone officials said.

    In the first option, the recapitalisation money, now in European Financial Stability Facility bonds, would be returned to the EFSF and Greece would instead apply for and get an Enhanced Conditions Credit Line (ECCL) from the European Stability Mechanism — the successor of the EFSF.

    This would allow Greece to say it is not longer under a programme, make it possible for euro zone ministers to increase the size of the credit line above the 11 billion if necessary and set clear conditions for the availability of the money, even if it is not drawn upon.

    But obtaining an ECCL would mean Greece has to sign a new “memorandum of understanding”, politically sensitive in Greece where the previous MOU detailed austerity reforms demanded by lenders, resented by Greeks as a loss of sovereignty by Athens.

    This option is also relatively lengthy — it would take a minimum of five weeks to complete — and tougher on conditions because the ECCL could be cancelled if Greece fails to meet reform targets and Athens would then have to apply for new, fully-fledged bailout.

  • Obodo sent off in Greece

    Obodo sent off in Greece

    Former Nigeria international Chris Obodo was sent off for Xanthi in a Greek league clash at Pas Giannina yesterday, reports africanfootball.com.

    Obodo, who joined Xanthi as a free agent in the off-season, was sent off in the 90th minute for his second booking after he was first cautioned in the 84th minute.

    Xanthi were forced to a 2-2 draw. Concerns over Obodo’s attitude were raised before he finally signed a year’s deal.

    Obodo’s club are 12th on the table with two points from three matches. The midfielder has played in Italy and Portugal.

  • Greece needs a 21st Century Marshall Plan

    At their White House meeting last week, U.S. President Barack Obama assured Greek Prime Minister Antonis Samaras of his support as Greece prepares for talks with creditors on additional debt relief amid record-high unemployment.

    The U.S. should also endorse a new blueprint for recovery based on one of the most successful economic assistance programs of the modern era: the Marshall Plan.

    It is clear by now that the European Union’s policies in Greece have failed. Projections that government spending cutbacks would stop the economy’s free-fall proved to be wildly optimistic. The 240 billion euro ($319 billion) bailout from the euro area and International Monetary Fund has shown little sign of success, and Greece is experiencing its sixth year of recession.

    The spending cuts and tax increases, along with the dismissal of huge numbers of public-sector employees, demanded as a condition of the loans and assistance have only deepened the economic pain.

    Instead of changing course, however, euro-area economists have responded to bad news by revising their forecasts to reflect lower expectations. Those numbers document a staggering record of mistaken assumptions that has led to today’s failure.

    In December 2010, the so-called troika of lenders — the European Commission, the European Central Bank and the International Monetary Fund — predicted that their measures would move Greece’s unemployment rate to just under 15 percent by 2014. A year later, it changed the forecast to almost 20 percent.

    This month, the Hellenic Statistical Authority reported that unemployment rose to a record in May, with a seasonally adjusted jobless rate of 27.6 per cent. The rate was 64.9 per cent for people 15 to 24.

    Bold declarations that belt-tightening would produce growth have been pared back, too. Since 2010, the troika has gradually dropped its forecast for 2014 gross domestic product (in money terms) by almost 40 percent. IMF staff reported last week that GDP contracted 6.4 percent in 2012 and will drop 4.2 percent this year before expanding only a little in 2014.

    Yet, despite admissions that mistakes were certainly made, no consideration is being given to ending austerity measures. Nor has there been effort to devise a renewal agenda for Greece. The Marshall Plan offers a spectacularly successful model that could easily be adapted.

    Greece last faced economic ruin immediately after World War II. By 1949, the country was bankrupt, with virtually no industry; transportation networks, farmland and villages had been devastated, and about a quarter of the population was homeless.

    Marshall Plan funds allowed Greece to rebuild, start power utilities, finance businesses and aid the poor. And, because social chaos had created an opening for communist and extremist parties, the U.S. hoped the stimulus would stabilize democracy, even as it created wealth.

    Like other Marshall Plan nations, Greece experienced growth on a scale it had never known. The astonishing transformation was widely hailed as an “economic miracle,” and the nation continued to surge more than 20 years after the assistance ended.

    With that enormous achievement in mind, the Levy Economics Institute has constructed a macroeconomic model of what a Marshall-type recovery plan could do for the Greek economy today. We assumed a modest stimulus from EU institutions of 30 billion euros between 2013 and 2016 that would be directed at public consumption and investment, and particularly jobs.

    Here is how an EU-funded plan for recovery could succeed. Although past bailout funds benefited banks and financial institutions, with a large portion devoted to interest payments for creditors, the new program would focus on debt forgiveness, and then turn to reconstruction projects to rebuild national infrastructure and create public projects at the local level.

    A rebuilding plan could address Greece’s tremendous need to renovate schools, hospitals, libraries, parks, roads and bridges. Forests need to be replenished: Catastrophic fires have led to deforestation. Tourism once accounted for more than 25 percent of the economy; now, extraordinary beach cleanups are badly needed to attract visitors.

    University graduates, after having been trained at public expense, are now forced to seek opportunity outside Greece. They could make valuable contributions, introducing information technology and other know-how to the government, health and education sectors.

    These efforts could draw an idled, but ready and trained labor force, to construction, education, social service and technology. More employment would increase aggregate demand, which is now severely depressed. In turn, the multiplier effect of these expenditures would increase GDP substantially.

    Instead, Greece is applying “expansive austerity.” The idea is based on a contested theory, and the real-world results have been a humanitarian disaster. These policies are lowering demand by reducing incomes, which cuts into tax revenue. The inevitable result is higher deficits and debt-to-GDP ratios.

    For comparison, we modeled what we expect to happen in the coming years if Greece stays on its scheduled fiscal diet. The government has consistently been unable to meet troika-mandated deficit-reduction targets, and the lenders have consistently required further cutbacks.

    The results of our modeling exercise were clear: Under today’s policies, unemployment would continue to increase, reaching almost 34 percent by the end of 2016. Under a Marshall Plan scenario, the rate would fall to about 20 percent.

    Similarly, if Greece institutes the currently planned austerity measures, we calculate that its gross domestic product would reach about 158 billion euros by the end of 2016, compared with 162 billion euros projected for 2013. That would be more than 15 billion euros short of the troika-mandated target.

    If, alternatively, government squeezes harder to meet the required deficit-to-GDP ratio goals, the endgame will be even worse: A poor and increasingly out of work population, among other factors, will push GDP to about 148 billion euros, more than 30 percent below its 2008 peak. A Marshall Plan scenario would put GDP a little above the troika’s target.

    The first Marshall Plan wasn’t an act of charity or a bailout: It was an effective investment strategy to create a vibrant European economic market and prevent political disintegration. To institute a modern version, we need to revise discredited austerity theories — or the euro-area institutions that promote them.