Posts tagged "greece"

Eurozone crisis live: Finance ministers gather as tensions rise in Spain

Eurogroup will decide today whether to approve aid tranches for Greece and Cyprus, after seeing fresh anti-austerity protests in Spain over the weekend

Greek PM intervenes in ‘difficult’ talks with creditors

Finance minister reportedly lashed out at mission chiefs from EU, ECB and IMF as pressure builds over next repayments

Almost three years after Greece narrowly avoided bankruptcy with its first bailout from the EU and IMF, the country’s relations with its international creditors have taken an unexpected turn for the worst.

The Greek prime minister Antonis Samaras was forced to step in on Sunday after stalled negotiations became bogged down in acrimony when visiting inspectors resumed talks last week.

Indicative of the tensions, Athens’s normally mild-mannered finance minister, Yiannis Stournaras, reportedly lashed out at mission chiefs from the EU, ECB and IMF during a heated exchange in his office on Thursday, telling them they could “take the keys” to the economy ministry if they continued to demand more austerity from a nation experiencing a sixth straight year of recession.

Emerging from the building, the economics professor uncharacteristically labelled the talks as “very difficult” and gave a taste of his own frustration. “The negotiations for the next loan tranches are still very difficult. I can assure you that things are not simple at all,” he said.

After troika representatives abruptly cancelled a meeting with Stournaras late on Saturday, Samaras tried to smooth over the cracks. At stake are two slices of aid worth €8.8bn (£7.5bn) that have been put on hold because of the slow pace of structural reforms.

The first instalment, of €2.8bn, is contingent on the governing coalition agreeing to sack 25,000 civil servants by the end of the year and 150,000 by 2015. The demand has placed what is being called “intolerable pressure” on Samaras’s already fragile administration, with his two junior leftwing partners openly opposing the measure at a time when unemployment is nearing a record 30%.

Highlighting the discord, the administrative reform minister, Antonis Manitakis, in charge of streamlining the bloated public sector and aligned with the small Democratic Left party, threatened to resign – a move that would dramatically undermine the government’s unity.

Other sticking points, according to well-placed sources, include the recapitalisation of Greek banks – and a possible merger between the National Bank of Greece and Eurobank – and a highly contentious property tax levied through electricity bills the conservative-led coalition pledged to scrap when it assumed power last June.

Household incomes have fallen by as much as 50% since the debt crisis erupted in Athens more than three years ago. In an attempt to placate lenders and keep a restive population at bay, Samaras and his coalition partners proposed last week that the property levy be substantially reduced by broadening the tax base to include farmland and undeveloped real estate. Creditors, so far, have failed to react.

Greece faces two debt repayments, including €3.6bn in maturing treasury bills, this month and next. “Not reaching an agreement is not an option,” said Pandelis Kapsis, a prominent political commentator and former government spokesman. “There may be a delay [in disbursement of rescue funds] but there is absolutely no way we can move ahead without an agreement,” he told the Guardian.

Greece is likely to suffer from the turmoil in Cyprus, whose economy is expected to contract sharply following its own bailout agreement. But last week Samaras spoke for the first time of an economic recovery amid signs that fiscal consolidation was finally beginning to pay off.

“Even those who until recently had their doubts are today convinced that we can make it,” he told an audience in Athens, insisting that with private sector hirings outpacing firings in March the country was at long last breaking the vicious cycle of recession.

The investment bank Morgan Stanley also predicted that Greece would achieve a primary surplus by the end of the year, saying it was now optimistic about the country.

Greek consul’s London villa fetches £23.3m as part of state’s fire sale

Body overseeing debt-stricken country’s privatisation drive says it has raised £41.1m from selling four diplomatic properties

A small corner of Notting Hill is to play a part in reducing Greece’s debt mountain, following the sale of the luxury home of the Greek consul for £23.3m.

The 8,700sq ft Victorian villa in west London has nine bedrooms and views of Holland Park, and has been sold to an unknown buyer for £3m more than expected in its initial valuation last September.

The Hellenic Republic Asset Development Fund (TAIPED), which is overseeing the country’s privatisation drive, announced on Tuesday that it had raised €41.1m from selling four diplomatic properties, including the London consul’s residence. As well as the diplomatic residences, Greece has embarked on a fire sale of its sun-kissed islands, airports, marinas and royal palaces.

The Holland Park property has been in the hands of the Greek state since 1973, but became an asset for sale as the economic crisis took hold. Kensington and Chelsea is the second most expensive borough for property in the UK, behind Westminster.

What the Greek government and the consul have lost, Greece’s creditors will gain. The proceeds will go to the European Union, the European Central Bank and the International Monetary Fund.

TAIPED said other sales included diplomatic buildings in Nicosia, Brussels and Belgrade, with respective price tags of €8.3m, €3.24m and €2.075m.

“After all the delays in our privatisation programme, this has to be good news,” one Greek insider said.

Independent property developer Julian Bryson said converting the west London property into an “oligarch’s London mansion” could cost around £600 per sq ft – a bill of around £5.25m. This would pay for a very “high-end job” to install entertainment systems and ensuite bathrooms and overhaul the layout to turn offices into living space.

That value could easily double, he said, if the buyer wanted to excavate the basement to install a swimming pool and create extra living space, as is becoming typical for London’s space-pressed millionaires, who are prevented from building upwards and outwards by planning laws. Costs would escalate again if the owner let loose landscape gardeners on the overgrown wilderness at the back of the property.

Nevertheless, Bryson said someone had made a good buy. “If I had £23m I would have bought it. It is a fantastic property.” The unknown buyer’s neighbours include Simon Cowell and Richard Branson, according to Marsh & Parsons estate agents.

“From Russian oligarchs to Hollywood celebrities it epitomises the glitzy, but it’s also got a residential feel to it which is quite nice,” said Bryson.

Although the borough is best known for chic eateries, upmarket boutiques and riding stables in nearby Avondale Park, it also boasts two state secondary schools rated “excellent” by Ofsted, estate agents point out.

Greece rules out more public sector job cuts

International creditors told that mass layoffs out of the question with unemployment at European high of 27%

Greece was heading for a full-on collision with its international creditors on Sunday as Athens’ uneasy coalition, struggling to meet the onerous terms of the country’s latest bailout, ruled out layoffs in the public sector.

Flying into the capital at the start of a quarterly review of the debt-choked economy, mission heads from the EU, International Monetary Fund and European Central Bank were told flatly that mass firings were out of the question when unemployment had reached a European record of 27%.

“The public sector has shrunk by 75,000 people in the last one and a half years,” the finance minister, Yannis Stournaras, told a newspaper in a taste of the stiff resistance the auditors are likely to meet. “There will be no layoffs.”

The Eurogroup of finance ministers is expected to discuss the dire situation in Greece and Cyprus, which has asked for a bailout worth almost 100% of its national income.

Stournaras, a technocrat widely credited with smoothing often fraught relations between Greece and its foreign lenders, has encountered mounting hostility from within the tripartite government over the dismissals.

Athens agreed to cut 150,000 posts from its unwieldy public sector by 2015 as part of a wide-ranging package of austerity reforms promised when the “troika” unlocked €54bn in long overdue aid in December.

Under that plan, 25,000 employees were to be transferred this year to a “mobility” scheme, the first step towards redundancy. Streamlining so far has relied on a policy of natural attrition, with only one person being hired for every 10 who retire.

But the conservative-led administration has faced growing pressure from its leftwing junior partners. Acutely aware of the country’s economic tailspin, Fotis Kouvellis, who leads the Democratic Left, has warned that with 1.4 million Greeks now unemployed, the prospect of yet more losing work could threaten the fragile social peace.

Mired in what economists are calling a “great depression”, with its GDP set to contract for a sixth straight year, Greece is projected to see unemployment exceed 30% by the year’s end as a growing number of businesses file for bankruptcy. Over 60% of those without work are under 25.

Public-sector firings are among a series of neuralgic points likely to be raised by the troika. Representatives, who indicated they would not be visiting Athens “to renegotiate its rescue package but supervise its economic performance”, are also expected to address the thorny issues of progress on privatisations, tax administration reforms and bank recapitalisation.

Paitence is in short supply. Creditors have committed more funds to Greece – at €240bn, the biggest bailout in world history – than any other troubled economy since the tiny nation, revealing the unsustainable level of its public debt, triggered the eurozone crisis in late 2009.

Piling on the pressure ahead of the monitors’ visit, the Euro Working Group chief, Thomas Wieser, emphasised that Athens had to keep its side of the deal. “All that was agreed in the bailout plan has must be implemented. These reforms were agreed to make the Greek economy stronger, flexible and more competitive,” he told the Greek newspaper Realnews.

Although the IMF has publicly admitted that it seriously underestimated the impact of Greece’s recession on its ability to deliver, there are growing concerns over the government’s determination to crack down on tax collection – the single biggest drain on the country’s economic performance.

A confidential report prepared by the EU and IMF and leaked to the Greek media last week showed that the nation was lagging severely in key revenue targets, with Athens’ tax collection mechanism being singled out for particular criticism.

While Greece had managed to rein in public spending – pulling off the biggest fiscal consolidation of any OAED country – tax avoidance, particularly among high earners, remained “astounding”, said the report, estimating that at €55bn unpaid tax amounted to nearly 30% of GDP.

Indicative of the febrile mood enveloping Greece, the radical left Syriza opposition party said that in light of the missed targets, it was clear the coalition partners were preparing new wage and pension cuts. “They are discredited and dangerous,” it said in a statement. “The sooner they leave, the better for Greek society and the economy.”

Latest financial, market & economic news and analysis | guardian.co.uk

Greece and Germany: this is a crisis of cousins | Mark Terkessidis

My family’s experience shows how easily Greeks and Germans forget what they have in common

I recently bumped into a cousin in Switzerland. I hadn’t known she even existed – she and I never moved in the same family circles when I visited relatives in Athens. But since the start of the crisis, Greeks abroad have become more aware of their family trees. My relative completed a degree in Germany 25 years ago and returned to Greece to get a job in the food industry. Two years ago she was made redundant. For 18 months she tried to find work, then gave up and begged her mother to call her contacts in Germany – such as my father, her cousin once removed, who helped her move to Germany, and from thereon to Switzerland.

Although the German parliament should on Friday pass a deal that eases the pressure on the Greek economy, many Greeks have gone back to doing what they have always been good at: they activating networks of relatives in the diaspora and moving abroad. Statistics released this month show that Greek migration to Germany has shot up almost 80% in the past few years. They are a different breed to the unqualified workers from rural areas who moved abroad in the 1960s, however: the new migrant comes from one of the crisis-hit cities and has a bagful of degrees and qualifications.

In this respect, the Greek disaster is a German boon: the brain drain from the Mediterranean is helping to plug Germany’s chronic lack of qualified workers. And yet Greeks who arrive are rarely welcomed with open arms at German borders. A large part of the population still insists that “we” will end up having to cough up for “their” welfare. Out come all the old cliches: haven’t “those Greeks” always been feckless layabouts? People empathise with the situation in Greece but often wouldn’t want to go as far as letting out their flat to a Greek family.

Accepting that migration is once again part of the Greek experience isn’t easy for Greeks, either. Expectations are higher than they used to be. In the 90s, Greece had managed to turn itself from an emigration into an immigration country (even if not a particularly welcoming one, as the rise of Golden Dawn shows). In 2004, when Athens hosted the Olympics and the Greek football team won the European Championship, it briefly looked like the country had finally arrived in Europe. That dream has now come to a sudden end: in the eyes of most Europeans, we’ve been pegged back to “oriental” levels.

I grew up in Germany with a Greek father and a German mother, and I find it relatively easy to look at the situation from both sides of the divide. But for Greeks in Greece to accept partial responsibility in their downfall isn’t easy. Greece experienced modernisation, but no real reforms. Mentally, it never kept up with economic progress. The EU and the euro arrived and living standards rose, but in politics the same old family structures remained intact, tourists were served the same old souvlakis and moussakas for notched-up prices, and the country continued to consume, “Balkans-style” – as if the whole dream could be over by tomorrow.

Analysing what really happened during the boom years is much harder than blaming the big bad Germans, those heartless, work-obsessed robots. Of course you can question Angela Merkel’s austerity politics. And there’s no question that some Germans – much like many Greeks – have simply failed to grasp where the European project is at: there’s a widespread and enormously inflexible fixation with savings, wage restraint and fighting inflation that is simply outdated.

But ultimately Germany and Greece are simply opposite poles at a new phase of European integration. If you look at the relationship between the two countries from a distance, the overwhelming impression is not of a culture clash but a historical enmeshing. You only have to remember that the blue-and-white Greek flag is based on the colours of the state of Bavaria – whose Prince Otto became the first king of independent Greece. These shared links and influences – all too quickly forgotten – should be the starting point for solving Europe’s problems.

Europeans are currently going through an astonishing learning curve: Greeks are coming to terms with the fact that the European Union isn’t just the friendly aunt from the distant west that sorts out our infrastructure but that it can make demands too. And Germany is slowly starting to grasp that the EU can’t just be an export market with a stable currency. A union also has to involve solidarity with people who don’t speak the same language as you.

In that respect, the crisis could be an opportunity to complete European integration. But that chance will come and go if we don’t get a glimpse of a light at the end of the tunnel. I am pleased that the Bundestag will, in all likelihood, pass a measure on Friday to cut Greek’s debt mountain by €40bn. For the short term such measures are important, but in the long run “rescue packages” are no recipe for a Europe in which Greece and Germany can coexist happily.

Translated by Philip Oltermann

Senator Lindsey Graham is latest Republican to disavow tax pledge

South Carolina senator tells This Week he will break Grover Norquist’s pledge in order ‘to avoid becoming Greece’

Senator Lindsey Graham has become the second senior Republican in days to publicly disavow a pledge that handcuffs the party to a policy of no tax rises, raising hopes of a deal over the fiscal cliff.

Speaking on ABC’s This Week, the South Carolina politician said that the only pledge members of either party should make would be one to make sure the country did not go the same way, economically, as Greece. Regarding a pledge against tax hikes that has been signed by most Republicans in Congress – having been promulgated by the conservative lobbyist Grover Norquist – Graham said: “I will violate this pledge, long story short, for the good of the country.”

In the aftermath of the GOP’s defeat in the presidential election of 6 November, Norquist is increasingly seeing his influence on the party decline. On Thursday, senator Saxby Chambliss said he would break the Taxpayer Protection Pledge in an attempt to help avert the automatic triggering of $600bn of spending cuts and tax increases, the so-called “fiscal cliff”.

Washington has until the end of a year to negotiate a deal to avoid such a situation. Economists have suggested that a package of swingeing spending cuts and tax hikes could be catastrophic for the US economic revival, plunging the country back into recession.

“I care more about this country than I do about a 20-year-old pledge,” Chambliss said in an interview, earning a rebuke from Norquist.

A vast majority of Republicans in the House and the Senate have signed the Taxpayer Protection Pledge, which was created in 1986 and which commits them to voting against any increase in revenue taken from personal income. Until recently it had been seen as a litmus test for the conservative credentials of party representatives, but the incoming House of Representatives will have 16 Republicans who have not signed up – an increase from six. One new Republican senator, Arizona’s Jeff Flake, has avoided putting his signature to the demand.

On Sunday, Graham – who had already spoken of his misgivings about the pledge – added his name to those who have gone on record about their intention to break with the policy.

“I think Grover is wrong,” he said. “When you are $16tn in debt the only pledge we should be making to each other is to avoid becoming Greece. I will violate this pledge, long story short, for the greater good of the country, only if Democrats do entitlement reform.”

Speaking on the same show, the Democrat senator Dick Durbin also indicated a willingness for negotiation. After saluting Graham, Durbin said: “What he just said about revenue and taxes needs to be said on his side of the aisle. We need to be honest on our side of the aisle.”

Durbin, a Democratic Party whip, noted that Congress was due to begin its new session on Monday.

“We can solve this problem,” he said. “Tomorrow, there’s no excuse: we’re back in town.”

Eurozone crisis live: France downgraded ahead of Greece aid meeting

Moody’s has warned that France’s economy is losing competitiveness, as it cuts its credit rating by one notch

Eurozone crisis live: Asmussen hints at third Greek programme

European politicians are marking out their territory ahead of tomorrow’s meeting to discuss how to address Greece’s debts, with Jörg Asmussen of the ECB predicting another package beyond 2014. The IMF may not approve…

European strikes, cancelled flights and your rights

Holidaymakers are languishing in UK airports instead of lounging on Mediterranean beaches following a general strike over austerity cuts

Thousands of holidaymakers hoping to fly to Spain, the Canary Islands, Portugal, Greece and Italy have had their flights disrupted and cancelled because of a general strike.

EasyJet has cancelled 26 flights, including services from Gatwick to Barcelona and Madrid, and rescheduled 10 others including flights from Gatwick and Manchester to Athens, and from Gatwick to Thessaloniki. Iberia Group has cancelled more than 350 flights.

The disruption is expected to continue into 15 November. TAP Portugal has announced that London-Lisbon flights will also be affected on both days. Passengers are being told their airline is unable to land at airports where fire services are not functioning.

So if you are still languishing in a British airport instead of lounging on Mediterranean beaches, what are your rights?

Refunds or rebooking cancelled flights

EU regulations stipulate that if your flight has been cancelled you should be offered a full refund or the option of rebooking. You are also entitled to phone calls, refreshments and accommodation if you are stuck at the airport overnight.

If your flight is delayed the airline must offer you meals and/or refreshments, depending on how long the delay is. If it is a lengthy delay the airline may have to give you accommodation and transport to the hotel.

Most airlines have encouraged passengers to rebook on alternative dates free of any extra charge.

Compensation

Under EU law industrial action is categorised under “extraordinary circumstances”, which means your airline is not obliged to pay the compensation that would usually be due if a flight is cancelled, though it will pay for meals and refreshments if you find yourself stranded at the airport.

Travel insurance

Although the cheapest policies may not include cover against strike action, most now pay out if policyholders are delayed because of industrial action – check the small print to make sure. However, few will pay out if the policyholder cancels the trip simply because of the threat of cancellation, before it is confirmed by the airline.

For your claim to be successful you must have bought the insurance before the date the strike was announced – 19 October.

Eurozone crisis live: Greece faces threat of aid delay

Fears are growing that Eurozone finance ministers will fail to agree on Greece’s next bailout payment when they meet next week