Greece over halfway to recovery, says PM

Πηγή: FT
By Ralph Atkins and Kerin Hope
March 18 2012

Greece’s caretaker prime minister insists that a “large, silent majority” of Greeks are willing to do whatever is needed to stay in the eurozone, despite near-daily anti-austerity demonstrations.

Lucas Papademos said Greece was determined to avoid another debt restructuring and its political leaders were prepared to put aside differences to implement structural and fiscal reforms.

In an interview with the Financial Times, Mr Papademos expressed confidence that Greece’s downward economic spiral would prove temporary. “I am convinced that we are more than halfway along the path to economic recovery – although the fiscal consolidation process will last longer,” he said. “Positive growth rates should be achieved within less than two years,” he said.

Mr Papademos’s defiance comes in spite of widespread fears outside Greece that its economic situation makes exit from the eurozone a distinct possibility. He admitted that Greece might need more outside support if it was unable to return to financial markets by 2015.

However, Mr Papademos argued that implementing the agreed reform programme, and extra measures to boost growth, would turn a vicious downward spiral of fiscal austerity and economic contraction into “a virtuous circle of structural reform, increasing activity and faster fiscal consolidation”.

Full implementation of the programme should also eliminate the possibility of another government debt restructuring, Mr Papademos said. “We will do whatever is needed to ensure that this was the last restructuring of Greek sovereign debt.”

Greek leaders are going ahead with national elections in late April or early May – a decision criticised by Germany. However, the former European Central Bank vice-president, who took over as caretaker prime minister in November, said reforms would continue under any government.

Greece has secured a second EU-IMF bailout loan but the path ahead is far from clear

“This is the will of the majority of the Greek people,” he said and would “be taken very carefully into account by the political parties”. A main achievement of his government had been to forge “a higher degree of consensus” on implementing the latest bailout programme.

Mr Papademos said: “Almost all opinion surveys have systematically indicated that a large majority of the people – I have seen figures ranging between 70 per cent and 80 per cent – very much support Greece’s continuing participation in the euro area and this implies that, despite the sacrifices and the short term adjustment costs, they are willing to do what has to be done in order for the country to remain in the euro.”

Mr Papademos revealed plans to strengthen the office of prime minister to ensure continuity under a new government. He was careful not to rule out continuing as prime minister after the election if there was insufficient support for an alternative candidate.

With election preparations intensifying, Greece’s socialist Pasok party held a leadership ballot on Sunday, although Evangelos Venizelos, the finance minister, was the sole candidate to succeed former premier George Papandreou. A socialist official said turnout by party members and supporters was higher than expected. Mr Venizelos is expected to resign his cabinet post on Monday to focus on rebuilding Pasok, which is trailing well behind the conservative New Democracy party according to opinion polls.

Papademos to Ministers: Back Bailout or Quit

Riot police detain protesters during an anti-austerity demonstration in Athens on Feb. 10, 2012.

Πηγή: Bloomberg
By Maria Petrakis and Simon Kennedy
Feb 10 2012

Greek Prime Minister Lucas Papademos told members of his government they must back deeper budget cuts needed to prevent financial collapse or quit, as political dissension threatened to unwind the country’s second bailout.

Papademos said failure to secure the 130 billion-euro ($171 billion) rescue package that’s under negotiation threatened 11 million Greeks with a default that would halt the payment of wages and pensions and shut down schools, hospitals and businesses. He spoke after five ministers resigned in two hours and protesters clashed with police in Athens.

“Some say default would be preferable,” Papademos told a Cabinet meeting in Athens this evening, according to an e-mailed transcript from his office. “They are woefully mistaken. What is of the essence right now is to do whatever we can to approve the new plan and let the loan accord proceed.”

Concerns the bailout might unravel mounted after euro-area finance ministers yesterday kept back approval of Greece’s austerity measures, one of the Greek governing coalition parties pushed back against German demands for deeper cuts, and police used tear gas to counter demonstrators in the capital.

Papademos met his ministers to discuss the bill detailing the measures, amounting to 7 percent of gross domestic product to 2014, which will be put to a parliamentary vote this weekend. The Cabinet gathered after one minister and three deputies from the Laos party as well as a Socialist minister said they were quitting in protest at the steps worked out for a rescue.
‘German Boot’

“What has particularly bothered me is the humiliation of the country,” George Karatzaferis, the leader of Laos, which has 16 members in the 300-seat parliament, said in televised comments. “Clearly Greece can’t and shouldn’t do without the European Union but it could do without the German boot.”

Karatzaferis spoke hours after German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece was missing deficit goals and had to do more to meet its bailout commitments.

With the rescue package in the balance, the parties that support Papademos’s interim government will meet tomorrow ahead of parliamentary votes on the new measures. Lawmakers will convene from both the Socialist Pasok party and the New Democracy party, which leads in opinion polls before elections due as soon as April. A number of Pasok deputies have threatened to vote against the bill.

Political uncertainty, Papademos said, was the main reason for finance ministers failing to approve the program in Brussels yesterday.
‘Cannot Remain’

“It should be evident that whoever disagrees and doesn’t vote for the new program cannot remain in this government,” he said.

Global stocks fell for the first time in four days and the euro weakened from yesterday’s two-month high against the dollar as the plan for Greece ran into turbulence.

Police in Athens scuffled with protesters as unions started a 48-hour strike against the austerity measures demanded by the so-called troika of international creditors who monitor progress made by Greece.

Schaeuble, briefing lawmakers in Berlin on troika estimates relayed to the Brussels meeting yesterday, said current plans would leave Greece’s debt as high as 136 percent of GDP by 2020, according to two people in the meeting. That compares with the 120 percent foreseen in the second bailout. Debt was about 160 percent of GDP last year.

“The Greek offer is not sufficient and they have to go away to come up with a revised plan,”Bertrand Benoit, a spokesman for the German Finance Ministry, said by telephone.
Juncker’s Conditions

The emergency euro-area talks broke up late last night with Luxembourg Prime Minister Jean-Claude Juncker saying Greece must turn its budget cuts into law, flesh out 325 million euros in spending reductions and have its major party leaders sign up to the program so they don’t retreat after the elections. Another extraordinary meeting was set for Feb. 15.

“In short: no disbursement without implementation,” Juncker said. “We can’t live with this system while promises are repeated and repeated and repeated and implementation measures are sometimes too weak,” he said.

In a bid to pressure his country’s lawmakers, Greek Finance Minister Evangelos Venizelos said the parliamentary vote on budget cuts amounted to a ballot on euro membership.
‘Salvation and Future’

“If we see the salvation and future of the country in the euro area, in Europe, we have to do whatever we have to do to get the program approved,” he said.

Resolution of the aid talks, which have dragged on since July, would allow Greece to make a 14.5 billion-euro bond payment on March 20 and contain the threat that speculators will target debt-saddled nations including Italy and Portugal.

The strike called by the private-sector GSEE union shut down schools, government services, and some public transit for the second time this week.

“They want to privatize the entire country,” Ploumitsa Triantafillopoulou, 42, who works for an organization that promotes day-care facilities for children, said today in an interview. “All of us here we will lose our jobs. They don’t care for us. They don’t care for the people of Greece.”

Europe’s hardline stance follows more than two years in which Greece failed to carry through promised reforms to tackle its uncompetitive economy and meet the terms for aid. Greece blamed its shortcomings on a deepening recession now set to worsen with reports yesterday showing unemployment jumping to 20.9 percent in November and industrial production declining.
Debt Swap

Bondholders met separately in Paris yesterday to discuss accepting an average coupon of as low as 3.6 percent on new 30- year bonds in a proposed debt swap. An agreement would slice 100 billion euros off more than 200 billion euros of privately-held debt and a formal offer must be made by Feb. 13 to allow all procedures to be completed before the March 20 bond comes due. European Union Economic and Monetary Affairs Commissioner Olli Rehn said the deal is “practically finalized.”

The Brussels meeting, attended by International Monetary Fund chief Christine Lagarde and European Central Bank President Mario Draghi, came hours after Papademos and party chiefs ended a week of meetings with a deal on fresh budget cuts.

The measures are aimed at delivering budget reductions totaling 1.5 percent of GDP this year and range from a 22 percent paring of the minimum wage to lower pension payments and immediate job cuts for as many as 15,000 state workers.

Greece deal fails to convince, EU demands more

Πηγή: Business Insider
By Reuters
Feb 10 2012

Greek political leaders said they had clinched a deal on economic reforms and spending cuts needed to secure a second bailout, but euro zone finance ministers demanded more measures and a parliamentary seal of approval before providing the aid.

The European Union and the International Monetary Fund have been exasperated by a string of broken promises and weeks of wrangling over the terms of a 130 billion euro bailout, with time running out to avoid a default.

Finance ministers of the 17-nation euro zone meeting in Brussels warned there would be no immediate approval for the rescue package and said Athens must prove itself first.

Jean-Claude Juncker, who chairs the Eurogroup, set three conditions, saying the Greek parliament must ratify the package when it meets on Sunday and a further 325 million euros of spending reductions needed to be identified by next Wednesday, after which euro zone finance ministers would meet again.

"Thirdly, we would need to obtain strong political assurances from the leaders of the coalition parties on the implementation of the programme," Juncker told a news conference after six hours of talks in Brussels. "Those elements needs to be in place before we can take decisions."

"In short, no disbursement before implementation."

Facing elections as soon as April, Greece's party leaders have been loath to accept the lenders' tough conditions, which are certain to be unpopular with increasingly angry voters.

Greek Finance Minister Evangelos Venizelos flew to Brussels after all-night talks involving Prime Minister Lucas Papademos, leaders of the three coalition parties and EU and IMF inspectors. He left the Brussels talks quickly, telling reporters Greece faced a choice of staying in the euro or leaving, Bloomberg reported.

A spokesman for the Greek representation in Brussels could not immediately confirm the comment.

Papademos' office had said a final 300 million-euro gap was bridged on Thursday in talks with the troika of the European Commission, the European Central Bank and the IMF, and endorsed by the party leaders.

The Greek government called on the coalition parties to support the deal when it comes to parliament, saying the Brussels meeting showed they were only half way there.

"The first step is for parliament to approve it, showing political parties' commitment to the targets and the policies of the new economic programme. It's time all of us to assume their responsibilities. We need action, not words," government spokesman Pantelis Kapsis said in a statement.

The euro rose on news of a deal, which appeared to remove - at least for now - the risk of a hard default by the euro zone's most indebted country, which faces a major bond redemption on March 20. The risk premium investors charge for holding Italian and Spanish bonds fell.

However, IMF spokesman Gerry Rice said talks would continue to finalise details, making clear no agreement had been concluded yet. He said managing director Christine Lagarde wanted assurances Greece would stick to the agreed policies whatever the outcome of looming elections.

Venizelos said Athens also had an outline deal with private creditors on a bond swap in which they would give up some 70 percent of the value of their Greek bond holdings, reducing Athens' 350 billion-euro debt pile by about 100 billion euros.

"The draft agreement on private sector involvement to decrease the Greek debt burden is practically finalised, even if it will be formally approved as part of the overall package, I trust next week," EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters.

ECB President Mario Draghi said he was "quite confident" that all the components of a Greek debt deal would fall into place and hinted the central bank could provide indirect help without breaching a treaty ban on financing governments.

Euro zone finance ministers will meet again on Wednesday, by which time Athens is expected to have all elements in place, including the parliamentary approval. A debt sustainability analysis will also be finalised by then, Rehn said, adding that there would also be tighter EU oversight in Greece.

The IMF says Greece's debt-to-GDP ratio must be cut to 120 percent by 2020, but it is not clear the measures Athens is being called on to enact will be sufficient to hit that target.

Pain and more pain

The measures will mean a big fall in the living standards of many Greeks, now in the fifth year of a deep recession. Deputy Labour Minister Yannis Koutsoukos, a socialist, resigned over a package he said would be "painful for working people".

Greece's two major labour unions called a 48-hour strike for Friday and Saturday against the reforms.

"The painful measures that create misery for the youth, the unemployed and pensioners do not leave us much room," secretary general of the ADEDY union, Ilias Iliopoulos, told Reuters.

"We won't accept them. There will be a social uprising."

Earlier, Panos Beglitis, spokesman for PASOK socialists who are in coalition along with the conservative New Democracy party and far-right LAOS, said the minimum wage would be cut by 22 percent as part of efforts to make the economy more competitive.

Asked how the differences over pension cuts had been resolved, a government official told Reuters: "There will be cuts in other areas of public spending and we will see how we will minimise reductions in pensions."

New Democracy leader Antonis Samaras defended the resistance put up by Greek political parties to deeper austerity and called for a change in policy, in comments that may buttress European partners' doubts about his commitment to the programme.

"When your country is faltering and its social cohesion is at risk, can the only antidote to the crisis be even higher unemployment and two more years of recession?" Samaras said in a televised address.

"We should show the Europeans that what is happening in Greece will soon spread to the rest of Europe if we do not change the policy of an endless austerity."

But he also said the deal opened the way for a big cut in Greece's debt that would "give us hope once again".

Deeper recession

Greece has fallen deeper into recession since it received a first bailout in May 2010. Latest unemployment figures showed the jobless rate hit a record 20.9 percent in November, with youth unemployment a staggering 48 percent.

The sharper-than-forecast contraction has opened a funding gap of about 15 billion euros in the bailout package agreed last October to bring Greece's debt down to about 120 percent of gross domestic product from nearly 160 percent today.

Two sources said the government would promise spending cuts and tax rises worth 13 billion euros from 2012 to 2015, almost double the seven billion originally pledged.

To help fill the remaining gap, Athens has urged the ECB to forego profits on its Greek bond holdings in a move that could raise 12 billion euros or more.

The bank's 23-member Governing Council discussed the issue on Thursday. Draghi hinted there was a route to do that, while ruling out the ECB sustaining any loss.

Asked whether the ECB could give back profits on Greek bonds with a face value of about 50 billion euros which it bought at a discount in the market, Draghi indicated it would have to pass on the profits to governments when they were realised.,

"If the ECB distributes part of its profits to its member countries as part of the capital key, that's not monetary financing," he said.

Morning Brief: Greece fails to agree to new budget cuts

Πηγή: FP

By David Kenner 

Feb 9 2012

Top story: Greek Prime Minister Lucas Papademos announced that his coalition had failed to agree to a series of new austerity measures. The three parties met for seven hours, but reportedly could not reach a deal on new pension cuts.

Immediately after the meeting with his coalition partners ended, Papademos met with representatives of the European Union, the European Central Bank, and the International Monetary Fund to discuss a new bailout package for Greece. The group announced its intentions to conclude an agreement before euro zone finance ministers meet on Thursday.

The pension cuts, which were reportedly included in a draft agreement between Greece's bailout partners and Papademos, represent the main stumbling block. According to reports published in the Greek press, the new measures requested by Greece's creditors would slash over $4 billion from the budget.

Nerves wearing thin as Greece extends talks deadline

Greek trade unions have called for a general strike on Tuesday

Πηγή: EUobserver
By VALENTINA POP
Feb 6 2012

BRUSSELS - Greek talks with international lenders on a €130bn bail-out have gone into further overtime as the technocrat premier struggles to secure the backing of political parties for more spending cuts.

The government had sought to wrap up the deal over the weekend, but after marathon talks, Prime Minister Lucas Papademos was able to announce only a partial deal in support of the austerity measures demanded by international lenders.

In a statement Sunday night, Papademos said the party chiefs had agreed to reduce public spending by 1.5 percent of the country's gross domestic product, cut wages and labour costs and recapitalise their cash-strapped banks.

According to official figures, some €65bn has been pulled out of Greek banks since 2009, out of which around €16bn was sent abroad, mainly to British and Swiss accounts.

"The prime minister and political leaders will meet again tomorrow to complete the consultations on the content of the programme," the statement read.

Wage cuts and a pensions freeze are said to be the most contentious points, as no party wants to be associated with such measures ahead of the April elections.

Antonis Samaras, leader of the conservative New Democracy party, said the country was "being asked for more austerity, which it is unable to bear."

In return, Papademos is said to have threatened to resign if there is no agreement, Greek daily Kathimerini reported.

The country is now in its fifth year of recession. The unemployment rate is at 20 percent and the number of homeless people on the freezing streets of Athens has increased by 25 percent since 2009. The International Monetary Fund, itself one of Greece's lenders, has admitted that the social costs are too high.

In protest at the planned cuts, the country's biggest trade unions have called for a 24-hour strike on Tuesday.

A spokesman for the Socialist Pasok party said political leaders were given a noon-deadline on Monday to agree on the cuts, so that the government could present the deal to a teleconference or snap meeting of eurozone finance officials. But as one EU official put it, "with Greece, no deadline is for sure."

The ultimate deadline for Greece is 20 March, when it has to repay €14.5bn worth of bonds for which it desperately needs the second bail-out. But a preparatory phase of four to six weeks is needed prior to that in order for the finance ministry and banks to implement the so-called private sector involvement - bond-holders taking 'voluntary' losses of more than 50 percent, which should also be part of the €130bn bail-out deal.

In an interview with Der Spiegel, eurozone chief Jean-Claude Juncker did not rule out that Greece may be declared bankrupt if the deal is not sealed in time.

"If we were to establish that everything has gone wrong in Greece, there would be no new programme, and that would mean that in March they have to declare bankruptcy," he said.

Juncker mentioned a promised privatisation drive and the struggle against rampant corruption in state administration as two areas that needed particular attention.

Top banker Josef Ackermann, head of both Germany's financial giant Deutsche Bank and the International Institute of Finance negotiating with the Greek government, on Saturday warned that if Greece were to go bust, the entire financial system would be shaken.

Speaking at the Security Conference in Munich, the Swiss banker said: "It's not only about Greece, it's about Europe," adding that other troubled euro-countries would be immediately affected. Portugal, already under a bail-out programme, is seen as the next country in line in case of a Greek default.

Meanwhile, German Chancellor Angela Merkel and French President Nicolas Sarkozy are set to hold talks and a joint government meeting in Paris on Monday.

Germany's fierce opposition to the European Central Bank or national governments taking losses on their Greek bonds along with the private sector is another reason why the negotiations in Athens have stalled for weeks.

Greek crisis talks for debt deal pushed to Monday

IMF chief debt inspector Poul Thomsen member of the so-called troika of Greece's creditors _ the European Union, the European Central Bank and the International Monetary Fund _ leaves the prime minister's official residence after meeting with Greece's Prime Minister Lucas Papademos in Athens, Greece on Sunday, Feb. 5, 2012. The troika demanded tougher austerity measures, private sector pay cuts and firings of civil servants. At stake is a new euro130 billion ($171 billion) bailout deal without which Greece will default before the end of March.

Πηγή: AP
By DEMETRIS NELLAS and NICHOLAS PAPHITIS
Feb 5 2012

ATHENS, Greece (AP) -- Crisis talks on a debt deal for Greece among the three leaders of parties supporting the coalition government were suspended and will continue Monday.

Greece is racing to finalize austerity reforms needed for a new euro130 billion ($171 billion) bailout without which it would face bankruptcy in late March. But in a country deep in recession, with unemployment at 19 percent, many politicians and unions oppose more austerity measures.

The three party leaders held a five-hour meeting late Sunday with Prime Minister Lucas Papademos to hammer out a deal with debt inspectors representing eurozone countries and the International Monetary Fund, but failed to reach an agreement.

An announcement from Papademos' office said the three had agreed on measures to cut spending in 2012 by 1.5 percent of gross domestic product - about euro3.3 billion ($4.3 billion) - improve competitiveness by cutting wages and non-wage costs, such as social security contributions, reduce auxiliary pensions and re-capitalize banks without nationalizing them.

But the three leaders - socialist George Papandreou, Antonis Samaras of conservative New Democracy and Giorgos Karatzaferis of the rightist Popular Orthodox Rally - differed as to what this would mean in detailed proposals.

Samaras said upon leaving the talks that Greece's creditors "are asking for more recession which the country cannot bear. I am fighting, with all my means, to prevent this."

Papandreou objects to cutting actual wages and wants the state to take over banks, at least temporarily. His socialist party executive is meeting at the moment to consider these proposals.

"Political party leaders are obliged to provide a first response to the proposals by" Monday morning, socialist party spokesman Panos Beglitis told reporters after the party leaders' meeting with Papademos.

Papademos is due to resume talks with representatives of the "troika" of Greece's creditors - the European Union, the European Central Bank and the International Monetary Fund - later Sunday and will be joined by Finance Minister Evangelos Venizelos and Labor Minister Giorgos Koutroumanis.

Unions and employers' associations have warned that private-sector wage cuts would deepen the nation's recession, now in its fourth year.

Papademos and Venizelos also met separately with representatives of banks in an effort to complete a bond swap deal that would reduce Greece's debt by euro100 billion ($131.6 billion). The talks involved Charles Dallara, managing director of Washington-based Institute of International Finance (IIF), and Jean Lemierre, senior adviser to the chairman of French bank BNP Paribas.

Josef Ackermann, the CEO of Germany's Deutsche Bank and the IIF's board chairman, is also in Athens.

Greek Premier Says Creditors May Be Forced to Take Losses

Prime Minister Lucas Papademos of Greece in his office. The debt crisis has occupied him since he took office in November

Πηγή: New York Times
By RACHEL DONADIO

Jan 17 2012

ATHENS — Taking direct aim at hedge funds and other private holders of Greece’s debt, Prime Minister Lucas Papademos says he will consider legislation forcing the creditors to take losses on their holdings if no agreement can be reached in critical negotiations scheduled to resume Wednesday.

In a wide-ranging, 90-minute conversation on Monday night, his first with a newspaper since he came to office in November, Mr. Papademos also called on Greek politicians to pass the economic measures demanded by Greece’s foreign lenders in exchange for bailout aid, saying vested interests with political ties had helped to block the changes needed to revive the country’s rigid and moribund economy.

But he added that European leaders did not act swiftly enough to tackle the debt problem when it first arose in early 2010. And he said Greece’s foreign lenders should have introduced growth measures earlier in its program for the austerity-squeezed country, whose economy is expected to shrink by 6 percent this year and where unemployment is 18 percent and rising.

Mr. Papademos’s most pointed remarks appeared aimed at the private bondholders who have increasingly more sway over Greece’s fate than do its politicians or even the prime minister.

Mr. Papademos said that if Greece did not receive 100 percent participation in a program in which bondholders would voluntarily write down $130 billion from Greece’s unwieldy $450 billion debt, the country would consider passing a law to require holdouts to take losses.

“It is something that has to be considered in the light of expectations about the degree of the participation to be achieved,” Mr. Papademos said. “It cannot be excluded. It is contingent on the percentage.”

The prime minister is a former vice president of the European Central Bank, a nonpolitician brought in to lead an interim government with a mandate to secure new bailout funding as part of a new loan agreement.

His comments came after talks broke down last week between Greece and its creditors over the terms of a “voluntary” default, in which the private bondholders will agree to a 50 percent reduction or more in the value of their holdings. The so-called troika — comprising the European Central Bank, the European Union and the International Monetary Fund — has demanded such a deal as a condition to extending more aid.

Many private investors, like hedge funds, pension funds and banks, would just as soon see an involuntary default, because much of their holdings are insured through credit default swaps.

But European leaders are dead set against such a “credit event,” which could ignite a chain reaction with unpredictable and potentially catastrophic results for the world financial system.

However, the prime minister said he expected the talks to be completed successfully. “The talks are not straightforward, because they aim at a voluntary restructuring of public debt, and to achieve a number of objectives simultaneously, objectives that involve trade-offs,” Mr. Papademos said. “Taking into account the complexity of the exercise, I would say that we are very close to reaching an agreement.”

There is a growing sense in Europe that a Greek default cannot be avoided, if not now then perhaps in March, when a bond comes due that the country cannot pay without more financing from the troika. “I am aware of that,” Mr. Papademos said, adding that he thought the new financing would be approved. “I think the facts reveal that the European partners have taken extraordinary measures to help Greece address its problems.”

In conversation Mr. Papademos, who lived in Frankfurt and served as a vice president of the European Central Bank from 2002 until his retirement in 2010, is a true technocrat — quiet, polite, measured, rational. Unlike his technocratic counterpart, Prime Minister Mario Monti of Italy, who has acute political instincts and appears to thrive in the Italian political circus, Mr. Papademos is clearly ill at ease with the thrust and parry of political life.

He has not yet held a news conference in Greece, and was taken aback by a reporter’s questions about how the crisis had affected his friends and family or where he kept his personal savings.

“I have moved absolutely nothing out of Greece,” he said.

He bristled at the suggestion that he was out of touch. “I am fully aware of the adjustments that are needed and of the sacrifices being made by the people. You don’t only have to look at the numbers, the fact that the unemployment rate is 18 percent. You can walk in the city and see.”

He asked Greeks to put their sacrifices in perspective. If all goes well, he said, they could expect “an end to austerity” next year. He added that the tough measures were aimed at ensuring Greek wage stability in the future, including for low-income wage earners.

Mr. Papademos has not gotten a lot of help from his own government, which so far has failed to pass or carry out legislation required by the troika in exchange for more financing. But experts say that Mr. Papademos is doing his best considering the situation he inherited.

“I’m not suggesting there has been a revolution, but I think there’s a slow change,” said Loukas Tsoukalis, the president of the Hellenic Foundation for European and Foreign Policy, an Athens research institute. “Greece is showing enormous difficulty and reluctance in going ahead with reforms, and very often reluctance in implementing what has already been passed — but it is moving slowly.”

But timing is everything. Mr. Papademos said his mandate was to secure a new bailout and new loan agreement, not to solve all of Greece’s problems, and that his government would be short-lived.

“I would say the baseline scenario is for elections to be held sometime in April,” he said.

Until then, he added: “I am confident that we can overcome this crisis, provided that we remain united in our effort to address our debt and competitiveness problems. And I think that the Greek people are united; it’s important also that the political forces are united in line with the will of the Greek people.”

Greece faces 'worst' recession

Πηγή: thewest
By AFP
Dec 15 2011

Greece will likely chalk up its worst-ever recession this year, Greek Prime Minister Lucas Papademos warned on Wednesday, with the contraction to be greater than the 5.5 per cent forecast.

"2011 will be the worst recession here ever" with gross domestic product contracting by "over 5.5 per cent" as the government has officially forecast, Papademos said at a dinner organised by the American-Greek Chamber of Commerce.

Greece's economy shrank by 4.5 per cent in 2010.

"We have a hard way to go," said Papademos.

The head of the IMF mission in Greece, Poul Thomsen, said earlier Wednesday that the Greek economy will go down "six per cent and maybe more" in 2011.

The public deficit was likely to come in at around 10 per cent of GDP rather than the target of 9.0 per cent of gross domestic product.

Greece has slashed spending and hiked taxes as it tries to bring down its deficit under a 2010 bailout deal with the International Monetary Fund and European Union that includes 110 billion euros ($142 billion) in rescue loans.

A second deal with the eurozone agreed in October aims to shave 100 billion euros off its massive debt mountain of 350 billion euros via a voluntary write-down in the value of bonds held by private creditors.It should also get another 100 billion euros in loans and 30 billion euros in help for its banks under the eurozone deal.

Greece’s Samaras Urged by EU to Back Deficit Cuts in Writing

Πηγή: Bloomberg
By Jonathan Stearns

Nov 21 2011

Nov. 21 (Bloomberg) -- Antonis Samaras, head of Greece’s New Democracy party, faced growing European Union demands to pledge written support for Greek budget cuts as a condition for the next installment of international aid to the country.

“We need to see a country united,” Jose Barroso, president of the European Commission, the EU’s executive arm, said at a press conference today in Brussels with Greek Prime Minister Lucas Papademos. “The issue of trust, of confidence, is critically important.”

Samaras, whose party is a member of Greece’s unity government, has balked at the demand for a written endorsement of budget cuts, telling officials from the EU, the International Monetary Fund and the European Central Bank that he has already taken five actions that show his full commitment to the austerity program, state-run Athens News Agency said on Nov. 19.

Greece needs a sixth disbursement of loans under last year’s 110 billion-euro ($148 billion) rescue and a planned second international aid package of 130 billion euros to avoid economic collapse. The euro area and IMF, which are funding the two packages including the next payment of 8 billion euros, want Greece’s main political leaders including Samaras to commit to spending cuts beyond the life of the Papademos-led unity government.

‘Very Demanding’

EU President Herman Van Rompuy called on “all Greek political leaders to fully back this strategy.” In a statement after meeting Papademos today, Van Rompuy said euro-area finance ministers “should” be in a position to authorize the next Greek loan installment at a meeting scheduled for Nov. 29.

“The situation is very demanding,” Van Rompuy said. “A lot of efforts have already been done by the Greek people. However, more needs to be done to restore stability, confidence and growth.”

Barroso said Greece faces “exceptional” difficulties that don’t allow for “political games” by Greek party leaders. He said the aim is to ensure that Greece stays in the 17-nation euro area.

“For the European Union and IMF to support, they need to be sure that this is for a sustainable effort, that it’s not just for tomorrow,” Barroso said. “What we have to do now is to concentrate on implementation -- less politics and more commitment. It’s not just a sprint; it’s a marathon.”

International Lenders

Papademos, a former ECB vice president, vowed to press ahead with steps needed to win further aid while saying it was also up to Greek party chiefs like Samaras to meet the euro-area and IMF conditions for extra funding. He defended the demand by international lenders for a written commitment to continued austerity.

“It is necessary in order to eliminate uncertainties and ambiguities concerning actions to be taken in the future by parties that may be in power,” Papademos said. “But it’s up to the leaders of the relevant parties to decide how this confirmation of the commitment will be made.”

He took over the premier’s job this month from Socialist leader George Papandreou, who stepped down after being rebuked by Germany and France for announcing plans -- later revoked -- for a referendum on the second bailout. German Chancellor Angela Merkel and French President Nicolas Sarkozy said any Greek referendum would have to be a yes-or-no vote on Greece’s membership of the euro area.

In his remarks today with Barroso, Papademos said Greece needs to keep the euro. This goal is supported by “the overwhelming majority of the Greek people,” he said.

‘Herculean One’

“This is the only route forward, the only option for this government and for the Greek people,” Papademos said. “The task ahead of us is a Herculean one.”

He also vowed to enact a voluntary writedown of Greek debt with private investors, as foreseen in the second aid package for Greece approved by euro-area leaders on Oct. 26-27. That bond exchange foresees 50 percent losses for investors and is supposed to take place in early 2012.

“It’s a complex process, but we are committed to complete it successfully together with the private sector and our European partners,” Papademos said.

Greece submits proposal to avert bankruptcy

Πηγή: IT
By Reuters
Nov 19 2011

ATHENS – Greece’s new government took a first step yesterday towards meeting the terms of an international bailout needed to avoid bankruptcy, submitting a budget Bill that foresees no new austerity measures next year as long as reforms are enacted.

The draft predicted that Greece would face a fifth year of recession but said a plan to convince private creditors to take a 50 per cent loss on bond holdings could cut the fiscal deficit by more than a third.

Economists said that years of swingeing tax hikes, public salary and pension cuts and other belt-tightening measures could send the economy deeper into contraction and the draft spending plan’s forecasts were probably too optimistic.

The budget draft forecasts that the €220 billion economy will shrink 2.8 per cent in 2012, versus 5.5 per cent this year.

“The feasibility of next year’s fiscal deficit depends highly on the depth and severity of the recession,” said Diego Iscaro, an economist at IHS Global Insight.

“Under current circumstances, we expect the economy to contract at a sharper rate in 2012 and therefore we believe that the target will be difficult to achieve.”

Still more important, analysts said, was a rift between parties in technocrat prime minister Lucas Papademos’s unity coalition caused by jockeying for position by the conservative New Democracy party ahead of an election slated for February 19th.

Mr Papademos must win pledges from the rival parties that they will do what it takes to meet bailout terms or Greece’s lenders will withhold an €8 billion aid tranche. Representatives from the International Monetary Fund, the European Union and European Central Bank were due to meet Greek finance minister Evangelos Venizelos and Mr Papademos later yesterday and the heads of the coalition parties today.

Tensions have risen between coalition partners, the Socialists of former prime minister George Papandreou, and New Democracy, as the latter’s leader, Antonis Samaras, has refused to sign the commitment sought by EU and IMF authorities.

Underscoring the pressure on Athens, the Dutch finance minister said that the Greek parties had “to make a clear and unequivocal choice in writing” by signing a pledge.

“Are they with us, or not? We don’t have the luxury of patience any longer,” said Jan Kees de Jager .

Mr Samaras has said that he wanted to win an outright majority in the snap election to reverse the austerity measures with which he disagrees.

Greece's Mission Impossible?

Πηγή: New York Times
By NIKOS KONSTANDARAS

Nov 15 2011

No comic book superhero was ever given a tougher mission than the one just undertaken by Lucas Papademos, the gray-suited, gray-haired economist with the shy smile who has been appointed head of an emergency government in Greece.

If Greece stays on its feet and remains in the euro zone, this will be the strongest signal to the world that the Europeans are serious about saving their currency; this will help save the euro and, as Chancellor Angela Merkel of Germany has said, saving the euro will save the European Union.

Mission impossible?

No superhero has had so many odds stacked against him. The politicians who appointed Papademos to head a fractious three-party coalition have made clear they want him out of the way soon; after two years of mostly pointless austerity and missed targets, the citizens of Greece are suspicious of change; many of Greece’s E.U. partners make no secret of their haste to cut Greece off from the euro zone and the European Union. To undo the damage of decades, Papademos has three months.

No superhero has fought for higher stakes. A nation held hostage by the failings of its political class and burdened by many years of irrational spending has invested its hopes in a former vice president of the European Central Bank and longtime governor of Greece’s central bank.

Even before his first policy statement, 55 percent of respondents in a Greek poll said they trusted him. Perhaps this was so mainly because they needed to put their faith in someone different from their politicians. Today’s troubles are nothing compared to what will happen if Greece is forced to abandon the euro.

Not only will approximately €180 billion in bank deposits be vaporized by instant devaluation, but, free of E.U. and I.M.F. constraints, the political class will go back to the free-spending, unreformed ways that destroyed the economy in the first place.

Papademos’s fight is for the honest citizens — those who see half their salaries going to taxes and social security dues and who get poor public services in return. These are the millions of hard-working citizens and immigrants who have nothing to hide, who have paid taxes upon taxes and put their savings in the country’s banks rather than spiriting them abroad (like tax dodgers). These are the people who kept Greece functioning when others cheated, when politicians lavished benefits on their favorites. It is they who will pay the bill and pull Greece toward recovery.

To keep Greece in the euro zone, Papademos’s immediate tasks are to secure the next €8 billion loan instalment that will keep Greece solvent; to ratify a new €130 billion bailout from the E.U., the European Central Bank and the I.M.F.; and to negotiate a 50 percent debt writedown with private sector creditors. To achieve this, he must get the parties supporting his government to sign a commitment that they will abide by the agreement with our creditors.

The main opposition party, New Democracy, has stated that it would sign no such agreement and that it expects Papademos to make way for elections on Feb. 19. The party has obviously not learned the lesson from the failure of the Socialist Pasok government, which was forced to resign and hand over to a coalition that includes members of Pasok, New Democracy and the far-right LAOS party. Even with a majority in Parliament, Pasok could not implement reforms. It is highly unlikely that any other single-party government will.

But politicians are not the only problem. Unions and small opposition parties, which talk of toppling what they call the “bourgeois system,” have been merciless in resisting every reform. These include reduced benefits, public-sector layoffs and the opening of closed-shop professions. Protests have often turned violent, with antiestablishment militants taking the opportunity to attack the police and other demonstrators, creating the impression that all protests are violent and Greece ungovernable.

If Papademos can gain the trust — or at least the tolerance — of such groups long enough to start implementing reforms, he will succeed where others either failed or did not dare to go. And he will achieve this only if he is seen to introduce the spirit of justice in Greece, with everyone paying taxes, with laws that are enforced without fear or favor, where hard work is rewarded.

Reform is the key to Greece’s future — and the most difficult task. Even the burgeoning number of economists who declare that Greece should leave the euro in order to save itself agree on the need to make the economy and society more rational.

And yet, leaving the euro would be a death sentence. No only would it strip Greeks of the benefit of having a strong currency for the first time in their volatile history, but it would reward all those who have repeatedly cheated the rest of us and have hidden their euros abroad, waiting for an opportunity — such as a return to the drachma — to wipe their debts clean and then buy up an impoverished Greece on the cheap with their euros. If Papademos manages to hold together his coalition, if he wins citizens’ trust and manages to sideline or disarm unions and opposition groups, if he is supported by our E.U. partners, Greece may gradually begin to change. And this will turn the tide of public opinion in Europe.

Greek and foreign media, Greek and foreign politicians, have repeatedly exaggerated the benefits, early pensions and other lunacies in Greece’seconomy. This has obscured the greater problem: the gross inefficiency of a society based on the age-old patronage system of votes-for-benefits.

Papademos, the outsider, could change all this — providing a new vehicle for reform-minded members of the old parties while also attracting other talented outsiders to try help their country. The people of Greece are ready for this. They know that the charismatic populists of the past brought nothing but ruin. Perhaps they hope that with Papademos at their helm, this is the time for every man and woman to join the effort to rescue their country from bankruptcy, poverty and isolation. United, we can win.

Nikos Konstandaras is managing editor of the Greek daily Kathimerini.

Papadimos Government Swears In – FM Venizelos Stays Put

Πηγή: Greek Reporter
By Emmanouela Seiradaki

Nov 11 2011

So, after more meetings and consultations the new Prime Minister Lucas Papademos and representatives of the three parties (PASOK, New Democracy,LAOS) finalized the composition of the crisis cabinet which counts 48 (!) members-so much about the flexible cabinet Papadimos hoped for- as ND, PASOK and LAOS tried to squeeze in as many ministers as they could! Allegedly, new PM Lucas Papademos was adding and deleting names from the government list until 3 a.m. last night!

The government consists of 48 people: PASOK (Socialists) has 38 officials, Nea Dimocratia (Conservative) 6 and LAOS (far-right) 4. In an obvious attempt to please everyone, some ministries have representatives of all three parties, like the Ministry of Defence where the Minister is from ND, the two alternates are from PASOK and LAOS, and the deputy Minister comes from PASOK!

PASOK Oldies

The majority of PASOK ministers stay right where they were with Evangelos Venizelos and Theodore Pangalos both remaining Deputy premiers. Mr. Venizelos also remains Finance Minister.

Dimitris Reppas (Minister for the Interior, Decentralization and Electronic Governance), Anna Diamantopoulou (Minister for Education, Lifelong Learning and Religious Affairs), Andreas Loverdos (Minister for Health and Social Solidarity), Michael Chrysochoidis (Minister for the Competitiveness and Shipping), George Papakonstantinou (Minister for the Environment, Energy and Climate Change), Κοstas Skandalidis (Minister for Rural Development and Food), Pavlos Geroulanos (Minister for Culture and Tourism) and Christos Papoutsis (Citizen Protection Minister) all stay put.

John Ragousis is transferred to the Ministry of Defence under new Minister Dimitris Avramopulos from ND and Mrs. Fofi Gennimata is transferred as Deputy Minister to the interior ministry.

ND and LAOS Newbies

Both ND Deputy leaders were given ministries, as Dimitris Avramopoulos is the new Defence Minister and Mr. Stavros Dimas, a former European commissioner is the new foreign minister. Konstantinos Arvanitopoulos is the Alternate Minister in the Ministry of Education, Yiannis Mourmouras is appointed as Deputy Minister under Evangelos Venizelos in the Ministry of Finance. Finaly, Petros Alivizatos is appointed Deputy Minister (Tourism). Dimitris Vartzopoulos Deputy Minister in the Ministry of Health under Andreas Loverdos.

FromLAOS: Makis Voridis is the new Infrastructure Transport and Networks Minister, George Georgiou is the Alternate Minister in the Ministry of Defence, Adonis Georgiadis is the Deputy Minister for Shipping, and Asteris Rontoulis is the Deputy Minister in the Ministry of Rural Development and Food.

Papademos government gears up for Greece challenge

Πηγή: RNW
By ANP/AFP
Nov 11 2011

A new Greek unity government headed by the European Central Bank's ex-deputy chief Lucas Papademos will be sworn in Friday after a historic power-sharing deal between the country's main rival parties.
The ceremony at 1200 GMT at the presidential mansion is to be officiated by Archbishop Ieronymos, head of the Church of Greece.

Papademos, 64, was brought in to pull Greece back from the brink and convince its increasingly impatient European and IMF creditors that tough reforms will be completed as promised by the previous short-lived socialist administration.

"The Greek economy is facing huge problems despite the enormous efforts made ... Greece is at a crucial crossroads," the incoming prime minister said in his maiden speech after his appointment, adding: "The course will not be easy."

Papademos will head a transition government whose main task will be to ratify an EU bailout deal crucial to the country's economic survival.

His first job is to persuade the European Union and International Monetary Fund to disburse an eight-billion-euro ($11-billion) slice of aid from a 2010 bailout deal that is needed by December 15 before state coffers run dry.

Then he must force through painful austerity measures exacted as the price for a second EU bailout package which gives Athens 100 billion euros in loans, the same amount in debt reduction and a further 30 billion in guarantees.

His appointment took four days of torturous talks between the top two parties, the outgoing ruling socialists and the main opposition conservatives, after Prime Minister George Papandreou on Sunday pledged to step down.

Former head of state Costis Stefanopoulos described the process to appoint Papademos as "ridiculous" and leading newspapers said Greece had been "humiliated" in the eyes of fellow Europeans, particularly as Papademos had been a front-running candidate since Monday.

"This is something unprecedented in our country, so it had to be done in a solid procedure," outgoing deputy government spokesman Angelos Tolkas told state television channel NET.

Papandreou's position as prime minister had become untenable after he shocked his European partners with a call for a referendum on the bailout deal on October 31. He was admonished by fellow EU leaders at the G20 summit and returned home to a party revolt.

There was also simmering anger towards two years of austerity policies -- which Papandreou's successor is bound to continue -- with protesters even disrupting nationwide parades last month in honour of Greece's wartime resistance to the Axis powers.

The new government, which is also slated to hold early elections as soon as the EU deal is ratified by parliament, was set up with support from the socialist PASOK party, the New Democracy conservatives and the smaller nationalist LAOS party, who together account for 254 deputies in the 300-seat parliament.

The KKE Communists and the leftist Syriza party have washed their hands of the whole process, with Syriza leader Alexis Tsipras pointing out that a non-elected government carries no real power over the Greek people.

"This is a raw subversion of the people's sovereign rule," Tsipras said.

"The new government is called to apply policies without democratic legality," he added.

The last unity government in Greece in 1989 was also headed by an eminent economy expert, former bank of Greece governor Xenophon Zolotas, and only lasted three months.

Advisor warns against major debt reduction policy in Greece

Loukas Papademos: "The potential economic benefits of a debt restructuring will be much smaller than what is frequently forecast and the procedure entails important dangers for Greece and the euro-zone"

Πηγή: BR
By AFP
Oct 23 2011

ATHENS: A senior advisor to the Greek premier and formerly an ECB vice-president, on Sunday warned against a major cut in the country's massive debt, currently being discussed at an EU summit in Brussels.

While such a move would in theory help Greece by reducing its debt service costs, the resulting damage to the banks and so the economy could be huge, and the gains overall less than expected, Loukas Papademos said.

"The potential economic benefits of a debt restructuring will be much smaller than what is frequently forecast and the procedure entails important dangers for Greece and the euro-zone," Papademos wrote in To Vima weekly.

Greece has a debt mountain of over 350 billion euros ($487 billion) and faces crushing interest repayments in coming years.

The European Union in July agreed a supplementary rescue package on top of a 110-billion-euro bailout loan set up last year to help Athens cope.

But EU policymakers have realised that a voluntary 21-percent 'haircut' on Greece's nominal debt borne by private creditors which is an integral part of the July plan may not be enough.

European leaders meeting in Brussels on Sunday are debating a recommendation by their finance ministers that banks be asked to accept a write-down on their Greek government bond holdings of at least 50 percent.

Papademos warned in his Sunday opinion piece that in reality, less than half of Greece's debt would be beneficially open to restructuring.

He noted that in July, nearly 30 percent of a central government debt of 366 billion euros was in the hands of Greek banks, pension funds and insurance firms whose losses in a haircut would have to be offset by the cash-strapped Greek state.

Another 30 percent held by the International Monetary Fund, European Central Bank and other official institutions "cannot be restructured for political and legal reasons," he added.

"As a result, only around 40 percent of Greece's total public debt, held by foreign private investors, could bring net economic benefits. A 50-percent haircut will reduce the total debt by about 20 percent," Papademos said.

Greece's main industry lobby group and the head of the country's fourth-largest bank have also publicly warned against a greater debt reduction than that agreed in July because of the danger to the banks.

Officials in Brussels have agreed in principle that more than 100 billion euros should be made available to European banks if they need to bolster their capital after a large Greek debt write-down.