Greece’s Rotten Oligarchy

Πηγή: New York Times
By KOSTAS VAXEVANIS
Jan 6 2013

DEMOCRACY is like a bicycle: if you don’t keep pedaling, you fall. Unfortunately, the bicycle of Greek democracy has long been broken. After the military junta collapsed in 1974, Greece created only a hybrid, diluted form of democracy. You can vote, belong to a party and protest. In essence, however, a small clique exercises all meaningful political power.

For all that has been said about the Greek crisis, much has been left unsaid. The crisis has become a battleground of interests and ideologies. At stake is the role of the public sector and the welfare state. Yes, in Greece we have a dysfunctional public sector; for the past 40 years the ruling parties handed out government jobs to their supporters, regardless of their qualifications.

But the real problem with the public sector is the tiny elite of business people who live off the Greek state while passing themselves off as “entrepreneurs.” They bribe politicians to get fat government contracts, usually at inflated prices. They also own many of the country’s media outlets, and thus manage to ensure that their actions are clothed in silence. Sometimes they’ll even buy a soccer team in order to drum up popular support and shield their crimes behind popular protection, as the drug lord Pablo Escobar did in Colombia, and as the paramilitary leader Arkan did in Serbia.

In 2011, Evangelos Venizelos, who was then the finance minister and is now the leader of the socialist party, Pasok, instituted a new property-tax law. But for properties larger than 2,000 square meters — about 21,000 square feet — the tax was reduced by 60 percent. Mr. Venizelos thus carved out a big exemption for the only people who could afford to pay the tax: the rich. (Mr. Venizelos is also the man responsible for a law granting broad immunity to government ministers.)

Such shenanigans have gone on for decades. The public is deprived of real information, as television stations, newspapers and online news sites are controlled by the economic and political elite.

Another scandal involves the so-called Lagarde List. In 2010, Christine Lagarde, then the French finance minister (and now the head of the International Monetary Fund), gave the Greek government a list of roughly 2,000 Greek citizens with Swiss bank accounts, to help uncover tax fraud. Greek officials did virtually nothing with the list; two former finance ministers, George Papaconstantinou and his successor, Mr. Venizelos, reportedly even told Parliament they did not know where it was. Meanwhile, several media outlets falsely accused some politicians and business figures of being on the list in order to conceal the ugly reality: rich people were evading taxes while their desperate fellow citizens were searching the trash for food.

When Hot Doc, the monthly magazine I edit and publish, made the list public in October,I was arrested and charged with violating personal privacy, but was acquitted. The result didn’t please those in power. So I am being brought back for a second trial (a date has yet to be set) on similarly vague allegations. Throughout the entire process — the publication of the list, my arrest, my acquittal — the Greek media were absent. The case was a top story in the international press, but not in the country where it took place.

The reason is simple. The Lagarde list implicates a corrupt group that answers to the name of democracy even as it casually nullifies it: officials with offshore companies, friends and relatives of government ministers, bankers, publishers and those involved in the black market.

After my magazine released the list, the Greek government made not a single statement about the case.

When Mr. Venizelos left the Finance Ministry last March, he failed to turn the CD with the list over to his successor. He took it with him. Only when his successor, Yannis Stournaras, told The Financial Times in October that he had never received the list did Mr. Venizelos turn it over to the prime minister’s office. He was never asked about the delay, and leaders of the three parties in the coalition government have not referred his conduct to Parliament’s investigatory committee.

Meanwhile, a newly released version of the list made clear that someone had removed the names of three relatives of Mr. Papaconstantinou, who was the finance minister from 2009 to 2011, before Mr. Venizelos. Last month, Mr. Papaconstantinou was expelled from Pasok. He now faces a Parliamentary investigation, the potential lifting of his immunity from prosecution as a former minister, and charges of tampering with the data. It appears that he may become a new Iphigenia, a scapegoat sacrificed so that the corrupt political system can survive.

This is all unfolding at a time when Greece is walking a tightrope above the abyss of bankruptcy, while the coalition government is instituting new taxes on the lower classes. Half of young Greeks are unemployed. The economy is shrinking at an annual rate of 6.9 percent. People are scrounging for food. And a neo-Nazi party, Golden Dawn, is on the rise, exploiting the resentment and rage toward the ruling class.

The Greek people must remount their bicycle of democracy by demanding an end to deception and corruption. Journalists need to resist manipulation and rediscover their journalistic duties. And the government should revive Greece’s ancient democratic heritage — instead of killing the messenger.

Kostas Vaxevanis is a magazine publisher and television journalist. This essay was translated by Karen Emmerich from the Greek.

A nexus of media, business and politics lies behind the country's crisis, say critics.

A presidential guard marches by a newspaper stand featuring news about Greece's election results in Athens in this June 18, 2012 file picture.

Πηγή: Reuters
By Stephen Grey and Dina Kyriakidou
Dec 17 2012

In late 2011 the Greek finance minister made an impassioned plea for help to rescue his country from financial ruin.

"We need a national collective effort: all of us have to carry the burden together," announced Evangelos Venizelos, who has since become leader of the socialist party PASOK. "We need something that will be fair and socially acceptable."

It was meant to be a call to arms; it ended up highlighting a key weakness in Greece's attempts to reform.

Venizelos' idea was a new tax on property, levied via electricity bills to make it hard to dodge. The public were furious and the press echoed the outrage, labeling the tax ‘haratsi' after a hated levy the Ottomans once imposed on Greeks. The name stuck and George Papandreou, then prime minister, felt compelled to plead with voters: "Let's all lose something so that we don't lose everything."

But not everyone would lose under the tax. Two months ago an electricity industry insider revealed that some of the biggest businesses in the land, including media groups, were paying less than half the full rate, or not paying the tax at all. Nikos Fotopoulos, a union leader at power company PPC, claimed they had been given exemptions.

"It was a gift to the real bosses, the real owners of the country," he said. "The rich don't pay, even at this time."

This time the media made little fuss. "The news was not covered by the media ... because media owners were among those favored," Fotopoulos said later. Leading daily newspapers in Athens either did not mention or downplayed his claims, a review by Reuters found.

To many observers the episode illustrates the interplay between politics, big business and powerful media owners. The interwoven interests of these sectors, though not necessarily illegal or improper, are seen as an obstacle to Greece's attempts to rescue its economy. They are, say critics, partly to blame for the current crisis and for hindering reform.

Leading media owners contacted by Reuters denied exerting any improper influence or seeking favors, or did not respond to questions.

But given the international impact of Greece's crisis, concerns now extend beyond the country. A source in the troika of lenders keeping Greece afloat - the European Union, International Money Fund and European Central Bank - said: "The system is extremely incestuous. The vested interests are resisting reforms needed to make the economy competitive."

Opposite sides of the Greek political spectrum speak about the subject in colorful terms. "In Greece the real power is with the owners of banks, the members of the corrupt political system and the corrupt mass media. This is the triangle of sin," said Alexis Tsipras, leader of Syriza, the main opposition.

Panos Kamenos, leader of the right-wing Independent Greeks party, said: "The Greek media is under the control of people who depend on the state. The media control the state and the state controls the media. It's a picture of mutual blackmail."

Others are more measured. Asked about the haratsi tax, Venizelos acknowledged there were some "blatant cases of paying less tax or none at all", but blamed this on poor records held by the state-run electricity company. "In no way was there any discrimination in favor of specific property owners," he said.

Simos Kedikoglou, a government spokesman, said officials were monitoring the property tax and any errors would be rectified.

Previous efforts to curb potential conflicts of interest - in particular relating to the media - have had little effect, according to a European Commission report on media freedom and independence, published in December 2011. It said Greek media policy "has remained highly centralized in the hands of the government of the day," and that it "has been thoroughly influenced, albeit in opaque and informal ways, by powerful economic and business interests who have sought to gain power, profit, or both."

RISE OF PRIVATE MEDIA

Interplay between politicians and the media is common in many European countries, notably in Italy where Silvio Berlusconi was both prime minister and head of a media group, and in the UK, where media owners such as Rupert Murdoch, chairman of News Corp, have had contacts with successive prime ministers.

But critics say such connections are particularly significant in Greece because the state plays a large role in the economy, and because of the way media has developed there.

Private radio stations and TV channels emerged only in the 1980s, after decades of state media control. As businessmen hurried into the fray, regulation was haphazard. Successive governments let broadcasters operate without proper licenses, according to the 2011 EU report on Greek media. This semi-regulated approach led to Greece having a large number of media outlets for its population of 11 million.

In 2009 the country had 39 national daily newspapers, 23 national Sunday papers and 14 national weekly papers, according to an earlier EU study of media. Per capita, Greece has far more national newspaper titles than, say, Germany or the UK. The country also has nine national TV stations, six of them privately owned, and numerous private radio stations.

A 2006 cable from the U.S. Embassy in Athens, obtained by Wikileaks, noted: "How can all these media outlets operate profitably? They don't. They are subsidized by their owners who, while they would welcome any income from media sales, use the media primarily to exercise political and economic influence."

At the same time, much of the economy outside the shipping industry depends on state contracts or licenses.

"Most companies in Greece are essentially waiting to get money from the state," said Theodoros Roussopoulos, a former government press minister. "Greece is officially capitalist, but in effect socialist."

Media owner Ioannis Alafouzos told Reuters that some of the media "are in effect press offices for business groups." Alafouzos, whose family owns SKAI TV, Greece's fifth largest station, and Kathimerini, a leading newspaper, added: "It's developed into a completely unhealthy situation. The purpose of media has been largely to execute specific tasks for their owners."

Alafouzos, whose wealth comes from shipping, said his family had been careful not to depend on government dealings. His critics say that SKAI was among the companies found to be paying no haratsi tax - an omission SKAI says was caused by local bureaucracy - and that his media interests benefit from state advertising. Alafouzos described the latter as a minimal proportion of his media interests' revenue.

FAMILY CONNECTIONS

One nexus of interwoven interests is MEGA Channel, Greece's biggest TV station, which is co-owned by businessmen who are leaders in, or have strong connections to, other sectors of the economy.

The biggest collective stake in the TV station is owned by members of the family of George Bobolas. One of his sons, Fotios, is a director of Teletypos, the channel's holding company. Another son, Leonidas, is chief executive and a major shareholder of Ellaktor, a construction giant founded by his father that has participated in multi-billion euro contracts with the state. Leonidas has no stake in Teletypos.

The Bobolas family also controls Ethnos, a popular daily and Sunday newspaper, other print media and websites. From the large, grey headquarters of their publishing company in Halandri, a northern suburb of Athens, the extent of the family interests is evident. Nearby is the Athens ring-road, built by an international consortium that included Ellaktor. Alongside the road is a new railway line to the airport, also built with Bobolas involvement.

George Bobolas did not initially respond to questions about his family's various interests. Instead, his newspaper Ethnos published several articles in the days after Reuters submitted questions to him. One alleged that Reuters "continues, it seems, to target our country, the Greek economy and entrepreneurship." Another described Reuters as a "fifth column" for the troika and alleged that Athens was being flooded by foreigners out to "undertake the demolition of public figures according to Anglo-Saxon practices."

After a further request from Reuters, Bobolas said in a letter: "I have never used the media owned by companies in which I participate, for the promotion of interests of the holding company Ellaktor S.A. ... Newspaper Ethnos has never used influence or asked any favors from rulers, for the benefit of Ellaktor."

Bobolas said former prime ministers could verify he had never asked for any favors and added: "One could say that Ethnos' severe judgment on governmental actions and politicians in general, could be considered as obstacle and not help to Ellaktor's corporate interests".

In a written statement, construction firm Ellaktor said its subsidiaries engage in both private and public contracts, and that it pursues public contracts "by participating exclusively in open international tenders, in accordance with Greek and European legislation."

Other figures involved in MEGA Channel include the family of Vardis Vardinoyannis, who is prominent in oil and shipping, and Stavros Psycharis, who controls the DOL media company.

George Vardinoyannis, son of Vardis, serves on MEGA Channel's board, and the family also owns a smaller station called Star Channel. The family is also the major shareholder in Motor Oil Hellas, one of two Greek refinery operators.

In an email, a spokeswoman for the family said: "Most of our companies are based abroad or have an international exposure. The production and sales of Motor Oil Hellas refinery, our biggest investment in Greece, are consistently 70 percent export oriented ... None of our companies rely in any way on government contracts or business."

Psycharis, whose company DOL publishes leading newspapers and has won state contracts in education, culture, travel, and printing, is MEGA Channel's chairman.

In 2006, he sued two investigative journalists who alleged on a radio program that he lobbied for the sale of Eurofighters to Greece and had used his newspapers to promote the merits of a deal. Psycharis denied the allegations. Three years later, after a court hearing, his case was dismissed.

The court rejected one claim by the journalists, but accepted that Psycharis' newspaper had campaigned for the Eurofighter deal. An appeal is pending. Psycharis did not respond to questions about the case.

In late November one of his newspapers chastised Apostolos Kaklamanis, a former speaker of the Greek parliament, who had told PASOK lawmakers that the era when oligarchs "appointed the party leader" had passed. Days after Kaklamanis spoke out, To Vima, a leading newspaper controlled by Psycharis, ran an article referring to his comments and promising to make allegedly embarrassing revelations about Kaklamanis.

Psycharis did not respond to questions about his media holdings or his wider interests.

Critics of links between media and business also cite the case of a gold mine project in Halkidiki, northern Greece. The mines were sold by the Greek government in 2003 to a newly-formed Greek mining company. Soon afterwards the construction firm in which the Bobolas family has an interest acquired a stake in it.

Local opponents campaigned vigorously against a license for the mining project being granted, claiming it would harm the environment. Tolis Papageorgiou, a leading figure in the protest group Hellenic Mining Watch, alleged that newspapers controlled by the Bobolas family failed to report large demonstrations opposing the mine and vilified an environment minister, Tina Birbili, who blocked a license for it.

"Just days into her new job in 2009 she became the target of media controlled by Bobolas because she refused to issue a license to the mining company," Papageorgiou alleged.

Soon after Birbili's appointment in 2009, newspapers owned by the Bobolas family christened her "Green Tina" and criticized her performance. Reports said she was blocking many kinds of development. The articles did not mention that the newspapers' owners had a family interest in the mine or the construction trade.

In his letter to Reuters, Bobolas said that Ethnos strongly supports large-scale projects that create employment and help the country recover from its economic crisis.

Birbili, who declined to comment for this article, was sacked in June 2011; a license to operate the mine was subsequently granted. After it was issued, construction firm Ellaktor, according to its annual accounts, booked a profit of 261 million euros from partly selling off and partly revaluing its stake in a Canadian company that had by that time bought 95 percent of the mine.

A former aide to the Greek prime minister of the time said Birbili's sacking was not related to the mine. The former environment minister who authorized the license, George Papaconstantinou, said "the decision was made solely on the basis the environmental impact study", which had been positive about the mine.

In his letter to Reuters, Bobolas said the only remaining connection his family has with the mine is his son's indirect stake of less than one percent.

TWO HATS

In the media, potential conflicts of interest can arise even at low levels. Tucked away inside the headquarters of the Athens union of journalists, ESHEA, is a list of its members who work for the government, for example in press offices; dozens wear a second hat as newspaper journalists at the same time.

The union's rules ban its members from working for bodies they cover as journalists. In an effort to unmask those breaching that rule, the union obtained a list of government-employed journalists in 2005. But it was never published.

Some of those named on the list complained; Greek officials judged that publishing the list would violate personal privacy. It was a decision that Dimitris Trimis, the union president, calls a serious defeat.

"There is a triangle of political powers, economic powers and media owners, and nobody can tell who has the upper hand," he told Reuters, sitting under the dusty portraits of his predecessors. "It starts from the top, between the minister and the publisher, and it trickles down to the press office and the journalist. It's a pyramid."

One example, he said, was a TV studio set up in 2007 by the Agriculture Ministry to promote its activities. Although about 50 people, including political journalists, were hired, only a few had anything much to do, he said. "Many more than would be needed were hired and it was clear it was a perk," Trimis said.

A spokesman for the ministry said the studio never employed full-time staff and that it closed in 2009.

Reuters has identified at least nine press officers for financial institutions who also write in the media, which has largely failed to report the need for the nation's financial system to be reformed. The "double hatters" include Alexandros Kasimatis, a financial journalist at a Sunday newspaper, who also works as head of public relations for the Capital Markets Commission (CMC), a key financial regulator of listed companies. Reuters could find no articles by Kasimatis, who writes about companies but not the CMC, in which he declared his CMC role.

Kasimatis said: "It is not a conflict of interest. The Athens Journalists' Union allows members to work at press offices provided they don't cover who they work for. And I never write about the CMC."

In an email to Reuters, Costas Botopoulos, chairman of the CMC, said Kasimatis' two jobs were compatible.

Another journalist, who did not face direct conflicts of interest, was still nicknamed Ms Light-Water-Telephone by fellow journalists because she was said to work both for To Vima newspaper and three public utility companies. Ioanna Mandrou, who now works for Kathimerini and SKAI TV, confirmed she had worked in the press office of OTE, a state telecoms company, and briefly as a consultant to a state water company. She said she had not worked for an electricity company.

"In To Vima I was a reporter covering judicial affairs and that had nothing to do with my work in OTE. And when I say I 'worked' for OTE, I literally mean I worked," she said. "I can tell you that around 95 percent of the people employed in similar jobs do nothing."

She said it was common for politicians to arrange such jobs as favors.

Kedikoglou, the government spokesman, said members of the journalists' union "have the right to work in state companies and as press officers under certain conditions and providing that they do not have conflicting interests."

PROSPECTS FOR CHANGE

Over wine and kebabs on a cool October evening in 2004, then prime minister Costas Karamanlis declared war on powerful forces in Greek society.

"We will not let five pimps and five vested interests manipulate our political life," he told conservative lawmakers invited for dinner at Bairaktaris taverna in Athens, according to people present at the meeting. He did not specify who he was referring to.

Karamanlis' subsequent efforts to restrict access to state contracts by media owners were met with full-frontal attacks from the press. But in the end, defeat came from the European Commission: in 2005, it said Karamanlis' plans violated EU competition rules, forcing him to scrap them.

Since then, no significant attempt has been made to tackle the interweaving of interests. Politicians who clash with media owners risk a bad press, according to one senior Greek politician who spoke to Reuters about his experiences when he was a minister in a former government. In one instance, he said, a media owner asked him to help stop a judicial investigation into the media owner's affairs. And, in another, a newspaper publisher who owed a million euros to a state-owned company contacted him seeking a deal to escape the debt.

"He said ‘I will put an advert for the state-owned company every day in the paper to settle it.' He expected me to call the company and make a deal. I refused to intervene," said the ex-minister, who spoke on condition of anonymity. He said he was subsequently the subject of negative reports in the publisher's paper.

The persistence of potential conflicts of interest is reflected in the latest Corruption Perceptions Index compiled by the campaign group Transparency International (TI). It ranked Greece 94th - 14 places lower than in 2011 and the lowest ranking of any euro zone country - and the group's Greek branch concluded "there are significant structural issues with the executive, the media and the business sector."

Kedikoglou, the government spokesman, said ministers now want to "normalize" broadcasting. The government intends to reform the regime of "provisional licenses" and bring in "legislation that will permanently set the rules applying to the television market," he said.

Even without legislation, the landscape is changing. By 2013 Greece's economy will have dwindled by a quarter in five years. Financial pressures have intensified. Advertising has shrunk and a Reuters study of recently-published accounts shows the top 18 Athens-based media companies have declared debts totaling more than 2 billion euros.

At the same time the international lenders keeping Greece afloat want real reform in exchange for their billions. They are, for example, demanding that trustees appointed by the troika sit on bank boards and have the final say in approving major loans, including those to media organizations.

The newspapers Ethnos and To Vima reacted to that proposal with scathing editorials. "Greece is not a colony," wrote Psycharis in a front page article in To Vima. "I address those who think that what the Third Reich failed to do will now be achieved by Europe's money peddlers."

For Greece, Oligarchs Remain Obstacle to Growth

Lavrentis Lavrentiadis embezzled money from a bank he controlled, prosecutors say.

Πηγή: New York Times
By RACHEL DONADIO and LIZ ALDERMAN
Dec 6 2012

ATHENS — A dynamic entrepreneur, Lavrentis Lavrentiadis seemed to represent a promising new era for Greece. He dazzled the country’s traditionally insular business world by spinning together a multibillion-dollar empire just a few years after inheriting a small family firm at 18. Seeking acceptance in elite circles, he gave lavishly to charities and cultivated ties to the leading political parties.

Lavrentis Lavrentiadis, who took control of Proton Bank in 2009, paid $65 million to avoid prosecution. Nonetheless, he and 26 others were charged with fraud and other counts in March.

But as Greece’s economy soured in recent years, his fortunes sagged and he began embezzling money from a bank he controlled, prosecutors say. With charges looming, it looked like his rapid rise would be followed by an equally precipitous fall. Thanks to a law passed quietly by the Greek Parliament, however, he avoided prosecution, at least for now, simply by paying the money back.

Now 40, Mr. Lavrentiadis is back in the spotlight as one of the names on the so-called Lagarde list of more than 2,000 Greeks said to have accounts in a Geneva branch of the bank HSBC and who are suspected of tax evasion. Given to Greek officials two years ago by Christine Lagarde, then the French finance minister and now head of the International Monetary Fund, the list was expected to cast a damning light on the shady practices of the rich. Instead, it was swept under the rug, and now two former finance ministers and Greece’s top tax officials are under investigation for having failed to act.

Greece’s economic troubles are often blamed on a public sector packed full of redundant workers, a lavish pension system and uncompetitive industries hampered by overpaid workers with lifetime employment guarantees. Often overlooked, however, is the role played by a handful of wealthy families, politicians and the news media — often owned by the magnates — that make up the Greek power structure.

In a country crushed by years of austerity and 25 percent unemployment, average Greeks are growing increasingly resentful of an oligarchy that, critics say, presides over an opaque, closed economy that is at the root of many of the country’s problems and operates with virtual impunity. Several dozen powerful families control critical sectors, including banking, shipping and construction, and can usually count on the political class to look out for their interests, sometimes by passing legislation tailored to their specific needs.

The result, analysts say, is a lack of competition that undermines the economy by allowing the magnates to run cartels and enrich themselves through crony capitalism. “That makes it rational for them to form a close, incestuous relationship with politicians and the media, which is then highly vulnerable to corruption,” said Kevin Featherstone, a professor of European Politics at the London School of Economics.

This week the anticorruption watchdog Transparency International ranked Greece as the most corrupt nation in Europe, behind former Soviet states like Bulgaria, Romania and Slovakia. Under the pressure of the financial crisis, Greece is being pressed by Germany and its international lenders to make fundamental changes to its economic system in exchange for the money it needs to avoid bankruptcy.

But it remains an open question whether Greece’s leaders will be able to engineer such a transformation. In the past year, despite numerous promises to increase transparency, the country actually dropped 14 places from the previous corruption survey.

Mr. Lavrentiadis is still facing a host of accusations stemming from hundreds of millions of dollars in loans made by his Proton bank to dormant companies — sometimes, investigators say, ordering an employee to withdraw the money in bags of cash. But with Greece scrambling to complete a critical bank recapitalization and restructuring, his case is emblematic of a larger battle between Greece’s famously weak institutions and fledgling regulatory structures against these entrenched interests.

Many say that the system has to change in order for Greece to emerge from the crisis. “Keeping the status quo will simply prolong the disaster in Greece,” Mr. Featherstone said. While the case of Mr. Lavrentiadis suggests that the status quo is at least under scrutiny, he added, “It’s not under sufficient attack.”

In a nearly two-hour interview, Mr. Lavrentiadis denied accusations of wrongdoing and said that he held “a few accounts” at HSBC in Geneva that totaled only about $65,000, all of it legitimate, taxed income. He also sidestepped questions about his political ties and declined to comment on any details of the continuing investigation into Proton Bank.

Sitting in the office of his criminal lawyer last month, relaxed, smiling and dressed in a crisp blue suit and red-and-blue tie, Mr. Lavrentiadis said he found it puzzling that he had been singled out in reports about the Lagarde list when other powerful figures appeared to evade scrutiny.

“My question is, ‘Why me?’” he said. “I’m the scapegoat for everything.”

In the interview, Mr. Lavrentiadis depicted himself as an outsider and upstart, an entrepreneur in a small country dominated by old families who frown on newcomers. “I am not from a third-generation aristocratic family,” he said repeatedly.

Indeed, by some lights, Mr. Lavrentiadis fell in part because he rose too quickly and then failed to secure enough of the right friends to protect him, a perception he did not dispute.

“Why me, something that is clean, and why not something that has bigger problems?” he said. Pressed on who might be responsible for his troubles, he smiled enigmatically. “I could tell you thousands of names,” he said, “but it’s not my style.”

Mr. Lavrentiadis’s mettle was forged early, when he took the reins of his family’s chemical supply firm, Neochimiki, in 1990, after the death of his father. Bright and charming, and stricken with rheumatoid arthritis, he quickly enlarged the company and stormed into the Greek business world in 2003, when he listed the company on the Athens Stock Exchange. In 2008, the Carlyle Group, one of Wall Street’s largest asset management firms, paid more than $970 million for a stake in Neochimiki.

Over the next four years, Mr. Lavrentiadis built an empire that included holdings in pharmaceuticals, banks, a soccer team and works of art. He also took stakes in print and electronic news media outlets, following a pattern in which magnates own virtually every nongovernmental news media outlet in the country. But the veneer began to crack soon after the financial crisis hit. Carlyle lost more than $65 million on Neochimiki and accused Mr. Lavrentiadis of overstating its financial health. Cash was bleeding from a range of other business holdings.

In December 2009, four months before Greece sought a foreign bailout, Mr. Lavrentiadis bought a controlling stake in Proton Bank, which had expanded rapidly after acquiring a small bank called Omega in 2005. Omega’s board members included Mr. Lavrentiadis; the father-in-law at the time of Evangelos Venizelos, now the Socialist Party leader; and a brother of a former prime minister, George Papandreou.

Regulators now charge that from the moment Mr. Lavrentiadis took over Proton, he began looting it to prop up his failing businesses and those of a network of what appear to be shell companies. In 2010 alone, a total of $925 million — more than 40 percent of Proton’s commercial loans — were made with virtually no credit checks to his firms or to shell companies he had sold to associates, according to an audit by Greece’s central bank, first reported by Reuters.

His problems burst into the public realm in mid-2011, when Greek financial prosecutors charged him with embezzling the $65 million, following investigations into suspected money laundering.

Several months earlier, however, lawmakers had quietly passed a law that allowed suspected wrongdoers to avoid prosecution if they repaid the money they were accused of stealing in certain crimes. The idea, legislators said, was to speed resolution of cases in Greece’s notoriously slow courts. Mr. Lavrentiadis quickly paid back the $65 million to Proton and claimed immunity.

Then in March, a financial prosecutor charged him and 26 others with fraud, embezzlement, forming a criminal gang, money laundering and breach of faith stemming from loans believe to have been issued by Proton Bank. The $65 million repaid by Mr. Lavrentiadis in a bid to secure immunity is regarded by prosecutors as only a part of the more than $915 million in bad loans that prosecutors say Proton floated to dormant companies.

In the interview, Mr. Lavrentiadis confirmed that he had returned the $65 million but declined to say under what circumstances. He dismissed the Bank of Greece report as not “objective,” and said prosecutors had not yet called him for questioning or detailed the charges against him personally, beyond those against the 27 as a group. “I trust Greek justice,” he said.

Despite the fraud accusations against him, Mr. Lavrentiadis was still the beneficiary of questionable government actions. In July 2011, Mr. Venizelos, then the finance minister, authorized a $130 million deposit of government money to Proton for a single day, he says to avoid a calamitous collapse. The action was approved by the Greek central bank but was in defiance of a ruling by Greece’s General Accounting Office that it was illegal. The $130 million, plus interest, was returned to the government, Mr. Venizelos said in written answers to a list of questions.

“It was absolutely necessary to preserve Proton — not Lavrentiadis — in order to save huge amounts of public money,” added Mr. Venizelos, who resigned as finance minister in March. A month after the $130 million transfer, Mr. Venizelos was co-writer of a law that retroactively granted the finance minister full power to bail out banks with public money, regardless of the recommendations of other state institutions.

Mr. Venizelos said the law was necessary because “Greece had not had a clear legislative framework that could allow it to handle public deposits in crisis situations.” But legal experts said it was part of a broader pattern in Greece where actions by influential figures are later smoothed over with new legislation that eliminates any questions of illegality.

Mr. Lavrentiadis declined to comment on his ties with Mr. Venizelos, beyond saying, “I never asked a favor.”

In October 2011, Proton was nationalized. “I was shocked,” Mr. Lavrentiadis said, adding that he did not believe the bank’s finances merited the move. In March, he challenged the decision in the Supreme Court and is awaiting a ruling.

Asked if the Proton case was evidence of a regulatory system that was working or one that had failed, Mr. Lavrentiadis smiled. “It’s a regulated market without rules,” he said of Greece. “You can interpret it however it’s to your benefit.”

Greece unable to collect €12.6bn fines due to lack of staff

Greece's tax collection mechanism has only managed to take in €630m

Πηγή: The Telegraph
By Andrew Trotman
July 6 2012

The figure amounts to 6.2pc of the debt-stricken country's GDP,Ekathimerini reported, citing data posted on the website of the Finance Ministry’s General Secretariat of Information Systems.

The report comes as Prime Minister Antonis Samaras today presents his economic plans for a country mired in a fifth year of recession despite two international bailouts and a raft of reforms.

As Greece struggles with an unemployment rate of 22.6pc, the country's tax collection mechanism has only managed to take in €630m - 4.77pc of the total €13.2bn fines - due to being understaffed and the absence of electronic applications.

The court orders came about after some taxpayers disputed the fines imposed by the mechanism.

There are currently more than 180,000 outstanding tax cases in the Greek courts. But while Athens had intended to have 50pc of the pending cases heard by last month and 80pc by the end of December, ministry data indicate that only 2.1pc cases made it to court in the first half of the year, Ekathimerini claimed.

Greece is keen to bolster its finances as was forced to take a €130bn bailout package, and is expected to tap the ESM and EFSF emergency funds to help its banks.

As a result, Mr Samaras is today set to announce an acceleration of Greece's privatisation drive, while simultaneously promising the population that more redundancies and pay cuts are off the table.

When privatisations of ports, airports, former Olympic sites and utilities began in 2010, hopes were that they would raise €50bn, but now the government expects just €15bn by 2015.

On Thursday, Pasok leader Evangelos Venizelos, who is part of the ruling coalition, called for a three-year extension to the bailout programme on the same day that Mr Samaras met with visiting EU-IMF debt inspectors.

Greece's new finance minister, Yannis Stournaras, also admitted that the country is "off-track" to meet the conditions of its bailout agreements.

The country will run out of cash within weeks if it fails to secure the next €31.5bn instalment of bailout funds.

Greek rhetoric turns into battle of wills

Πηγή: FT
By Kerin Hope and Peter Spiegel

Feb 15 2012

The battle of wills between Athens and its eurozone lenders intensified on Wednesday, with Greece’s finance minister accusing “forces in Europe” of pushing his country out of the euro while his German counterpart suggested postponing Greek elections and installing a new government without political parties.

The tongue-lashing by Evangelos Venizelos, who is expected to stand in April elections as leader of the centre-left Pasok party, came as his government scrambled to meet escalating demands from international lenders that must be met if Athens is to avoid a full-scale default.

Greece took a step closer to meeting those demands when Antonis Samaras, head of the centre-right New Democracy party and the presumptive next prime minister, sent a two-page letter to European Union leaders vowing to implement the austerity measures included in the €130bn bail-out programme.

The letter, which came along with a similar missive from George Papandreou, the former prime minister who remains head of Pasok, was demanded by EU leaders as a condition of the deal. But the letter was received coolly in Brussels, particularly as Mr Samaras reiterated his stance that “modifications might be required” to the programme.

There were signs a group of triple A-rated governments, including Germany, Finland and the Netherlands, were hardening their stance towards Athens. During a conference call among eurozone finance minsters, the three countries suggested they may want additional letters from other smaller Greek parties and openly discussed the possibility of postponing Greek elections.

Ahead of the call, Wolfgang Schäuble, the German finance minister, said in a radio interview Greece might delay its polls and install a technocratic government that does not include politicians like Mr Venizelos and Mr Samaras, similar to the model currently in place in Italy.

Karolos Papoulias, the Greek president, fired back during a visit to military chiefs at the defence ministry: “We are all obliged to work hard to get through this crisis, but we cannot accept insults from Mr Schäuble. Who is Mr Schäuble to insult Greece?

“Who are these Dutchmen, who are these Finns? We have always defended not only the freedom of our own country, but the freedom of Europe,” Mr Papoulias added.

Further increasing the pressure on Athens, eurozone leaders were preparing to move forward on a debt restructuring for private holders of Greek bonds without immediately approving the full €130bn bail-out. The move would continue to starve the Greek government of funds even as Greece’s private creditors agreed a separate deal.

According to a timetable obtained by the Financial Times, eurozone parliaments would be asked to approve €93.5bn in aid to begin the debt restructuring in a matter of days, but deliberate remaining funds for the Greek government in early March.

“We continue to work under the assumptions of the October programme with the clear intent to help secure financial and economic viability of Greece,” said a senior Dutch official. “But time is running out and we insist that the Greek political leaders help us help them.”

A Greek finance ministry official said Athens had agreed to other demands which lenders want ahead of a meeting of eurozone finance ministers Monday, including €325m of additional spending cuts, which were made primarily in the defence and local government budgets.

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.

Update: Euro zone loses patience with Greece, says no rescue without reforms

Πηγή: yahoonews
By Reuters
Feb 5 2012

BRUSSELS - Euro zone finance ministers told Greece on Saturday it could not go ahead with an agreed deal to restructure privately-held debt until it guaranteed it would implement reforms needed to secure a second financing package from the euro zone and the IMF.

Euro zone ministers had hoped to meet on Monday to finalise the second Greek bailout, which has to be in place by mid-March if Athens is to avoid a chaotic default. But the meeting was postponed because of Greek reluctance to commit to reforms.

Instead, the ministers held a conference call on Saturday to take stock of progress on the second financing package, which euro zone leaders set at 130 billion euros back in October.

"There was a very clear message that was conveyed from all participants of the teleconference ... to the Greeks that enough is enough," one euro zone official said. "There is a great sense of frustration that they are dragging their feet.

"They should get their act together and start talking honestly, decisively and speedily with the Troika on the aspects of the programme that remain to be finalised - on fiscal and labour market reforms," the official said.

The Troika are the representatives of the European Commission, the European Central Bank and the International Monetary Fund, who have prepared a Greek debt sustainability analysis on which the second financing programme will be based.

"The main issue is the lack of reform, or prior action, in Greece," a second euro zone official said.

Euro zone ministers were also dissatisfied with Greek Finance Minister Evangelos Venizelos because they believed the minister was paying more attention to his position within his party ahead of the April elections, than to talks about reforms.

"There is a great sense of frustration with Minister Venizelos, who is very hard to get hold of because he is very busy campaigning for the leadership of (the Greek party) PASOK, so he is not available to meet with Troika members," the first official said.

"He is preparing his own political future, rather than the future of his country. People are seriously disgruntled about that and have conveyed this very clearly to him this afternoon," the official said.

"There is an increasing sense of frustration that why should we honour our part of the bargain, which we have in the past, while Greece does not seem to care that much, and has not delivered their part of the bargain," the official said.

ATHENS ADMITS TO TOUGH TALKS

In Athens, Venizelos admitted to a growing sense of impatience with the Greeks.

"There is great impatience and great pressure not only from the three institutions that make up the troika but also from euro zone member states," Venizelos said after what he called a "very difficult" conference call with euro zone counterparts.

"The moment is very crucial. Everything should be concluded by tomorrow night."

Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, voiced the possibility of default.

"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 in advance copy of comments to news weekly Der Spiegel.

Greece has secured a debt restructuring deal with private creditors to halve the value of Greek debt in nominal terms and in exchange receive new, 30 year bonds with an average coupon below 4 percent, officials said.

The restructuring is to help make Greek debt sustainable by cutting it to 120 percent of GDP in 2020 from 160 percent now.

But euro zone governments will only agree to bolster the debt restructuring, called private sector involvement (PSI), with 30 billion euros and further finance the Greek government through 2014 if Athens presses on with lagging reforms.

"The message to Greece now is very clear. The PSI as it stands now is broadly OK but we will not allow you to go ahead with the PSI unless we have guarantees that the rest of the reform to make the whole situation sustainable in the long run will be delivered," the first official said.

"We don't want to give them the PSI, because once we do, we surrender our leverage to obtain any more concrete commitments in terms of policy," the official said. "Before we go ahead with the PSI ... we want to have assurances that Greece is actually capable of implementing the second programme."

Debt restructuring is likely to hit Greek banks harder than others, because they hold a lot of Greek government bonds.

Some EU officials said on Friday that euro zone governments may now have to contribute closer to 145 billion euros than the originally envisaged 130 billion to the second financing package to help recapitalise Greek banks after the bond swap.

But there is strong resistance to that idea from several countries, including paymaster Germany.

"It is highly unlikely that the overall envelope will increase," the second official said.

"In some capitals there is absolutely no appetite whatsoever to reopen the size of the financing package," the first official said.

WHO PAYS?

Investors and some EU officials have suggested that any additional money needed to make Greek debt sustainable could come from the ECB, which holds a portfolio of around 40-50 billion euros worth of Greek paper.

The issue was not discussed at the Saturday call, however.

"This is off the table now. Everybody is saying now that before we can start discussing what the public sector can do, should do or may do, let's talk to the Greeks about what they are prepared to do," the first official said.

"If the Greeks don't start delivering, the question of Official Sector Involvement (OSI) is superfluous."

International lenders to Greece would like to see a lower minimum wage, the removal of the 13th and 14th month "bonus" salary and the liberalisation of labour markets - issues that are politically difficult for Greek parties before the April elections.

"We hope that over the next 12-24-48 hours they will get their act together and ... discuss these matters very urgently with the Troika," the first official said.

Euro zone officials said that Greece, betting that the euro zone would not allow a disorderly default because of the possible repercussions across the 17-country single currency bloc, was playing a dangerous game.

"They think, that we think that the unthinkable cannot be thought. But they better think again," the first official said.

The euro zone expects Greek politicians to come up with a consensus on reforms by Monday, but a letter committing to reforms from political parties may not be enough at this stage, the official said.

"We don't care so much about signed letters by now, we want a clear timetable for legislative action, we would expect them to put it in legislation and pass it possibly before the end of February or in early March - that is the best guarantee - better than any signature," the first official said.

Editor's note: According to the Greek newspaper "Proto Thema" :

"Unrealistic featured eurogroup chief and prime minister of the Grand Duchy of Luxembourg today's Reuters report citing the unnamed sources that the top of theeurogroup, argued that the Finance Minister Mr. Evangelos Venizelos deals more with the claim of leadership of PASOK despite negotiations with the troika.
The announcement from the press office of the Minister of Finance states inter alia that Mr.Venizelos was contacted by Jean-Claude Juncker, who asked him to state clearly that thepublication of Reuters has nothing to do with reality.

"This anonymous publication seems ridiculous, if not suspect anyone with a basic knowledge of the daily program of the Minister of Finance and his team, who make avaliant effort in 24 hours to reach an agreement with the troika and the IIF» answers thepress office of the Ministry of Finance.

Official Denial in Greece Regarding "Indefinite Liquidity and Banking Stability"; Is a Worthless Guarantee Twice as Good When Doubled?

Πηγή: globaleconomicanalysis
By Mike Shedlock / Mish
Nov 21 2011

Things are really humming along in Greece, complete with an official denial of instability in the Greek banking system.

Please consider Government Doubles Bank Guarantees

State guarantees to Greek commercial banks are to double from 30 billion to 60 billion euros in order to secure liquidity in the market, Finance Minister Evangelos Venizelos told lawmakers in Athens on Monday.

Addressing Parliament’s Financial Affairs Committee, Venizelos said that ensuring the market’s cash flow continues will secure the liquidity of the banking system and safeguard bank deposits.

“The Greek banking system is guaranteed with indefinite liquidity and there is no issue with the stability of the system. This is the case for all eurozone countries,” Venizelos said."Official Denial" is Ominous


The concept of official denial comes from British television sitcom, Yes, Minister.

“The first rule of politics,” Sir Humphrey, the wily civil servant in the show, insists is: “never believe anything until it is officially denied.”

In case you missed it please see Eurozone Breakup Logistics (Never Believe Anything Until It's Officially Denied)

The statement by Venizelos "there is no issue with the stability of the system" is an ominous sign. So is the doubling of state "guarantees". The sane thing to do in Greece is immediately pull all your funds from Greek Banks.

For further discussion, please see History Suggests Greece Will Freeze Bank Deposits, Exit Euro by Christmas; Spain and Portugal to Follow Next Year; What's the Rational Thing to Do?

That is not a prediction, it is a statement saying "do not take any chances".

Greece Eyes EUR60bn In Uncollected Taxes

Πηγή: Lowtax

By Ulrika Lomas

Nov 21 2011

Presenting the European Union task force’s first quarterly report on debt-ridden Greece, head of the force Horst Reichenbach underscored the importance of addressing the sensitive and urgent issue of tax collection and evasion, noting that an estimated EUR60bn (USD81bn) in uncollected taxes are still outstanding.

Set up in August by European Commission President Jose Manuel Barroso, tasked with supporting Greece in implementing its painful economic reform measures, the special force maintained in its report that between EUR6bn and EUR8bn in outstanding taxes are considered to be immediately collectable, thus enabling the country to significantly reduce its widening fiscal deficit.

According to Reichenbach, around EUR30bn in uncollected levies are currently tied up in lengthy ongoing legal battles.

Underscoring the importance of strengthening the country’s tax dispute resolution mechanism, together with improving the Greek tax authorities’ technical ability to clamp down on rampant tax evasion, Reichenbach announced that work is currently under way to resolve the issue of undeclared deposits held by Greek investors in Switzerland. Here, Reichenbach underlined the importance of Greece successfully concluding a bilateral tax agreement with Switzerland.

Greece and Switzerland have reportedly initiated talks recently on concluding such a deal to enable the government to swiftly recover vital lost tax revenues. Greek wealth in Switzerland is said to vary vastly between tens of billions of euros and over EUR100bn.

Determined to recoup evaded taxes to help avert the imminent threat of bankruptcy, in its latest ultimatum the Greek finance ministry recently urged individuals alleged to have evaded taxes in excess of EUR150,000 to declare their position to the country’s tax authorities and to settle their accounts. Failure to do so within the specified timeframe would lead to publication of individual names, the ministry warned.

Back in October, Greek Finance Minister Evangelos Venizelos announced plans to publish the names of around 15,000 individuals, alleged to have evaded taxes in Greece.

Describing tax evasion as a "national crime", which has resulted in a shortfall in tax revenues for the state of around EUR37bn, Venizelos confirmed at the time that it has now been possible for the state to successfully track down individuals said to have evaded over EUR1m in tax.

Revealing that Greek tax officials in collaboration with private companies would now endeavour to recoup the money, the minister also emphasized that a new task force has been set up charged with auditing the thousand biggest companies in Greece in terms of turnover.

Europe urges Greece to do more, delays bailout funds

Holding a Greek flag, Hellenic Postbank employees protest in front of the Finance Ministry in central Athens against the privatization of the company, during their 24-hours strike on May 30, 2011. Europe delayed the release of bailout funds to Greece on Tuesday, demanding Athens make more sacrifices and warning banks may have to share more of the pain in the crisis threatening the eurozone.

Πηγή: The Vancouver Sun
By AFP
Oct 4 2011


LUXEMBOURG — Europe delayed the release of bailout funds to Greece on Tuesday, demanding Athens make more sacrifices and warning banks may have to share more of the pain in the crisis threatening the eurozone.

Stock markets tumbled after European finance ministers said Greece could wait until early November to receive 8.0 billion euros, the next installment of an EU-IMF 110-billion-euro bailout, held up since last month.

There was also mounting concern that the eurozone debt crisis may claim its first bank, with shares in Dexia plunging 37 per cent on concerns it may collapse or be broken up.

Luxembourg premier Jean-Claude Juncker, who heads the group of eurozone finance ministers, called on Greece to agree "additional measures" with international auditors "to close any remaining gaps for 2013 and 2014."

Juncker also said a rescue fund to be used for a second Greek bailout, that was agreed in July but is now frozen with auditors demanding a three-year rewrite of Athens' spending plans, will be made more "efficient."

But he said ministers were not considering an increase in the size of the 440-billion-euro European Financial Stability Facility, as suggested by the United States and others.

Swedish Finance Minister Anders Borg warned that Greece risks missing budget targets demanded by creditors and said measures need to be taken to protect Europe, including a possible restructuring of banks.

"It is quite clear that there is an evident risk that the Greek program is off track," Borg told reporters. "We have to rethink how we can move faster forward towards backstops and firewalls to handle the situation."

The delay in unblocking the eight billion euros, originally set for release in September, prompted Greek Finance Minister Evengelos Venizelos to suggest Athens was being made a "scapegoat" for wider eurozone debt troubles.

Venizelos however was sent back to the drawing board to secure creditors' agreement on a new massive overhaul of the rapidly shrinking Greek economy, and enable a final decision on the loan funding before the end of October.

A decision on the aid to Greece is expected before an EU summit on Oct. 17-18.

"I thought that we would need to take a decision because Greece had pressing needs, but we are told that it is for the beginning of November," said Belgian Finance Minister Didier Reynders.

He said the ministers are waiting for a report from the "troika" of auditors in Greece — the European Commission, the European Central Bank and the International Monetary Fund.

Global pressure is now on to resolve the problems before G20 leaders meet in Cannes, France, on Nov. 3-4, after a warm-up gathering of finance ministers in Paris on Oct.14-15.

There was also bad news for Greece's private sector creditors whom Juncker warned to expect greater losses on their Greek sovereign debt holdings than the 21 per cent haircut already agreed in July.

The private sector agreed to participate in a second bailout of Greece, with the eurozone and IMF providing 109 billion euros in new funds.

"As far as (private sector involvement) is concerned, we have to take into account that we have experienced changes since the decision we have taken on July 21," the Luxembourg premier said.

This would be bad news for European banks, many of which have extensive holdings of Greek sovereign debt, and some governments are worrying about how much they will have to give their banks in the event of a Greek default.

Shares in Dexia plunged by 37 per cent in Tuesday trading when the bank's directors indicated it may need major restructuring, prompting France and Belgium to pledge to guarantee its debts.

"Dexia's problems stress the point that for eurozone leaders the Greek crisis is less about Greece and more about the potential for it to spark a much more widespread banking and economic disaster," said Rabobank analyst Jane Foley.

Stock markets closed down in Asia and tumbled as they opened across Europe on Tuesday morning, from falls of 3.40 per cent in Hong Kong and 1.05 per cent in Tokyo and drops of 3.5 per cent in Frankfurt and 2.6 per cent in London.

The euro struck a near nine-month low against the dollar and 10-year nadir versus the yen.

Japanese Finance Minister Jun Azumi called for the swift and transparent passage of the new Greek rescue package, to reassure markets and help stem the yen's recent surge against the euro.

"The sense of uncertainty cannot be wiped out unless (euro member states) clearly show the market they are swiftly implementing the assistance scheme for Greece."

Meanwhile Klaus Regling, the head of the EFSF, will explore further ideas on how to ramp up the effectiveness of the fund, after broad discussions about possible "leveraging" to multiply its firepower.

The United States and other major economies want money to keep flowing into Athens, to avoid a default they fear could trigger global recession.

Greek finance minister tries to quash talk of ‘disorderly default’

Orderly default, disorderly default or sticking to the austerity programme are Greece's options, the finance minister allegedly said (Nikita Avvakumov)

Πηγή: EUobserver
BY LEIGH PHILLIPS

Sep. 23 2011

The Greek finance minister on Friday attempted to quash talk of a “disorderly default” as the drumbeat of rumours of the country abandoning its effort to service its debts gathers pace.

Two papers reported that the minister, Evangelos Venizelos, had privately told MPs that the country was faced with three possible scenarios to exit its crisis, with one potential outcome a disorderly default.

He allegedly said that the other two scenarios would be an orderly default involving a 50 percent haircut for holders of government bonds, or sticking to the current austerity measures in the hope of winning a second international bail-out.

On Friday, Venizelos put out a statement denying he had made such comments and said the government was committed to adhering to its internationally agreed debt-reduction targets.

“Greece has taken the final decision to do everything in its power in order for all the European Council decisions of July 21, vital both for the Euro Area and for Greece itself, to be implemented fully and on time,” he said.

“All other discussions, rumors, comments and scenarios that distract attention from this central goal and political obligation of Greece and of all the other euro-area member states and European institutions, do not offer good service towards our common European case.

The minister’s comments came as Deutsche Bank warned that EU financial institutions may have to swallow larger haircuts than previously agreed. In July, the Institute of International Finance brokered an agreement for banks to take a 21 percent cut on Greek bonds maturing in advance of 2020.

However, Deutsche Bank’s Charlotte Jones said on Friday that the private sector will likely have to accept losses of at least 25 percent, as the July agreement employed a government bond yield of nine percent as a baseline, but bonds have jumped sharply since the summer.

And Silvio Peruzzo, the Europe economist with Royal Bank of Scotland, told American news outlet CNBC that the risk of default had increased. “We think that at this stage, the risk of a default is clearly running very high moving towards the end of the year,” he said.

The increased talk of default at the end of the week came after the head of the Dutch central bank, Klaas Knot, on Thursday admitted that a Greek default scenario is being considered.

Business newspaper Het Financieele Dagblad asked the banker directly whether such an outcome is on the table. "It is one of the scenarios. I'm not saying that Greece will not go bankrupt," he said.

The same day, EU economy chief Olli Rehn warned against an “uncontrolled default”, leaving room for speculation that plans for a controlled default were being considered as the Dutch central bank chief had said.

"An uncontrolled default or exit of Greece from the eurozone would cause enormous economic and social damage, not only to Greece but to the European Union,” Rehn said.

Shares across Europe continued their decline on the back of the discussion of losses from sovereign debt exposure and the euro traded close to an eight-month low against the dollar.

Moody’s, the credit rating agency, downgraded the creditworthiness of eight Greek banks, and warned that further downgrades are on the cards. The move hit Greek stocks, which slid 4.3 percent mid-afternoon, with bank shares plunging more than eight percent.

Greece seeks to avoid 'humiliation' with more cuts

IMF representative Bob Traa speaks during a conference in Athens, Monday, Sept. 19, 2011. Greece's finance minister promised Monday to stick with his plan for the country to post a primary surplus in 2012, hours before he was to hold an emergency teleconference with debt inspectors.

Πηγή: AP

By DEREK GATOPOULOS

Sep. 19 2011

VOULIAGMENI, Greece (AP) -- Greece will try to avoid international "blackmail and humiliation" by speeding up reforms and civil-service staff cuts, the finance minister said Monday, hours before holding an emergency teleconference with creditors.

Greece's international bailout creditors stepped up the pressure at the start of a crucial week in the nearly two-year debt crisis, urging the government to do more to heal its finances. Global markets were skeptical, however, and stocks fell sharply on fears Athens will default on its mountain of debt.

Out of patience with the Socialist government's delays on promised reforms, Greece's partners and creditors are threatening to cut the cash lifeline without which the country would go bankrupt in less than a month.

Athens is struggling with a deepening recession that is eating away at the impact of its austerity measures while also causing unemployment and public anger to grow.

International debt inspectors will talk to finance chief Evangelos Venizelos around 1600 GMT.

"We expect the Greek authorities to explain, in particular, how they intend to close the fiscal gaps in 2011 and 2012 and how they plan to proceed with the structural reforms and privatizations," said Amadeu Altafaj Tardio, a spokesman for the European Commission.

Initially, Athens said the teleconference would be followed by a ministerial meeting under Prime Minister George Papandreou, who canceled a scheduled trip to the U.S. on Saturday. But government spokesman Elias Mossialos later said in an interview with Real FM radio that the meeting could be moved to another day depending on the course of separate talks between Venizelos and his fellow ministers.

Ahead of the discussions, Venizelos said the government still seeks to generate euro3 billion ($4.1 billion) more revenues next year than it spends, before counting the cost of interest on existing debts.

Greece's economy is expected to contract by about 5.5 percent this year - more than the 3.5 percent earlier assumed - and a further 2.5 percent in 2012, according to new government and IMF estimates.

"The country cannot go forward without the true implementation of major structural reforms - we have delayed them," Venizelos said at a conference south of Athens, adding that achieving the 2012 target was vital.

The government still must live up to its commitment to lower the 2011 budget deficit goal to 7.6 percent of gross domestic product.

When it became obvious earlier this month that there was a more than euro2 billion ($2.75 billion) shortfall in the budget, Greece's creditors threatened to withhold the sixth installment of a euro110 billion rescue package agreed upon in May 2010.

Without the installment, worth euro8 billion, Greece faces defaulting on its debts by mid-October.

A review by officials from the International Monetary Fund, the European Central Bank and the European Commission, collectively known as the 'troika,' was suspended earlier this month amid talk of missed targets.

The government hurriedly announced an extra two-year property tax - payable through electricity bills to ensure its collection - to compensate for the shortfall.

But the news was greeted with an outcry from a public already reeling from salary cuts and the recession. State electricity company unionists also threatened to refuse to collect the taxes, and to prevent those who don't pay having their power supply cut off.

Yiannis Panagopoulos, head of Greece's largest trade union, GSEE, said further revenue-boosting levies would be "unfair and imbalanced."

"Our country has recently been undergoing a weekend nightmare: every weekend there is the threat of bankruptcy, whispers of a coming bankruptcy, we hear again and again that everything is about to collapse," he said. "What our creditors are asking of the country is unthinkable. ... A country is its people, and above all it is they that must be saved."

A Communist labor union has called a protest against the tax outside parliament Wednesday.

Venizelos said Sunday night that the backlash led to skepticism among Greece's creditors about whether the government would manage to raise the projected revenue.

While technical staff from the troika have been back in Athens for about a week, trying to figure out whether the recently announced measures will be enough to meet the targets, senior debt inspectors have stayed away until progress is made.

Altafaj Tardio said that, depending on what Venizelos says at the teleconference, the troika "will decide on the resumption of the review mission."

IMF representative Bob Traa urged the government to speed up structural reforms and avoid further emergency taxes, arguing that Athens should give up the "taboo" of firing public servants.

"I have compared Greece to a Mercedes that can go 120 kilometers per hour but is only going 40 because it has so much sludge in the engine," Traa told the conference.

He said Greece needed to speed up its reforms in tax collection and reducing the size of the overmanned public sector.

In an interview, Traa said Greece needed to implement key commitments including plans to slash 150,000 public sector positions by 2015.

"If you can do it (staff cuts) up front, you get over it much more quickly. Whether society can support that is a different issue," Traa told the AP. "Our experience is that ... if you do things gradually that may induce the public getting very tired. Adjustment fatigue is something that happens in every country."

Euro Zone Presses Greece on Cutbacks

Greece's Finance Minister Evangelos Venizelos, right, and Greek central bank chief George Provopoulos at the Economic and Financial Affairs Council in Wroclaw, Poland, over the weekend.

Πηγή: WSJ
By COSTAS PARIS And ALKMAN GRANITSAS

SEPTEMBER 18, 2011

ATHENS—Greece's government was meeting over the weekend after receiving fresh warnings from its euro-zone partners that future aid will be withheld unless it can produce conclusive steps to bring its unruly budget deficit into line.

Greece's Finance Minister Evangelos Venizelos, right, and Greek central bank chief George Provopoulos at the Economic and Financial Affairs Council in Wroclaw, Poland, over the weekend.

Prime Minister George Papandreou aborted a planned trip to New York and Washington this week to preside over emergency meetings in Athens to identify new savings that will convince other euro-zone governments that targets can be met.

Senior Greek government officials say these new measures could include massive public-sector job cuts, steps that some government officials fear could trigger a new outburst of public protest and possibly new elections.

Pressure has been turned up on Greece after talks with visiting international inspectors were abruptly suspended earlier this month after it appeared the country would overshoot its budget deficit for this year. And without fresh aid, Greece will run out of money by mid-October.

At the weekend meeting of European finance ministers in Wroclaw, Poland that concluded Saturday, finance officials from other members of the 17-country euro zone warned that Greece may not receive the next €8 billion ($11.04 billion) tranche under its bailout agreement in October, according to senior Greek officials familiar with the matter.

With financial markets worrying of a possible Greek default, inspectors from the European Union, the European Central Bank and the International Monetary Fund have postponed a decision on whether to extend the next payment until next month.

German Finance Minister Wolfgang Schäuble revealed a harder line when saying in a German newspaper interview published Sunday that the tranche will not be paid unless Greece sticks to planned deficit reductions.

"This is why the Greeks must produce the numbers that show things are according to plan," Schäuble told the mass-circulation Bild am Sonntag. "The Greeks have to know whether they can shoulder the burden."

Recently the Greek government set a new property tax to close the budget gap. But measuring the impact of the tax will take time. Greece may now have to resort to immediate layoffs in the public sector, new indirect taxes and the closure of dozens of state-linked organizations.

"The euro zone has serious doubts that the property tax will be implemented or yield the desired results. So they have asked for measures with immediate effect," said a senior Greek government official with direct knowledge of the talks.

The next aid tranche was originally expected to be paid out in September, but will now be delayed until October and pending further Greek government measures.

"There is a climate of serious mistrust against Greece," said a second senior Greek government official. "The [next] tranche is up in the air and the situation is very difficult. We are running out of money."

In May 2010, Greece narrowly avoided default with the help of a €110 billion bailout from its euro-zone partners and the IMF. Under the terms of that loan, Greece receives quarterly disbursements of aid to cover its financing needs every three months.

A second bailout agreement worth €109 billion is now being debated in the parliaments of euro zone countries. That package also could hinge on Greece passing muster in coming talks with the EU, ECB and IMF—the so-called "troika." Greek Finance Minister Evangelos Venizelos is due to hold official talks with the troika of international inspectors via a teleconference call Monday. The troika will return "when Greece has completed the necessary work," said a spokesman for the European Commissioner for Economic and Monetary Affairs Olli Rehn.

Greece might have to consider retroactively—and with immediate effect—rescinding all public-sector hiring that took place in 2010 and 2011, said Greek officials familiar with the discussions.

That could affect some 25,000 public-sector workers—and possibly more, said one official. Greece has also been asked to consider raising taxes on tobacco, alcohol and luxury goods, while there is also pressure for Athens to step up plans to close or merge dozens of public-sector bodies.

As yet, no decisions on new measures have been taken, say government officials, adding that Greece is trying to negotiate with its euro zone partners about specifics.

The Greek government argues that some of the hiring done last year and in 2011, was previously agreed to with the country's creditors and that only about 10,000 public-sector workers—those hired above the agreed to limits—should be let go.

"New measures have not been decided, but consultations are ongoing," a Greek official said. "Many scenarios are being examined beyond layoffs."

The growing pressure on Greek households and businesses from increasing austerity measures has lifted political tensions in Athens, with another round of cutbacks likely to shift support away from the government. Leading opposition parties are pushing for elections that could disrupt the reform process.

"The only solution to today's deadlock is elections," Antonis Samaras, head of the conservative opposition New Democracy party said in a widely-reported speech in Thessaloniki.

Greece announces new property tax

Riot police stay next to a fire set by protesters during a demo in Thessaloniki on Saturday Sept. 10, 2011.

Πηγή: AP
By NICHOLAS PAPHITIS

Sep 11 2011

Thousands of angry Greeks, from unionists fed up with some 20 months of austerity to local soccer fans, have called a series of protests in the country's second-largest city, ahead of an annual speech on the economy by Prime Minister George Papandreou.

THESSALONIKI, Greece (AP) -- Greece's cash-strapped government said Sunday that it would impose a new property tax on top of existing austerity measures in order to combat a revenue shortfall.

The government also decided, in a symbolic move aimed at a public angry at politicians, to dock a month's pay from all elected central and local government officials.

Finance Minister Evangelos Venizelos said the tax will be levied over the next two years and will cost citizens an average of euro4 ($5.53) per square meter (10.76 sq. feet).

Debt-crippled Greece urgently needs to keep a program of cutbacks on track to secure the continued flow of international rescue loans - worth euro219 billion ($302.6 billion) - protecting it from catastrophic bankruptcy.

Over the past 20 months, the Socialist government has cut pensions and salaries while raising taxes and retirement ages. But its efforts to cut back while reviving a fast-contracting economy amid record unemployment have faltered, sparking new market distress.

Speaking after a three-hour cabinet meeting in Greece's second-largest city of Thessaloniki, Venizelos said the new property levy - in addition to public sector reforms announced last week - will make up for lagging revenues this year by providing more than euro2 billion ($2.76 billion), about 1 percent of annual gross domestic product.

Venizelos added that top Greek officials from the head of state to senior ministry executives will lose one month's pay.

"The levy and the reforms are enough for us to pull through, but that also depends on the response of Greek society," he said. "It will be sufficient for us to achieve our targets."

Venizelos added that, if the measures work, Greece can expect a 2012 budget deficit of euro17.1 billion, about 8 percent of GDP, higher than the previously predicted 7.6 percent.

He warned, however, that the economy was expected to shrink at an even faster pace than expected, contracting 5.3 percent in 2011.

On Saturday, Prime Minister George Papandreou, in a keynote speech on the economy in Thessaloniki, pledged to meet fiscal targets despite the economic slowdown.

As the prime minister spoke, riots raged on the streets outside during an anti-austerity protest by some 25,000 people. Police arrested nine suspected rioters, while nine officers and 10 demonstrators were injured.