GreeceWatch: Stalled cuts, demands, rage, bribes
We begin with two contrasting views of austerity, one from a veteran politician and the other from those most affected by its miseries.
The bgi news is the Troika’s new demands that Greece frontload most of the cuts demanded in the new package now being finalized in order to draw the next allotment of bailout cash. The Troika sees more misery coming next year, but the finance minister says it’ll all work out. The Men in Black got another hot reception in Athens, fleeing in haste from an angry crowd.
There’s yet another report that the Troika is pushing to hold back its report on Greece until after next month’s U.S. presidential election, apparently out of fear that bad news would throw the race in Romney’s favor.
There’s more bad news for labor, with hotels closing for the winter as tourism declines, while other companies are cutting staff and working hours.
Germany’s applying more pressure, this time pushing for more vigourous taxing of Greek shipping companies, and another Greek politician is busted for taking German bribes.
The vapidity of Greek politics
With begin with this from euronews, comments from former “socialist” Prime Minister George Papandreou, revealing the sheer emptiness of the rhetoric of the long-established parties:
Two stories reveal the bottomless despair of austerity
Contrast the decorous blandness of Papandreou with the emblematic agony of less-privileged Greeks [Papandreou, after all, is the son of a prime minsiser, born into the political elite].
The ultimate declaration of austerity’s brutal reality may be found in this first item, one of two from Ekathemerini:
A 50-year-old man set himself alight on Wednesday on the premises of a construction company near central Omonia Square that had formally employed him, but firefighters managed to extinguish the flames before he sustained any serious injuries.
The 50-year-old had attached cans of fuel to his body, according to sources, who said the company owed him unpaid wages.
And then there’s this, our second offering from Ekathemerini:
Dozens of angry Greek parents handed over their children to bewildered officials on Wednesday in a symbolic protest against the abolition of tax breaks for large families as part of cuts demanded by foreign lenders.
“Here you go, you can raise them,” Nikolaos Smoloktos, head of the group representing Greeks with three or more children in the town of Drama, northern Greece, told the tax director.
The parents held banners reading “Stop killing our families” in one hand and strollers in the other as they walked straight into the director’s office and pushed their children towards him to make their protest.
>snip<
“We are used to making sacrifices but this is too much,” Smoloktos, a father of four, told Reuters by telephone after the protesters left, taking their children with them.
“We just hope they’ll change their mind and vote against these horrible measures.”
Listen to Papandreou again, then ask: Who really speaks for Greece?
Troika demands a faster austerity
Once again, we’re wondering if the Troika isn’t intent of turning Greece into a bad example, a demonstration of just what will happen to countries who fail to follow the gospel of neoliberalism.
There’s little doubt that Greece suffered under decades of misrule, in which politics was treated as a machine for enabling a politics of greed and corruption, actively encouraged by, among other, corrupt German corporations and their endless bribes.
But one could say much the same of the United States, where corporations dominate government through the revolving door and the vast flood of corporate cash fueling a deeply corrupt electoral process.
Now the Troika is demanding that Greece frontload the grief of the latest round of cuts, a move certain to arouse yet more bitterness and rage.
From Ekathemerini:
The troika is demanding that Greece increase the amount of spending cuts it will make next year by more than 1 billion euros in order for the country’s lenders to approve the austerity package the government has put together.
Kathimerini understands the European Commission, European Central Bank and International Monetary Fund want to increase the frontloading of the measures because they believe the Greek economy will perform worse than forecast in the draft 2013 budget presented by Finance Minister Yannis Stournaras this week.
The government predicted that the recession will reach 3.8 percent of gross domestic product next year but the troika believes that the contraction is likely to be as high as 5 percent, Finance Ministry sources said.
This has prompted visiting inspectors to ask the Greek side to increase from 7.8 billion euros to as much as 9.2 billion the amount of cuts to be implemented next year. The total package is worth about 13.5 billion euros.
The troika thinks this will lead to Greece wiping out its primary deficit next year but not achieving a primary surplus of 1.1 percent of GDP, as forecast by Stournaras.
More from Keep Talking Greece:
If it’s true, this is, indeed, insane. According to Ta Nea newspaper, Greece’s lenders’ representatives want that almost the whole package of austerity measures will be implemented in 2013 and won’t be distributed more or less equally to 2013 and 2014.
>snip<
This demand comes at times when the Greek government plans to raise the issue of extension of implementation of the fiscal program for another two years, until 2016.
>snip<
“These demands are insane”, a senior source of Finance Ministry told Ta Nea.
“This requirement will not be accepted as it is outside the scope of the agreement of the political leaders. Moreover the Greek economic team does not believe that such an intensive austerity will benefit the economy. On the contrary, the country will plunge into even deeper recession. (TA NEA via in.gr)
I don’t know if this is ”outside the scope of the coalition government leaders agreement”. But Greeks and Troikans should better check the Second Bailout Agreement, PASOK and Nea Dimocratia signed in March 2012.
Troika sees tougher year ahead for Greece
The economic contraction, they say, will be worse than the government’s official prediction. Add in those frontloaded cuts, and it’s certain to be a year of grief for the hard-pressed Greeks.
From Renee Maltezou of Reuters:
The European Commission, European Central Bank and International Monetary Fund troika expect Greece’s economy to contract by 5 percent next year, more than the government’s 3.8 percent forecast, a senior finance ministry official said on Wednesday.
“There is disagreement on the macroeconomic scenario, we project a recession near 4 percent, they (troika) at 5 percent,” said the official who declined to be named.
He said both sides were still trying to find common ground on 2.5 billion euros worth of austerity measures to be applied next year.
Don’t worry, be happy, says the finance minister
Yep, everything will be worked out by Monday, and then the Euro Group finance ministers will cough up the cash.
From Agence France-Presse:
Greece expects to bridge a fiscal gap with international creditors by Monday to unblock access to billions of euros in badly-needed loans, Finance Minister Yannis Stournaras said on Wednesday.
Stournaras said an agreement would be reached by “Monday’s eurogroup,” a reference to a meeting of eurozone finance ministers inLuxembourg.
He acknowledged that the difference with creditors was still “quite big” but insisted that a deal could be reached with auditors from the European Union, the International Monetary Fund and the European Central Bank (EU-IMF-ECB).
Stournaras was positive the gap would be closed, saying: “They will come over to our views, we will go to theirs,” in remarks to reporters outside the prime minister’s office.
More from Helena Smith of The Guardian:
Emerging from talks with Greek prime minister Antonis Samaras, the finance minister admitted that the “gap” between Athens and its creditors was still far from being bridged. “It is quite big. There has to be a compromise,” he said.
But, in perhaps the first display of optimism this week, Stournaras said he also believed the negotiations would be concluded successfully by the time euro zone finance ministers meet on Monday. “[The talks] will close. They will come round to our views and we will go to theirs,” he told reporters this evening.
The economics professor said the government was doing its utmost to ensure that the debt-choked country took receipt of its next installment of aid “very quickly.” Greece’s coffers are almost at empty with officials saying reserves will dry up by mid-November. Finance ministry sources said ahead of the euro group meeting Stournaras would hold talks “every day” with visiting mission chiefs from the EU, ECB and IMF in a bid to seal the draconian €13.5bn package of spending cuts being demanded in return for further rescue funds.
But there’s still the potential for the slip twixt cup and lip, as Ekathemerinireports, via Neokosmos:
Greece is still hopeful it can conclude by the end of the week an agreement on the 13.5-billion-euro austerity package it is negotiating with the troika despite the fact that its lenders have raised objections to about 3.5 billion euros of spending cuts and tax hikes and are also demanding a raft of structural reforms be implemented before the next loan installment can be approved.
Sources told Kathimerini on Tuesday that representatives of Greece’s creditors raised objections to 1.5 billion euros of spending cuts for next year, mostly from health, defense and reform of local authorities and the public sector. The international lenders have also cast doubt on 2 billion euros’ worth of measures for 2014, although these are mostly revenue-raising.
The troika added to the pressure on the Greek government, which was hoping to have passed the package through Parliament in time for the European Union leaders’ meeting on October 18, by insisting that a range of structural reforms that fell behind schedule this year due to the two general elections in the summer are implemented as “prior actions” before Athens could receive any more money.
These reforms include the liberalization of so-called closed professions, the deregulation of goods, services and energy markets, the creation of a new body to manage state procurements and the merging of all health insurance providers with the National Organization for Healthcare Provision (EOPYY).
Troikarchs get yet another hot reception
The growing anger of Greeks over the growing demands of the Troika is generating what folks in the covert ops world call “blowback.”
From Keep Talking Greece:
This is the third incident within 24 hours and I slowly believe, representatives and technical teams of the so-called Troika, Greece’s lenders from the IMF, the EU and the ECB, should start thinking to change their suits with some knight armor like in the good old Middle Ages.
Earlier on Tuesday, municipality workers chased members of a Troika technical team as they were trying to meet with Greek majors from the Central Union of Municipalities (KEDE). However the municipality workers union tried to hinder the meeting.
They blocked the KEDE entrance with overturned garbage bins. When the team arrived, the workers started to chase them, to throw water bottles at them and use the usual …French.
Proto Thema speaks even of “kicks” and “hurled coffees”.
According to NewsIt.gr the team started to run and in the tension of the moment, the workers chased also the interpret[er], a young woman. She sought refugee in a book store, near by.
Maybe the hapless Troikarchs can invoke the classic German defense when confronted with misdeeds. You know, “We were just following orders.”
And with another announcement dropped Wednesday, the Men In Black can expect further warm receptions.
Seems the coalition wants to impose a hefty new tax on the self-employed that would cost 35 percent of the income for someone who works at home at earns a poverty-level annual income of €10,000.
Are foreign lenders delaying report to help Obama?
The evidence is growing.
From Helena Smith of The Guardian:
In what would be a nightmare scenario for Greece, speculation is growing that foreign lenders are planning to delay their long-awaited assessment into whether the country’s debt mountain is manageable. From Athens’ standpoint the report is vital because it is key to releasing €31.5bn in aid – rescue funds that have been put on hold since June.
Without the cash installment Greece will be unable to pay salaries and pensions and be forced to default on its debt with euro exit almost certainly following suit. “I have just heard reports about the possibility of a delay and am waiting for the EU and IMF to deny them,” said Dimitris Hadzisokratous, head of economic policy for the Democratic Left, one of three parties participating in the governing coalition.
“There are circles, by which I mean the IMF, who are pressing for a delay until after the US election in November,” he told me. “I cannot confirm that it will happen but it is possible. We need to move on. We want to conclude these negotiations [over Greece’s latest €13.5bn austerity package] and begin focusing on development and growth.”
So even the investing class is afraid of their own colleague, the Mittster?
And what does it say that now Wall Street favors a Democrat over a Republican?
But after Wednesday night’s disastrous debate showing, Obama will need all the help he can get.
Another hit for Greek labor, hotel closings
The decline in tourism will force many Greek resort hotels to close for the winter season, adding yet another blow to the Greek working class, already struggling with Depression-era unemployment levels.
From Christina Flora of Greek Reporter:
Suffering under the weight of five years of recession and crushing austerity measures that have hurt domestic sales, more Athens hotels are set to close this winter because of a big drop in demand and high operating costs, and because they haven’t been paid 16 million euros, $20.65 million, for hosting injured Libyans earlier this year.
In August the average occupancy rate at 3-, 4- and 5-star hotels posted a drop of 16.9 percent compared to the same month last year, while the average price per room fell 6.5 percent and revenues per available room contracted by 22.3 percent. In the first eight months of 2012, the average occupancy rate was down 30.1 percent from the same period in 2008.
In comparison with 2008 summer season, this year there was a 30 percent decline in occupancy, a 14.1% drop in the in average room rate and 39.9 percent fall in revenues per available room. In the area around Omonia Square, some 18 hotels have already closed, including luxury hotels.
More bad news for labor
While the Troika is demanding longer work hours and reduced pay as part of the pending package of cuts, many Greek businesses have already fulfilled half the obligation, while chosing another option for the second.
From ANSAmed:
Greek enterprises have cut salaries and working hours in order to reduce labor costs and survive under the huge pressure of the financial crisis, as daily Kathimerini reports quoting an ICAP’s HR Pulse survey, which was published on Tuesday. At the same time, though, the increasing number of enterprises turning to investment in training and new technologies in an attempt to respond to the contemporary demands of the market is an encouraging sign amid the relentless change that labor and salaries are undergoing.
In the second quarter of the year – the period covered by the ICAP survey – reducing working hours was an option chosen by 25% of companies as a means of cutting labor costs over the next three months, while only 5% responded by saying that they had already implemented the measure. Only 13% of companies said they are not planning to cut their labor costs, down from 18% in the previous quarter. Still, less than half (47%) said they had already cut their costs per employee, while 80% said they have not reduced spending on marketing training.
That “good news” about training simply means that workers will doing more in the hours they still work.
Germans pressure Greece on shipping taxes
The reason: Greek companies ship for less than their German rivals.
From Agence France-Presse:
The European Commission asked Greece on Wednesday to clarify the workings of the tax system for its key shipping industry which is run by some of the wealthiest people in the bailed-out country.
“The commission is currently looking at the tonnage tax and has asked for details from Greece,” the office of European Competition Commissioner Joaquin Almunia said.
The tax is levied on the tonnage a ship carries in place of a tax on the shippers’ profits, reportedly to the great advantage of Greece’s shippers and undercutting state income from one of the country’s prize economic assets.
The system was set up in 1953 when the Greek shipping industry, one of the largest in the world, was rebuilding after World War II.
Greek press reports said earlier that the Commission request was driven by pressure from Germany whose shippers are losing market share.
We have little doubt that wealthy Greek shipping magnates are milking the tax system for all it’s worth, both the Greek and Germany shipping businesses have reason for concern.
The Baltic Dry Index, the key measure of shipping tracked by the industry and investors, closed Wednesday at 798, down 54 percent for the year, and down from it’s 2008 record high of 11,793.
Another Greek busted for taking German bribes
The suspect was head of procurement for former defense minister and fellow “socialist” Akis Tsochadzopoulos, who was busted back in April in what Athens News described as “his luxurious neoclassical mansion on Dionysiou Aeropagitou St, opposite the Acropolis.”
From Athens News:
A former defence ministry official accused of involvement in a military procurement kickback scandal is expected to appear before an examining magistrate, following his arrest on Tuesday.
Yiannis Sbokos (61), who was general secretary responsible for armaments at the ministry from 1997–2000, was arrested at his home in Kifisia.
According to the file prepared against Sbokos, a long-time close associate and subordinate of former Pasok defence minister Akis Tsochadzopoulos, he belongs to the group that handled and concealed huge amounts of money paid in kickbacks from the procurement of Russian-made Tor-M1 anti-aircraft missiles and the German-made 214-type submarines from the shipbuilder Howaldtswerke-Deutsche Werft (HDW).
Sbokos was a Pasok MP for the Cretan prefecture of Rethymno from 1991 to 1993. He was elected again in 2000, but this was subsequently overturned on petition from another candidate.
