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  • Investment: The forgotten casualty of the Greek crisis | MacroPolis
    35 percent Transport equipment is the second largest casualty with a drop of 71 percent since the 2007 high with just 3 4 billion spent Its share is down from 20 percent to almost 17 percent of the total Metals products and machinery are also badly impacted having sharply fallen by 59 percent since their 2008 high from 12 6 billion to 5 2 billion euros They now represent a quarter of total investment spending In total the 21 7 billion euros of capital formation in 2014 reflect a rapid decline of 65 6 percent It is the clearest indication that firms investment capacity and decisions were heavily impacted by the deep and extensive austerity which hit incomes and demand the absence of a functioning banking system which led to a collapse of credit and the ongoing uncertainty around the country s place in the Eurozone that posed a huge redenomination risk The data does not even capture 2015 when Grexit was officially put on the table by Germany as a solution to the ongoing Greek problem This underlines that despite the dramatics and the set backs of the first part of SYRIZA s administration the wounds in the Greek economy are deep and preceded the amateurish handling of the negotiations last year What is alarming in connection to SYRIZA is that it should be focused on recovering the lost ground as far as investment is concerned if any economic recovery is to take hold But so far ideological sclerosis and a general aversion to private initiative seems to inhibit the government from creating an environment that will be attractive to investors It is in this space that the battle for the economy and the government s future will be decided You can follow Yiannis on Twitter YiannisMouzakis Send with e mail Print this page 2 Comments RSS 26 Feb 2016 11 47 Posted by Dionysios Chionis Democritus University of Thrace Nice analysis two crucial issues 1 don t confuse figures flows and figures reserves Capital formation investment 2 correlation does not imply causality but the vice versa Reply to this post 26 Feb 2016 07 49 Posted by Dean Plassaras Greeks and the Greek press have some weird definitions of what constitutes an investment due mainly to lack of financial sophistication and total alienation from the rules and definitions of the global investment game For example they consider a long term lease on Greek airports won by an unsophisticated german group called Fraport an investment Clearly a long term lease which reverts assets back to the state is not an investment It can only be classified as a short term cash flow generator by an incompetent state which lacks the sophistication and know how to turn aging state assets into profitable sustaining long term outperformance generators Bottom line selling ports trains and airports to outsiders for cash could hardly be called an investment These are asset fire sales because the Greek state is compelled to do so Nothing to

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3708 (2016-04-27)
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  • A marriage of inconvenience | MacroPolis
    customary unauthorised overflights in its attempts to rattle Athens and strengthen its longstanding case for questioning Greece s territorial rights in the Aegean When a Greek Navy helicopter crashed on the island of Kinaros two weeks ago for instance Turkey issued naval and aviation notices Navtex and Notam for Greek air space and territorial waters as part of the search and rescue operation even though Greece had already sent its own vessels and aircraft Over the weekend a Turkish frigate attempted to force an Italian research vessel that was conducting a study for the laying of a cable between Karpathos and Rhodes to change course after warning it that it was in Turkish territorial waters The Turkish vessel only desisted after a Greek frigate was sent to the area This explains to a great extent why Greece has flatly rejected calls from some parts of the EU for joint Greek Turkish coast guard patrols to combat refugee smugglers It is also why Athens was initially reluctant to agree to NATO patrols in the Aegean It only acquiesced once it was clear that the Turkish ship in the flotilla would not be allowed in Greece s waters and vice versa for the Greek vessel Most controversially of all Turkish authorities refused the plane carrying Tsipras to Iran permission to fly over Turkey recently Ankara regards the prime ministerial plane as a military aircraft and considers Rhodes where it was due to land for refuelling before continuing its journey into Turkish air space as part of a demilitarised zone in the Aegean Turkish authorities reportedly would have only allowed the plane to enter their air space if it stopped in Bodrum rather than Rhodes Instead the prime minister s flight plan was changed and the aircraft landed in Egypt The decision to skip plans to land in Rhodes which underlines Greece s heightened concern about giving Turkey justification to ratchet up the tension in the Aegean led to Tsipras being roundly criticised by his domestic opposition Greece s impotence has been most visible in the refugee crisis where Turkey holds all the cards Turkish authorities have understood that to some extent they can control the flow of refugees and migrants crossing to Greece a power that Erdogan apparently had no qualms about flaunting during a meeting with European Council president Donald Tusk and European Commission chief Jean Claude Juncker in November 2015 when he reportedly told the EU officials that Turkey could open the doors to Greece and Bulgaria anytime and bus the refugees to the border While Erdogan whose mood during the November meeting only appeared to sour after he was told that Turkey would receive 3 billion euros in aid over two years rather than one bargains with the EU Greece seems little more than a helpless bystander Like his EU counterparts Tsipras is caught between knowing that Erdogan s dominance means there is no other choice than to attempt to reason with him but that in doing so he

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3705 (2016-04-27)
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  • Multiple crises fence in Greece | MacroPolis
    beginning of the crisis due to the Greek economy contracting by around a quarter At the same time the number of Greeks in work has fallen to 3 6 million which is less than the 2 6 million pensioners and 1 2 million unemployed combined The rise in unemployment during the crisis has caused serious damage to Greece s pension funds The country s main social security fund IKA saw the level of contributions paid in by workers plummet by 31 5 percent between 2010 and 2014 as a result of people losing their jobs and those in employment seeing their salaries reduced Tsipras is agonising over how to find 1 8 billion euros in savings with doubts about whether his government will survive such a move when IKA alone has lost 16 5 billion euros over the five year period in question The conundrum that Greece faces is that it needs growth to recover but that in order to comply with its bailout programme which provides the only source of funding available at the moment it has to adopt measures such as VAT rises pension cuts and income tax increases that will hold back the economy Almost six years since Greece agreed to its first rescue package it feels that the country is almost back where it started Tsipras may have talked his way into power but he cannot charm his way out of this predicament It is a situation that has been made worse by his government s wayward and naïve negotiating strategy last year which saw the early signs of an economic recovery wiped out and Greece s banks undermined The Greek economy is expected to contract by 0 7 percent of GDP this year before growth returns in 2017 Despite being recapitalised for a third time late last year the country s banks have yet to play an active role in driving an economic recovery They are still nursing the wounds of losing more than 40 billion euros in deposits in the months before capital controls were imposed at the end of June The sense that Greece is penned in is also prevalent in the refugee crisis As with the bailout negotiations Tsipras s government spent a large part of last year not realising the urgency of the situation it was in Greece s response to the record influx of refugees and migrants almost 900 000 in 2015 has improved since last summer but it finds itself snared between Turkey which sees the flow of people towards Europe as a tool for leverage and the EU whose member states and electorates are growing more reactionary by the day The EU s inability to stop migrants leaving Turkey and the determination of countries in central and eastern Europe to limit the number of people entering their territory means that tens of thousands of refugees and immigrants are likely to be unable to leave a country that is itself trapped People are arriving on Greek shores after crossing

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3690 (2016-04-27)
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  • Greek pensions: The unsolvable equation | MacroPolis
    in 2009 will not exceed 26 billion this year IKA alone has lost a cumulative 16 5 billion euros in contributions in the 2010 2014 period According to the general government monthly bulletin in 2015 pension funds had a total of 35 3 billion in revenues 18 5 was from social security contributions and roughly 15 6 billion from current transfers 14 8 billion of which comes from the state budget Pension funds expenditure for social benefits in the same period reached 30 1 billion with the lion s share being pensions paid at 25 1 billion sickness benefits at 3 9 billion and other benefits of 1 1 billion euros On top of its contributions to the social security system the state paid out directly in state pensions 6 3 billion euros to 475 860 state pensioners from civil servants to military personnel local government employees and priests That takes the total 2015 figure of pension dependency on state funding to 17 9 billion euros the equivalent of 10 of GDP It is the spending as a proportion of national output that is widely used in the debate around Greece s pension reform However one should be cautious when using spending as a percentage of GDP in Greece s case given that more than a quarter of the denominator has vanished during the crisis In the budget total spending purely on pensions in 2016 is seen at 23 8 billion euros 20 billion of which is main pensions and 3 5 supplementary This translates into circa 13 5 percent of the estimated 2016 GDP Social security contributions are seen at 11 4 billion and the state contribution at 9 5 billion euros or 5 4 percent of GDP Spending slashed Sizeable as it may be the state s share towards pensions is only part of the total social security spending Transfers towards unemployment benefits and other employment programmes for OAED the employment agency are half a billion pharmaceutical spending and medical care via EOPYY the health service provider is another billion in transfers and hospitals get grants of 1 5 billion euros The Greek state needs marginally over a billion euros each month to provide a range of welfare services which takes the total transfers for social security excluding state pensions to 13 9 billion euros or around 8 percent of GDP As part of the belt tightening Greece has slashed many aspects of social security spending both in terms of overall expenditure and state transfers Greece s total social security bill has dropped from 49 billion in 2009 to 38 5 billion in 2015 and has been one of the key components of wiping out the massive primary deficits since 2009 At 2 4 billion euros pharmaceutical spending from the state health provider is one billion below the 2011 spend Medical expenses stand at 1 9 billion almost another billion down from the 2011 figure Hospitals have seen their revenues reduced by 600 million euros while they have

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3629 (2016-04-27)
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  • Search for solutions, not scapegoats in EU's refugee crisis | MacroPolis
    for taking part in the most rescues in Greece during the year They had saved a total of 1 322 people in 39 incidents During 2015 the same crew was involved in 251 rescue missions and pulled 9 532 people to safety a 721 percent increase according to figures provided by the Greek coast guard on December 17 This underlines what a remarkable job is being done by some of the Greek authorities who are bearing the full force of this runaway international crisis In recent weeks they have received additional support from other member states On Thursday Frontext said that it 750 officers including almost 300 involved in the registration and screening of arrivals on the Greek islands after Athens officially requested in December additional assistance with guarding its borders The only reason that there is not a stronger presence the agreement was for close to 400 is because EU member states have been slow in providing personnel rather than anything to do with Greek reluctance to accept help This suggests that European policymakers should not be expending more energy on repeated discussions about whether Greece is patrolling its borders and if arrivals are being registered The debate about excluding Greece from Schengen is equally absurd especially as it does not have borders with any other country that belongs to the passport free zone Instead the focus should be on how to stem the flow of people making perilous journeys across the Aegean and what to do with those that take the risk anyway So far the EU s efforts to get Turkey to tackle human traffickers has been a failure The 3 billion euros Ankara was promised has not been released and President Recep Tayyip Erdogan seems more concerned with the Kurdish crisis in southeastern Turkey and limiting the freedom of the press than addressing the migratory flow Clearly this needs to be addressed if the EU is going to get any respite which would give it time to get its house in order Greece has suggested an agreement with Turkey for all arrivals not from refugee producing countries to be shipped back across the Aegean The Netherlands has proposed a similar scheme with the EU agreeing to take a set number of refugees each year directly from Turkey In the meantime though Greece appears to be under pressure to become a holding pen for arrivals The help being provided by other countries to the Former Yugoslav Republic of Macedonia FYROM with approval from Brussels the tighter border controls further north the calls for Greece s neighbours to halt migrants in their tracks and the pressure to create the so called hot spots on the Greek islands point to large numbers of refugees and migrants being held back in Greece while they await relocation or deportation Mouzalas claims that one of the ideas mentioned during an EU interior ministers meeting last week was for a large refugee camp for 300 000 to 400 000 people to be created

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3613 (2016-04-27)
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  • Honey, I shrunk the Greeks vol. 2 | MacroPolis
    creditors who subsequently might themselves have to be bailed out As such Greece was denied the upfront debt restructuring that was needed and was forced into a belt tightening which was necessary but had severe intensity and speed as program financing was allocated to debt repayments and not deficit financing Now the IMF admits that this policy is not working because First the exception does not prevent contagion as this is understandable since the debt is not addressed and it does not calm markets As official financing is used to meet private claims you end up with a subordination risk where private money is seen as being inferior to the official claims and as such no one is willing to lend to that country and market access is not achieved Because of these two reasons the country is forced to pay heavy costs and the potential success of the program is put at risk as debt sustainability is not addressed Finally the issue of moral hazard rears its head because making creditors whole creates the impression that you can lend at exceptionally low rates to a sovereign without much concern as someone will come and bail it out The Fund s assessment has Greece written all over it and takes the debate right to the heart of the issue Hindsight is not necessary to see that the Greek bailout was destined to fail from the start An impossible task was compounded by the limited implementation capacity of the public sector and complex political and social dynamics When the cracks in the program design were exposed as early as the beginning of 2011 Greece spun into a downward spiral of economic and social catastrophe of unprecedented proportions for a developed economy during peace time According to the reformed framework for exceptional access Greece probably would have been given a debt reprofiling for all private claims in the three year life of the programme the IMF would have provided financing and the eurozone would have to give loans at favourable rates unlike the 300 basis points over Euribor which Greece was charged in 2010 to ensure getting loans from one s Eurozone partners would not be a particularly pleasant experience Greece s debt was not addressed at the start when by all admissions it was necessary Six years later it dominates the agenda having climbed to just under 180 percent of GDP after three bailouts The IMF has not confirmed its role in the latest programme partly because the issue of debt sustainability remains unresolved Eurogroup chief Jeroen Dijsselbloem recently suggested that one solution could be for the eurozone to promise that something will be done in 10 or 15 years underlining the fact that there is little appetite within the single currency area for proper debt relief just as was the case in 2010 As if nothing has been learnt since then Greece has to find an additional 3 5 percent of GDP in savings over the next three years to

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3597 (2016-04-27)
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  • One year of SYRIZA | MacroPolis
    dozens of interpretations about what the point of the July 5 referendum was and the role of ex finance minister Yanis Varoufakis is still the subject of intense debate not least due to his myriad interpretations of what happened and conflicting claims from his counterparts The result of all this was for the Greek economy to suffer another blow on top of the damage that had been done in previous years and for the government to sign up to bailout terms that are as painful if not more so than previous agreements SYRIZA was right to challenge the logic of the bailout programmes and the effects of five years of austerity policies but as long as it was committed to keeping Greece in the eurozone which Tsipras eventually declared as his position its ability to influence events remained limited Sadly Greeks paid a very heavy price until SYRIZA came to this realisation Moving away from the negotiations SYRIZA s other major failing has been that it has not yet shown it has any great intention of living up to its pledge to clean up Greek politics and start building a fairer society In fact instead of taking steps in this direction the government has gone the opposite way placing its own people in the public sector like all the administrations before it and wanting to influence or control as much of the media and private sector as it can SYRIZA gives the impression that it wants to engage in regime change but not so that it can alter Greece for the better but so that it can become the new regime It is true that SYRIZA has introduced initiatives to help some of the worst affected by the crisis in Greek society but this has been a small step An effective counter measure to the unemployment poverty and social exclusion created by the flawed policies of so many years would be to start creating the conditions for growth In this respect though SYRIZA is restricted to some extent by the memorandum policies more tax hikes to achieve primary surplus targets for example and its limited understanding of how the private sector works Until the Greek economy starts growing again there will not be much that any government can do to counter the effect of unemployment of around 25 percent declining wages non existent liquidity and firms going out of business The one area where SYRIZA has been breath of fresh air is in civil rights It has passed legislation regarding citizenship for second generation immigrants and civil partnerships for same sex couples that has corrected injustices of the past and places Greece in the group of socially progressive European countries This progressive thinking and realisation of what is happening in the world around us now needs to be transferred to other policy making areas Only then will SYRIZA have a chance of being remembered for anything other than being the instigator of Greece s most manic and energy sapping year

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3579 (2016-04-27)
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  • SYRIZA's long, slow march | MacroPolis
    loss of two MPs was a blow but given the difficulty of some of the measures such as the sale of NPLs it was a surprise there was not wider resistance within the government But the real challenge would always come next pension reform The overhaul of the social security system is crucial for a number of reasons Firstly because it is not sustainable in its current state despite 11 rounds of cuts since the crisis started Secondly because it has repeatedly been tampered with pensioners or would be retirees are extremely sensitive to any attempts to make further changes Thirdly in the absence of a functioning comprehensive welfare system pensions are used to plug a lot of holes in Greek society Granddad and Grandma provide the safety net for a large amount of families These are all reasons for pension reform being a very complex and sensitive issue for Tsipras to deal with However there is a fourth reason that this particular matter is so decisive for what will happen next and that is because it is the issue on which the relationship between Greece the eurozone and the International Monetary Fund is balanced The Europeans or at least key players such as Germany want the IMF on board the Greek programme because the fund is seen as a reform guarantor It has both the technical capacity and the policy ideology that satisfies those who want to ensure Greece does not get an easy ride The IMF though believes that Greece needs significant debt relief and has made this a condition of it remaining engaged Greece wants the debt relief the IMF recommends but does not want the policies it advocates which is one of the reasons that Tsipras and his ministers had recently claimed that the programme should progress without the Washington based organisation Aligning this Rubik s cube of preferences is a near impossible task It is made more complicated by the fact that the IMF sees cutting pension spending as the most reliable perhaps only way that Greece can reach its target of 3 5 percent of GDP primary surplus from 2018 onwards This translates into a recurring reduction in expenditure on retirement pay of at least 3 percent of GDP For the reasons mentioned above the government wants to avoid slashing existing pensions concentrating instead on producing cost savings from other interventions such as lowering replacement rates while also raising social security contributions The plan put forward by the government and currently being examined by the institutions does not seem to provide the long term savings that the IMF is looking for If the eurozone accepts this then the IMF will be looking for the Europeans to make up the difference through debt relief It is doubtful whether there is the appetite for this kind of relief for Greece within the eurozone The Greek government meanwhile will be loath to accept anything more drastic than what it has proposed At last week s Eurogroup though

    Original URL path: http://www.macropolis.gr/?i=portal.en.the-agora.3565 (2016-04-27)
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