Greek Debt Crisis

The Latest Greek Drama, Explained

Greeks demonstrate outside parliament in Athens, February 16, 2015
Greeks demonstrate outside parliament in Athens, February 16, 2015 (Lefteris Heretakis)

Time is — once again — running out for Greece. This time the sticking point is a €7 billion tranche from its bailout program. Greece needs the money by July, but European officials had hoped to reach an agreement with the International Monetary Fund about the payment early next week, lest Greece’s debt crisis become an issue in the Dutch and French elections.

The mood in Brussels isn’t hopeful, the Financial Times reports. The expectation is that the creditors will miss their self-imposed deadline.

That would be especially unfortunate for the Dutch prime minister, Mark Rutte, who faces reelection in four weeks. He famously promised voters in 2012 that he would not support any more bailouts for Greece — but then he did. This is the worst possible time for him to be reminded of that broken promise.

There is no immediate risk of bankruptcy, let alone ejection from the eurozone, for Greece. But the closer we get to July, the more markets will worry and the more pressure will rise on lenders to hash out a compromise.

So what’s the problem? Read more “The Latest Greek Drama, Explained”

Greece Tries to Weasel Out of Spending Commitments Again

Greek prime minister Alexis Tsipras answers questions from reporters in Brussels, February 4, 2015
Greek prime minister Alexis Tsipras answers questions from reporters in Brussels, February 4, 2015 (European Parliament)

For the nth time, Greece is testing Europe’s patience by circumventing the spending commitments it made to qualify for financial support.

Surprised by a high budget surplus this year, the Greece prime minister, Alexis Tsipras, immediately vowed to use the money to fund free school meals for poor children, top up pensions for low-incomes retirees and freeze sales tax hikes on islands that are struggling to cope with refugees.

Tsipras, who leads the country’s far-left Syriza party, did not consult with his bailout monitors before making the spending pledges. Read more “Greece Tries to Weasel Out of Spending Commitments Again”

Greeks Push Through Pension Cuts, Eye Debt Relief

Greek lawmakers pushed through €5.4 billion in savings early on Monday despite violent protests outside parliament and a three-day strike that has brought the Balkan economy to a standstill.

The cuts were required under Greece’s third and latest bailout from the rest of the European Union and the International Monetary Fund.

The country’s far-left leaders, having failed to find a way to honor their election pledge to cancel austerity, hope the latest cutbacks will at least unlock talks about debt relief.

Euclid Tsakalotos, the finance minister, warned that the alternative was “another Greek crisis” that could perhaps lead to “another failed state in the region.” Read more “Greeks Push Through Pension Cuts, Eye Debt Relief”

Tusk Rebuffs Greek Attempt to Circumvent Lenders

Angela Merkel Donald Tusk
European Council president Donald Tusk listens to German chancellor Angela Merkel during a meeting of conservative party leaders in Brussels, July 12, 2015 (EPP)

European Council president Donald Tusk has refused to call an emergency summit of government leaders to discuss Greece’s latest altercation with its creditors, maintaining that this must be resolved at the level of the finance ministers instead.

A day earlier, Jeroen Dijsselbloem, the Dutchman who chairs eurozone meetings, canceled just such a conference because he said there was no progress to discuss.

Greece has balked at implementing €3 billion in cuts to comply with the terms of its financial rescue package.

Alexis Tsipras, the Balkan nation’s far-left prime minister, sought to elevate discussion to the leadership level to circumvent Dijsselbloem as well as monitors from the International Monetary Fund who insist that Greece honor its agreements.

The IMF jointly administers Greece’s €86 billion bailout — its third since 2010 — with the European Union. Read more “Tusk Rebuffs Greek Attempt to Circumvent Lenders”

Greece Continues to Drive Businesses Away

Are there another people in Europe so determined to shoot themselves in the foot as the Greeks?

Against all the advice of other euro states, they elected — twice — in recent years leaders who vowed to reverse what little progress had been made to liberalize the Balkan nation’s economy. Labor market reforms came undone last year. Privatizations were canceled or pushed back.

The country only agreed to sustain reforms in return for a third, €86 billion bailout this summer when it, once again, teetered on the brink of default.

Now promises have already been broken and targets missed. Greece is typically slow to implement the economic policy changes it commits to undertake. Yet there seems to be no holdup in policies that make things worse. Read more “Greece Continues to Drive Businesses Away”

Greece Rejects Creditors’ Call for Pension Cuts

Mark Rutte Manuel Valls Alexis Tsipras
Mark Rutte, Manuel Valls and Alexis Tsipras, the prime ministers of the Netherlands, France and Greece, meet at the World Economic Forum in Davos, Switzerland, January 21 (WEF/Valeriano Di Domenico)

Pensions are at the center of Greece’s latest dispute with its creditors.

The Greek Kathimerini newspaper reports that the International Monetary Fund’s managing director, Christine Lagarde, stressed to Prime Minister Alexis Tsipras during a recent meeting at the World Economic Forum in Davos, Switzerland that his government’s proposal for pension reform was inadequate.

The IMF jointly administers Greece’s €86 billion bailout with the European Union.

But Tsipras has said Greece won’t succumb to “unreasonable and unfair demands” and reportedly told Lagarde “there is no way” he can cut pensions for current retirees.

“One pension is a whole household’s income in the present circumstances,” the far-left leader told parliament last month. Read more “Greece Rejects Creditors’ Call for Pension Cuts”

Greece to Miss Privatization Targets Once Again

Greece flag
The flag of Greece (Ananabanana)

Greece pushed back the start of the privatization of the port of Piraeus this week for the third time in a month while Kathimerini reports that the country is once again trying to reduce its selloff targets in talks with creditors.

The far-left government of Prime Minister Alexis Tsipras argues that because it needs less money to recapitalize Greek banks than expected, it should also have to privatize less.

Under Greece’s most recent international bailout agreement, however, no direct link between bank recapitalizations and privatizations is made. Read more “Greece to Miss Privatization Targets Once Again”

Greece Threatened with Schengen Expulsion

European Union flag
A European Union flag on Crete, Greece, January 28, 2015 (Theophilos Papadopoulos)

European leaders on Wednesday threatened to suspend Greece’s membership of the continent’s free-travel Schengen Area unless it steps up border controls to contain the influx of asylum seekers.

Some 700,000 migrants have entered the European Union through Greece this year alone. Many are refugees from the wars in Iraq and Syria.

European foreign ministers are due to meet on Friday to discuss the migrant crisis.

Patience with Greece is wearing thin. The Balkan nation is accused of dragging its feet in implementing new security measures that are meant to stem the flow of people. Read more “Greece Threatened with Schengen Expulsion”

Tsipras Shirks Responsibility, to Call Early Elections

Alexis Tsipras
Greek Syriza party leader Alexis Tsipras speaks in Hamburg, Germany, September 29, 2012 (Die Linke)

Greek prime minister Alexis Tsipras is expected to resign on Thursday and call early elections that should give him a fresh mandate to face off a rebellion inside his far-left Syriza party.

He doesn’t need one.

Tsipras got two mandates from Greek voters this year, the first in parliamentary elections in January when Syriza fell only two seats short of an overall majority and the second in July when his government overwhelmingly won a referendum on the terms of its last bailout. Read more “Tsipras Shirks Responsibility, to Call Early Elections”

Third Bailout Due Despite Skepticism in Greece, Europe

German chancellor Angela Merkel speaks with her finance minister, Wolfgang Schäuble, in parliament in Berlin, September 10, 2014
German chancellor Angela Merkel speaks with her finance minister, Wolfgang Schäuble, in parliament in Berlin, September 10, 2014 (Wikimedia Commons/Tobias Koch)

European finance ministers were optimistic on Friday that a third bailout for Greece, worth €85 billion, could be finalized by the end of the day.

“I think that, at the end of this day, we will have a result,” Wolfgang Schäuble, the hawkish German finance minister, told reporters going into a eurozone meeting in Brussels.

His Finnish counterpart, Alexander Stubb, said he would be “very surprised” if there was no agreement tonight.

Both ministers took a hard line in negotiations with the Greeks for a third support package which is conditioned on liberal economic reforms and spending cuts that the far-left government in Athens previously opposed.

The Greek parliament approved the three-year plan in the early hours on Friday although 31 of Prime Minister Alexis Tsipras’ own Syriza delegates voted down the measures. Another eleven abstained. The bailout plan passed with support from the opposition

Syriza rebels are expected to split off at a party congress next month, likely triggering early elections. They blame Tsipras for capitulating to the demands of Greece’s creditors for comprehensive economic and judicial reforms despite winning January’s election on promises to cancel austerity and later getting 61 percent support in a referendum to reject the terms of the last bailout.

Other countries, especially in the north of the currency union, are skeptical that Tsipras will honor the conditions of the bailout when his more pro-European predecessors struggled to enact reforms in the last five years. In Germany, a fifth of Chancellor Angela Merkel’s conservative lawmakers voted against a third bailout. In Finland and the Netherlands, leaders had to break their election promises not to help the Greeks again.

Without a third aid package, Greece would have risked default and ejection from the eurozone.