No government soon

As the tradition wants it the next German government will not be formed in a few days. It usually takes weeks and this will not change now. As things stand presently it is more plausible than not that Merkel will seek a government partnership with the SPD’s socialists to form a grand coalition administration as they did during Merkel’s first term in the Chancellery. The last single party government in Germany was in 1957 under Conrad Adenauer, the first post war Chancellor governing the country from 1949 until 1963 and it is most unlikely this to be repeated now.

In any case Germany’s stance will not change regarding the two most important Eurozone issues that stand unresolved for months, the Greek enigma and the bank resolutions. Both of them triggered intense electoral confrontations more so over the Greek affair. The other thorny discussion, namely the structure of the Single Resolution Mechanism (SRM) for failing banks, didn’t acquire the dimensions of a prime electoral theme. It was debated in more closed circles where Berlin reaffirmed its position for a decentralised SRM, which will not disseminate all over the Eurozone part of the liabilities to be left behind, after a major bank resolution is accomplished.

As for the Greek case, Germany has already accepted that this country will need a third aid package towards the mid of 2014, but this time it won’t be tens of billions. Incidentally also yesterday the auditors representing the troika of Greece’s lenders EU-ECB-IMF were in Athens meeting the Financial Minister Yiannis Stournaras. Reportedly they all agreed that Greece is bound to show this year a positive prime surplus albeit small in its fiscal accounts. They also accepted that the 2013 recession reading will be smaller than predicted.

At this point it must be reminded that on the condition Greece attains this year a fiscal surplus, its Eurozone partners and lenders have undertaken the obligation to cut down the country’s sovereign debt to sustainable levels. This issue was extensively debated during the pre-election period in Germany and it reached even the eight o’clock news bulletins. During this debate both Chancellor Merkel and her Finance Minister Schaeuble repelled the proposal of a straight haircut of the loans Greece owes to its Eurozone partners/lenders. To note here that the largest credits having been accorded to Athens came from Berlin. However both the two leading German politicians didn’t exclude the possibility of cutting down interest rates and extending pay off time, a proposal that amounts to a lesser overall burden for Greece but avoids a reduction of the principal.

All in all the triumphant Angela Merkel in her first comments on the electoral results yesterday night appeared very restricted, about the new government she is expected to present to Bundestag. She was careful not to exclude a possible grand coalition with the socialists of SPD. This prospect however doesn’t seem enough to change Germany’s positions on the two hot Eurozone issues, the Greek problem and the SRM. On the contrary Berlin would rather appear more unbending on its opinions.

Republished by permission from europeansting.com.

“From Piraeus, the most important port in the Mediterranean, I want to send a message of optimism that we will succeed,” Samaras said, according to AMNA.

“The Greek people’s strength, the entrepreneurship of the Greek and, above all, the optimism and unity that exists today, have, I believe, always been the tools that gave us progress and prosperity and will give them to us once again,” he said, the state agency reports.

“Today, on the feast of the Epiphany, the wish that was given to us and the hope that we received from the Blessing of the Waters ritual instills in us once again optimism and strength that we will succeed,” the prime minister added.

The Prime Minister travels to Germany today to participate as a keynote speaker at the conference of German newspaper Die Welt. European Central Bank president Mario Draghi is to address the conference as well.

Tomorrow at noon, Samaras will meet with German Chancellor Angela Merkel, whilst earlier the Greek Prime Minister will have a private meeting with former Vice Chancellor of Germany, Hans-Dietrich Genscher.

Merkel’s spokesman Steffen Seibert said there would be an informal exchange of opinions during the meeting, according to Kathimerini newspaper.

“It is natural that we should take the opportunity to underline once again the progress that has been made in Greece in terms of structural reforms,” Seibert added.

Meanwhile, Finance Minister Yiannis Stournaras said Greece must maintain the trust of its partners, which it earned with great difficulty, on Sunday, warning that otherwise all the sacrifices made so far would be put into question.

Stournaras, speaking on MEGA television station, left no room for fiscal relaxation, and opined that if the government remains devoted to the adjustment programme of the Greek economy, the first signs of recovery will begin to appear in the second half of the current year.

“2013 will be a rough year, as we have EUR 9.2 billion in measures to implement. But we are on the right track.

He noted that the first positive messages from the execution of the budget appeared in the last months of 2012, which enables the government’s economic staff to harbor the optimistic forecast that the country’s primary deficit will end the year below the targeted 1.5 percent deficit to GDP ratio target, at 1.2-1.3 percent of GDP.

Stournaras was also optimistic on the execution of this year’s budget, noting that provided all the targets are surpassed, there will be a possibility for reasonable benefits in 2014. “If we do better on the 2013 targets – which is very likely – we will be able, in 2014, to channel 70% of the excess to social benefits, but targeted benefits to those who have genuine need”.

As I found out later, the men who stripped down were two. A 56-year-old American, who claimed to have been suffering from psychological problems, and somebody else. Rumours say he is British. The real question, however, is not the nature of their nationality, it is the reason that brought them to parade naked in front of the Greek Parliament.

Some people say those men were crazy, others that they were paid to shift the attention away from the protesters who flooded the streets during that day. In fact, much of Athens went into security lock-down during the week, and more than 6,000 police officers were needed to create safety zones for the German chancellor. In spite of them, the visit didn’t go down well.

Isolated, on Wednesday the German delegation might have noticed the lines of shops shuttered along the roads, and above them the locked flats. The economic crisis has altered the face of Athens. The divide between who has and who has not is visible in the way people carry themselves on the streets: they are either speeding away in a feast of fearful anticipation, or meandering helplessly.

On the whole, Mrs Merkel has become the embodiment of an imposed economic crisis for the majority of the Greeks, but another kind of demon is lurking around in the shadows. I am not sure those naked men aimed to challenge the German delegation; they might have been there to testify to Athens’ helpless battle against a much more sinister guest in town, the uncharted violence we are all victims of.

As criminality raises in direct relationship to unemployment, more and more people seek help from Golden Dawn. The party has recently raised to the third position in popularity, behind New Democracy and Syriza. Described by many as a neo-Nazi group, it has been accused to promote violence against foreigners living in Greece.

A few days ago, a Tanzanian community centre was vandalised by a group of 80-100 people in central Athens. This is neither an isolated violent attack on immigrants, nor the first one the party has been linked to.

The number of clashes between Golden Dawn’s members and anti-fascists groups are also escalating. On one of such occasions, 30th September, fifteen anti-fascist protesters were actually arrested in Athens and apparently tortured by the police in the Attica General Police Directorate (GADA). Some of them stated they were burned on their arms with a cigarette lighter, and more, as the police officers threatened to give their home addresses to Golden Dawn, which holds a track record of political violence. In response to the accusations, Christos Manouras, the spokesman for the Hellenic police, stated that there was no use of force by police officers against anyone in GADA.

Where is Greece going?

Mistreatment of Greeks in police custody has been rare until this year, as well as attacks against foreigners. In a country that suffered very much from different forms of Fascism – first the Italian, then the German, and finally the Greek Colonels – the events taking place at the present time are difficult to believe.

Whatever these people try to achieve, it seems they are rapidly winning: foreigners are afraid, the population is overwhelmed by a daily routine that offers no positive aspects, the number of homeless people is alarming, and criminality has never been so high. It seems like the perfect recipe for a civil unrest that brings to mind the most dark pages of contemporary Greek history.

As I consider the eventuality of leaving the country, I recall the time I first arrive in Athens, when homes in the outskirts of the city were left unlocked. Nobody feared the man next door, and the policeman was a friend who offered you coffee now and then.

According to Reuters, markets have enjoyed a strong run over the last few weeks on hopes that the new urgency in Europe to overcome its debt crisis may allow Greece to remain in euro and keep the bloc from unraveling. Rating firm Moody’s released a report saying that repair programs in troubled southern eurozone countries were having a significant benefit although overcoming the problems could take several more years.

Kathimerini writes Samaras is hoping that Eurogroup chief Jean-Claude Juncker will give Greece and its continued euro membership his strong backing following talks in Athens between the two men this afternoon, when the Premier will set out the measures Greek government plans to take. Sources said Samaras is hoping that unequivocal support from Juncker will set a positive tone for the week.

Jean Claude Juncker, who will also have dinner with Samaras at the Acropolis Museum, declined a request from opposition party SYRIZA to meet with its leader, Alexis Tsipras. The leftists had sent a request to the Luxembourg Embassy in Athens last week but were told Juncker would not have time for the meeting. Party sources blamed the government and the troika for the talks not being held. Tsipras had turned down an invitation to meet with troika representatives in July.

Hollande and Merkel need the latest report on Greece’s economic situation and a precise aid request before deciding how to help the country, France’s European affairs minister said according to Bloomberg. “There’s a process we’re engaged in to evaluate the efforts made by Greece in recent months, which we know was set back by elections,” European Affairs Minister Bernard Cazeneuve said yesterday in an interview with Europe 1 radio. “We’ll evaluate the situation and try to take a common position.”

Citing news agencies, capital.gr writes that Germany will not substantially soften its agreements with Greece, its foreign minister Guido Westerwelle said yesterday, after meeting with his Greek counterpart Dimitris Avramopoulos. According to Kathimerini Westerwelle said Greece needs to carry out the reforms that have already been agreed upon, but that “the German government wants us to remain together in the eurozone.” He pledged Germany’s help in implementing the reforms, but said “the key to success lies in Athens.”

According to protothema.gr, the government is still seeking around EUR 700 million to EUR 1 billion. All unresolved issues were on the table in the meeting yesterday evening between Antonis Samaras and Finance minister Yannis Stournaras. In statements after the meeting, Stournaras said “we are talking about a new type of labour reserve [in the public sector]“, and that the full package of measures will be ready early in September, before the Troika’s arrival in Athens. He added that the meeting with Samaras was of an informative nature; at this time “they are costing the measures” and this is an ongoing process.

“Mr. Avramopoulos’ recent journey to Berlin and the forthcoming trip of Mr. Samaras are meaningless” SYRIZA MP Rena Dourou said in an interview with NET radio, “since in their luggage they bear no other approach than full obedience to Merkel.” SYRIZA MP said the Prime Minister forgot to renegotiate and now the new national goal is to extend the programme.

Dourou also argued that “lengthening the adjustment period while keeping the disastrous recipe of internal devaluation, is nothing more than as to give us a longer rope to hang ourselves.”

“The fire will be uncontrollable and will not be limited to Greece and the southern European countries, it will destory the eurozone and this is not in anyone’s interest,” Tsipras said.

However, speaking at a news conference just days before Greece’s national elections on June 17, that his party had an “emergency plan” to deal with Greece’s euro exit if negotiations with international creditors on the country’s debt deal collapse.

“We’ve examined every possibility,” Tsipras said,  adding that he was positive about the outcome of the negotiations. He insisted his party will not approach Greece’s foreign creditors “to pick a fight, but to convince them,” Kathimerini reported.

Tsipras renewed his objections to the country’s latest 130 billion euro ($164 billion) bailout and referring to Spain’s 100-billion-euro bailout for its banks, Tsipras said Madrid had done better negotiations than Grecee and secured the aid without tough terms.

Syriza, which emerged as a political force during May 6 elections, rejects the country’s bailout with its international creditors, meanwhile, its main opponent,  New Democracy party, has vowed to stick to the bailout terms which include  austerity measures that have plunged the economy into recession.

Tsipras also said that political leaders did not have the luxury of several days to form a coalition after the June 17 polls. “On June 18 Greece must have a government, not  June 19, not  June 20. It will either be a leftist government with Syriza as its core or it will be a pro-memorandum government with New Democracy as its core,” he said.

“With respect to Greece, which has important elections next weekend, we’ve said that it is in everybody’s interest for Greece to remain in the eurozone while respecting its commitments to reform,” he said in an appearance in the White House briefing room.  “We recognize the sacrifices that the Greek people have made, and European leaders understand the need to provide support if the Greek people choose to remain in the eurozone.  But the Greek people also need to recognize that their hardships will likely be worse if they choose to exit from the eurozone,” he said.

Obama expressed his concern about Europe, which faces a threat of renewed recession as countries deal with a financial crisis, urging the region’s leaders to strengthen the banking sector. Obama said his administration has tried not to scold European leaders.

In mentioning German Chancellor Angela Merkel and French President Francois Hollande, Obama urged European leaders to pursue growth alongside austerity, noting that they have the support of the US, according to Kathimerni.

“Over the longer term, even as European countries with large debt burdens carry out necessary fiscal reforms, they’ve also got to promote economic growth and job creation.  As some countries have discovered, it’s a lot harder to rein in deficits and debt if your economy isn’t growing.  So it’s a positive thing that the conversation has moved in that direction, and leaders like Angela Merkel and Francois Hollande are working to put in place a growth agenda alongside responsible fiscal plans.”

Speaking after talks with New Zealand’s prime minister John Key, Merkel said on Friday: “What we have always said is that we want Greece to remain a member of the eurozone.”

“The precondition for that to succeed is that the future Greek government sticks to the memorandum that was agreed with the International Monetary Fund, European Central Bank and the European Commission,” she said according to AFP. 

Greece holds a fresh round of elections on June 17 after May 6 elections left no party with enough votes for a majority in parliament and days of talks failed to resolve the country’s political deadlock.

“This memorandum is the foundation for a favourable development and we have to say that clearly to all those who are seeking election in Greece,” Merkel stressed.

The US president warned of “hard days ahead” at a NATO summit in Chicago dominated by the withdrawal of forces from Afghanistan, CNN reported.

“The loss of life continues in Afghanistan and there will be hard days ahead,” Obama stated.

The aim of the NATO summit is to complete a transition process that will bring the war to an end of 2014 and put Afghans in the lead for their own security.

More than 50 leaders are attending the meeting, including heads of state and government from the 28 NATO countries.

Demonstrators clashed with a line of police who tried to keep them away from where the meeting was being held. The march, estimated by police to number 2,500 to 3,000 people, was led by a group of Iraq and Afghanistan war veterans who symbolically gave back their military medals, Al Jazeera reported.

The new French President, Francois Hollande, has promised to pull out the country’s forces by the end of this year, two years before the alliance’s timetable, showing division in talks.

But NATO Secretary-General Anders Fogh Rasmussen expressed confidence the alliance would “maintain solidarity” despite France’s decision. ”There will be no rush for the exits,” he said.

German Chancellor Angela Merkel told journalists, “We went into Afghanistan together, we want to leave Afghhanistan together,” showing the tension of the talks, Al Arabiya reported.

Karzai notted that it was important to complete the security transition and withdrawal of foreign combat troops from Afghanistan that the summit will ratify.

Referring to the possibility Greece exiting the Eurozone, Tsipras said: “I don’t believe that we will have a benefit if Greece goes back to the drachma. I don’t believe that because Eurozone will be in a big disaster… At the same time, we don’t want to go back to drachmas because, in Greece, we will have the poor people to have drachmas and the rich people to buy everything with euro… This is not good evolution for society and for the people… the majority of the people need to be in the safe…”

When asked what he would do as president, Tsipras said, “First of all, we will cancel all these austerity measures…. We believe that this crisis is not a Greek crisis but a European crisis. And we will try to find a common solution – about the role of ECB, about the Europe bonds, about the negotiation of the public debt of all the European countries.”

According to the official transcript, Tsipras stressed: “We will cancel the memorandum. And then we will go to renegotiate, in a European level, about a common way to go out of this crisis… This crisis is not a Greek crisis, but a European crisis. And we will try to find a common solution… That’s our position.”

Asked if he could foresee partners in that negotiation, Tsirpras was optimistic: “We think we will find partners…. We will have the same problem with Italy, with Spain, with Portugal, and also with Ireland and also in the central Europe.”