Eurowatch: Can Pasok form a new government?

The Guardian’s been liveblogging the developments as socialist [sic] party leader Evangelos Venizelos attempts to form a new government, and according to the latest developments, it looks like he has a chance.

In one of the latest developments, SYRIZA — the left coalition that tried and failed to form a government Wednesday — has apparently softened its once adamant anti-austerity line, an odd development given the party’s post-election rise in popularity [which we note below].

Lots more from Greece, more woes for Spain, bellowing from Berlin, and the latest chapter in Italy’s longest-running show, the Berlusconi Follies.

But on to Greece.

Venizelos tries to make a government

Most of today’s items on the Greek political scene were written before the latest developments liveblogged by The Guardian, but they indicate the difficulties Paok faces in trying to hammer out a coalition.

Given Pasok’s plummeting popularity, it’s going to be interesting to watch what sort of compromises are made. We suspect any last pretense of socialism will be cast aside.

From Maria Petrakis, Natalie Weeks, and Marcus Bensasson of Bloomberg:

Evangelos Venizelos, the socialist Pasok leader and former finance minister, is trying to form a government after receiving a three-day mandate from President Karolos Papoulias today. Pasok yesterday rejected terms for a government set by Alexis Tsipras of anti-bailout Syriza party, which then gave up its bid to build a coalition.

“There is no time to lose,” Venizelos said in Athens yesterday on state-run NET television. “We can’t take any decisions that worsen the recession, increase unemployment or endanger the real economy. That means no new elections, no instability, no uncertainty: to remain in the euro.”

The standoff has reignited European concerns over Greece’s ability to hold to the terms of its two bailouts negotiated since May 2010. With Parliament split and policy makers in Berlin and Brussels urging Greece to stay the course, the country at the epicenter of the debt crisis is again facing the risk of an exit from the euro.


“New elections are the most likely possibility,” Spyros Economides, a senior lecturer at the London School of Economics, said in a telephone interview. “The coalition math from the May 6 vote just doesn’t add up.”

Read the rest.

The BBC adds:

Pasok is now deeply unpopular, says the BBC’s Mark Lowen in Athens – seen as the architects of austerity, and tainted with allegations of corruption.

It dominated Greek politics for most of the past four decades, but saw its support slashed on Sunday – coming third with just 41 seats, a quarter of its pre-bailout support.

Its attempt to form a government also appears likely to fail, our correspondent says, making fresh elections – and weeks of fresh instability across the eurozone – seem inevitable.

Read the rest.

And from Niki Kitsantonis of the New York Times:

Mr. Venizelos is likely to face even greater difficulties as his party, known as Pasok, was the architect of the country’s first bailout in 2010 and is widely blamed for Greece’s economic woes. But although he failed to find any common ground in exploratory talks with political rivals, Mr. Venizelos expressed determination on Wednesday. “It is clear that we currently cannot reach a solution but we must continue the national effort,” he said, noting that his mandate would have “substance and importance.”

Local media were more skeptical, reporting that the Socialist leader may give up what appears to be a losing battle, surrender his mandate and instead ask the president to proceed to the next stage, summoning all the leaders of parties in Parliament to try to broker a coalition. If this fails, Mr. Papoulias must appoint a caretaker government and call new elections within 30 days, with the most probable date believed to be June 17.

Read the rest.

Bailout renegotiation hinted

This story leaves us wondering what sort of backroom deals are being hammered out in Brussels to allow the two formerly dominant Greek political parties, Pasok and New Democracy, to hammer out a deal that will keep the real Left out.

From Agence France-Presse:

Venizelos helped negotiate Greece’s second international bail-out, which was granted on condition the then Pasok-New Democracy coalition government implemented the harsh austerity measures required by the EU and IMF.

But both mainstream parties are now suggesting it will have to be renegotiated.

Venizelos now says Greece needs to “look for the best amendment possible of the terms” of the agreed reforms, and New Democracy leader Samaras said renegotiating the bailout was “certainly realistic”.

Their shift echoed the anti-austerity rhetoric of Syriza’s Tsipras, who argued that Sunday’s overwhelming anti-austerity vote had “clearly nullified the loan agreement and (pledges) sent to Europe and the IMF”.

Read the rest.

Meanwhile, the EU adds bailout strings

If there’s a carrot being offered in secret, Brussels also brought out the stick.

From Valentina Pop of EUobserver:

Eurozone officials on Wednesday night (9 May) agreed to pay only €4.2 billion as first bail-out tranche for Greece, an outstanding 1 billion being blocked until June, amid growing political uncertainty in Athens and another failed attempt to form a government.

“The Board has confirmed the release of the outstanding amount of €5.2bn from the first installment…an amount of €4.2bn will be disbursed on 10 May. The remaining funds of €1.0bn are not needed before June and will be disbursed depending on the financing needs of Greece,” reads a statement from eurozone’s temporary bail-out fund, the European Financial Stability Facility.

Its board of directors comprises of finance ministry officials from each of the 17 eurozone countries.

The statement also noted that the money is put into a “segregated account” and used to pay back Greece’s debt.

Read the rest.

Berlin brings out its own stick

If there’s one person whose name is likely to provoke anger in Greece, it’s that of Germany’s finance minister, the official who has consistently taken the hardest line against any moderation of the Troika-imposed austerity regime.

Wolfgang Schaeuble is back at it again.

From EUbusiness:

Greece must stick to a March deal agreed with its international backers and enact promised reforms to remain within the eurozone, German Finance Minister Wolfgang Schaeuble said on Wednesday.

“If Greece wants to remain in the eurozone, there is no better solution than the path it has already taken,” Schaeuble said, referring to austerity cuts and reforms in return for a 240-billion-euro debt bailout.

“You can’t have one without the other,” he added.

The Greeks need “to form a stable government and strictly respect their commitments, in the same way that we will respect our obligations to Greece,” Schaeuble said, echoing earlier comments by German Chancellor Angela Merkel.

Read the rest.

The latest Greek jobless numbers: Grimmer still

The official Greek unemployment rate nears 22 percent, numbers certain to fuel the growth of discontent as well as more alienation from the two mainstream parties which landed Greek labor in the deepest crisis since the fall of the dictatorship 38 years ago.

From Keep Talking Greece:

900 people were losing their jobs on a daily basis in February 2012, pushing  the unemployment rates to 21.7%. According to Greek Statistics Authority (ELSTAT) the number of unemployed in 1,070,724 people and the number of employed suffered a 8% decrease, when compared to February 2011.

Among the youth, younger than 25 years old the unemployment reached 53.8 percent.

PS And then some wonder why pro-bailout parties were rejected up to 68% by the voters

Read the rest.

Business closure ravage Greece

The rate of business failure is stunning, but with a fifth of the workforce jobless and the salaries of those still working already slashed by a fifth, the news is hardly surprising.

From Andy Dabilis of Greek Reporter:

[M]ore than 1,000 businesses in Greece are closing up shop each week, victims of a deep recession caused by pay cuts, tax hikes and slashed pensions that have made many Greeks simply stop spending on anything than goods needed for their survival.

Figures released by the National Confederation of Hellenic Commerce showed that retail sales during the Greek Easter period were down 18 to 21 percent in the apparel/footwear category and 11-13 percent at department stores compared to last year, despite offerings of up to 60-90 percent off. Shoppers in major retail stores reported seeing almost no one buying in recent days as political instability over the elections and expected new elections have rattled Greeks as much as European officials who fear Greece could be forced out of the Eurozone of countries using the euro and return to its ancient drachma, completing the country’s economic collapse. Turnover was also down from 2011, declining to $5.82 billion from $6.46 billion in 2022.

Read the rest.

Why Brussels doesn’t want a new election

Why do we suspect a lot of backroom wheeling and dealing in Brussels?

Consider this from Athens News:

Voters who who turned their back on parties behind an EU/IMF bailout on Sunday, say they are ready to do it all over again if, as seems all but certain, the election is rerun next month.

The two parties that dominated the country for decades and negotiated its 130 billion euro bailout were reduced to just 32 percent o the vote in Sunday’s election, with the rest of the voting public picked fringe parties that all opposed the bailout.

Politicians show virtually no sign of being able to cobble together a government, which means a new election is likely to be held in 3-4 weeks.

The political disarray has fuelled speculation Greece could be ejected from Europe’s single currency, even though polls show most Greeks want to keep the euro.

Read the rest.

So why did SYRIZA change its stance?

The Guardian’s report that Syriza has abandoned its hardline anti-austerity stance really puzzles us in light of this report from Keep Talking Greece:

Does the strong anti-austerity line of left-wing SYRIZA leader Alexis Tsipras boost the party in the awake of fresh elections? Apparently it does, according to Wall Street Journal, that considers the possibility of Tsipras to emerge as the biggest winner in potential upcoming fresh elections.

“Tsipras, strengthened by a broad coalition of like-minded left-wing groups, could emerge as the biggest winner as Greeks continue to register opposition to the austerity measures.

According to the latest internal surveys by Greece’s conservative and Socialist parties, Syriza continues to make strong gains among Greek voters three days after Sunday’s elections and is now regarded the country’s most popular party.

Sources from both parties said Wednesday that Syriza is now garnering around 25% of the vote–up from the outcome Sunday when it won 16.8% support, putting it two percentage points behind New Democracy’s 18.9%.

Read the rest.

So we ask again: What’s going in Brussels?

British bookies stop Greek eurozone exit bets

Years ago we spent nine months investigating America’s largest bookmaking operation for Sports Illustrated, and one thing we learned was the bookies are acutely attuned to inside information, developing their own intelligence sources to help them set odds and decide how much and where to lay off heavy betting that leans too far in one direction.

So we’re wondering what sparked this development, reported by EUbusiness:

British bookmakers Ladbrokes and William Hill have suspended betting on whether crisis-hit Greece will leave the eurozone, citing on Thursday political uncertainty in the country.

Athens was plunged into fresh crisis over the weekend as angry voters rejected austerity measures, leaving politicians struggling to form a viable government and raising fresh doubts over Greece’s eurozone membership.

“While the uncertainty continues in Greece, we have suspended betting on all markets in relation to a withdrawal,” a Ladbrokes spokesman told AFP.

“We will pay out on an official statement of intention (to withdraw). The odds were slashed to 1/3 from 4/6 this morning before we pulled it.”

Read the rest.

Greek borrowing costs soar again

Meanwhile, as Greece stumbles its way toward a new dysfunctional government, the debt load can only continue to grow, inevitably leading to further rounds of austerity and, presumably, a eurozone exit.

The market’s lack of confidence in the future of a euozone greece is amply demonstrated by the results of the latest government bond sale.

From Agence France-Presse:

Greece’s cost of borrowing jumped on May 8 as it sought to raise 1.3 billion euros ($1.7 billion) in a sale of six-month treasury bills, with it paying 4.69 percent to investors, up from 4.55 percent at the last equivalent sale on April 10.

“The failure of the Greek election to produce a new government provides some support to our view that Greece could leave the eurozone as soon as the end of this year,” London-based Capital Economics said in a note.

A Greek exit from the eurozone would not kill the euro because Germany has invested too much in the single currency’s survival, the head of Fitch ratings agency said May 8.

“If the deutschemark were reintroduced, it would appreciate considerably against other currencies. Export industries, which are the motor of the German economy, would suffer,” Fitch boss Paul Taylor explained in an interview with Spiegel Online.

“Germany isn’t going to tolerate that, even if one or more countries leave the eurozone.”

Read the rest.

Beat the press — literally

It’s tough being a reporter in Greece these days, where threats are regular occurrences, photographers are routinely beaten by cops, and now it’s the turn of a talking head to feel the boot.

From Keep Talking Greece:

Private Skai TV and radio journalist Costantinos Bogdanos was taken to the hospital with hand fracture and some head injuries after being attacked by three unknown perpetrators in downtown Athens.

The incident occurred at 1.30 am in Exarchia district of Athens. Speaking to SKAI TV, Bodganos said that he was attacked when he approached his car after a meeting with friends.

The three men grabbed him, threw him down and started to beat him with punches and kicks. Bodganos could not remember whether they were masked but he said that he felt “boots” and a “helmet”.

A friend of him who was nearby called the police, a squad arrived but the culprits managed to escape in unknown destination.

The journalist said that the attack was not a random incident with the purpose of burglary.  “The attackers mentioned the name of Skai and the EU memorandum.” Bodganos told Skai tv and radio after he was released from the hospital.

Read the rest.

WordPress eclipses Golden Dawn website

This one gives us pause. While we have zero sympathies with Golden Dawn, taking down their website could be counterproductive, rallying supporters and giving the group more sypmathy than it deserves,

From Ekathemerini:

Blog publishing platform WordPress has taken down the site maintained by the far-right party Chrysi Avgi (Golden Dawn) after it breached the terms of service.

Chrysi Avgi won 21 seats in Parliament in Sunday’s elections but has since been embroiled in controversial incidents with journalists.

Among the reasons WordPress gives for suspending content is inciting “violence or threatening or impersonating a private person.”

Read the rest.

In a second story, Ekathemerini reports on a call for a Golden Sunset:

Thessaloniki Mayor Yiannis Boutaris on Wednesday called for Greece to copy Germany’s law and ban any “Nazi parties.”

His comment came in the wake of far-right Chrysi Avgi (Golden Dawn) winning seats in Parliament on Sunday.

“It is a sign of the times,” said Boutaris during an event to mark the end of the Second World War. “Recession, austerity and unemployment have revived extremism in Europe.”

Cyprus President Dimitris Christofias also decried the rise of Chrysi Avgi, calling it a “rape of modern Greek history.” Christofias slammed the party for supporting the 1967-74 Greek junta, whose actions in Cyprus triggered the Turkish invasion of the island.

More austerity ahead for Spain

By all accounts, Spain’s the next domino in line to fall, and now it looks like another round of austerity is in order, a move certain to produce more backlash in a country where more than half the youth can’t find jobs.

From EurActiv:

Spain is set to miss its deficit reduction targets this year and next unless it takes new measures, the European Commission will forecast on Friday (11 May), but Madrid insists the targets will be met, Spanish and EU officials said.

The EU’s executive arm will announce on Friday its economic forecasts for the 27 countries in the European Union for this year and next, including growth, budget deficit and debt rates.

Spain’s borrowing costs have soared on investor concerns that the government may have to bail out the banking sector. Madrid has promised to reduce the public deficit to 5.3 percent of gross domestic product (GDP) this year from 8.5 percent in 2011, and to 3 percent in 2013.

However, the Commission will say that unless policies change, Spain will have a budget shortfall of 6.0 percent this year and just short of 4 percent in 2013, two EU officials said.

Madrid, under intense market pressure to demonstrate its public finances are be sustainable, is adamant it will meet the targets, although no new measures are in the pipeline for now.

Read the rest.

Spanish housing market collapses

No big surprise, but yet one more sign that the Spanish apocrypha is near.

From ANSAmed:

No sign of revival for the Spanish property market, which in March just registered yet another fall of 22.7% in its purchase and sales for homes on a yearly basis, the national statistics institute reported today.

The sale of houses decreases for the thirteenth consecutive month despite in March the fall was inferior to the one registered in the same month of 2011. 25,464 sale operations were carried out in general in March.

Hollande prepares to fly to Berlin

So will Merkozy be replaced by Merklande?

From Angela Diffley of Radio France Internationale:

France’s new president François Hollande will fly to Berlin within hours of his swearing-in ceremony on Tuesday for a working dinner with German Chancellor Angela Merkel and talks on the eurozone debt crisis.

The day after François Hollande’s victory, Angela Merkel declared that she would welcome him “with open arms” in Germany, but that “the fiscal pact is not negotiable. It was negotiated and signed by 25 countries”.

Hollande of course said during his election campaign that he wanted a re-negotiation of the fiscal pact, which was agreed at a difficult summit in Brussels in December. He wants more emphasis on growth in the pact.

On Thursday Merkel was applauded by lawmakers in Germany’s Lower House when she declared that there was no “magic bullet”, and that growth fuelled by borrowing would simply catapult the eurozone back “to the start of the crisis.”

But in Greece, amid political deadlock following Sunday’s elections, some are hailing Hollande as the new “Roosevelt of Europe”. Alexis Tsipras of the far-left Syriza party has asked for a meeting with the new French president as soon as possible and hopes to persuade him to speak for all those European people who are fed up with austerity, when he meets Merkel in Berlin next week.

Read the rest.

And the latest from the Iron Chancellor

The Iron Chancellor gave a hint today of what she’ll be telling the new French president:

From Xinhua:

German Chancellor Angela Merkel stood firm Thursday on the necessity of fiscal austerity, warning that any growth based on new debt would push Europe back to the mire of economic crisis.

The chancellor came under heavy pressure recently for her prescription to the prolonged eurozone debt crisis — tough budget cuts and fiscal discipline, as voters in France and Greece voiced resentment against such courses by choosing candidates and parties lashing austerity and urging refocus on growth.

“Growth through structural reforms is sensible, important and necessary.” Merkel told lawmakers in a speech in parliament. “Growth on credit would just push us back to the beginning of the crisis, and that is why we should not and will not do it.”

Merkel stressed that cutting debt and boosting growth were “two pillars” of the wayout to the crisis, and slashing deficit and regaining competitiveness “are not contradictory”, but belonging to each other.

Read the rest.

And a dose of Bunga Bunga to close

Another revelation of the depths of corruption of the government of oft-indicted, never-convicted former Italian Prime Minister reported by Corriere della Sera:

In 2006, Silvio Berlusconi moved to wrest control of the defence committee from the Centre-left by “paying one million euros to Senator Sergio De Gregorio”, who then left Italy of Values (IDV) and joined Forza Italia. The bombshell was dropped by Valter Lavitola on 25 April, when he was questioned in the presence of his lawyer Gaetano Balice at Naples’ Poggioreale prison. The deal broker described how parliamentarians were “traded”, naming Clemente Mastella and Lamberto Dini in negotiations with the Centre-right to bring down the Prodi government in what he called “Operation Liberty”. Mr Lavitola went on to discuss his relations with top Finmeccanica executives, asserting that he was a middleman for contracts in Central America. He also said he had introduced “Prime Minister Berlusconi to General Spaziante” to secure his appointment as “number two in the financial police”. It was the start of what Mr Lavitola himself calls his “collaboration” with public prosecutors Vincenzo Piscitelli, Henry John Woodcock and Francesco Curcio, who applied for and obtained his arrest in connection with false invoices issued by his newspaper l’Avanti! and allegations of international corruption. The magistrates are scrutinising the claims with care and do not rule out that they could have been made by Mr Lavitola to sort out a few old scores he had been unable to settle while he was in hiding.

Read the rest.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s