EuroWatch: Elections, Greece, bank woes

News of three elections, one held yesterday, another upcoming, and more handed Greek electioneering by Northern Europeans, plus the latest bad news from Greece, bank woes in Denmark, German labor news, and more.

Pro-EU candidate wins in Serbia

An ardent nationalist who once served as deputy prime minister to Slobodan Milosevic has been elected president of his country.

A one-time bitter foe of Serbian membership in the European Union who reversed course and now pushes a strong pro-EU line, Tomislav Nikolic defeated an incumbent who had urged a more cautious stance toward membership.

From the BBC:

Nationalist Tomislav Nikolic has been elected president of Serbia, beating liberal incumbent Boris Tadic.

Mr Tadic conceded victory after early predictions showed him trailing with 47.4% of the vote, with Mr Nikolic predicted to win 49.4%.

The contest had been seen as a vote on EU membership and the newly-elected president promised that “Serbia will not stray from its European path”.

Mr Tadic appealed to keep “Serbia’s strategic orientation towards the EU”.

“It would be a tragic mistake if Serbia changes its orientation. It is a matter of peace and economic development,” he said.


The outcome of the vote may affect both Serbia’s EU prospects and the future of Kosovo, the breakaway Serbian province which declared independence in 2008.

Read the rest.

More from Dan Bilefsky of the New York Times:

Declaring victory, Mr. Nikolic, 60, said he remained committed to Serbia’s European Union aspirations. “Serbia will not walk away from its path to the E.U.,” he said, promising to restore Serbia’s economic fortunes while fighting corruption. “These elections were not whether about Serbia will go to E.U., they were about solving problems that the Democratic Party has created in Serbia,” he added.

Analysts said Mr. Nikolic, a sometimes fiery populist, struck a chord with a growing underclass buffeted by the financial crisis at a time when the crisis-ridden European Union has lost its luster. As was the case with incumbents in Greece and France, they said Mr. Tadic had suffered a backlash from disillusioned voters hit by hard times.

Mr. Nikolic, a former ultranationalist, has in recent years professed a commitment to Serbia joining the European Union and has called for close relations with the United States. But analysts questioned whether a man who once said he would rather see Serbia become a province of Russia than a member of the European bloc would continue to push Serbia toward a pro-European path. Mr. Nikolic was in government with Mr. Milosevic when NATO bombed Serbia in 1999 during the war in Kosovo.

Read the rest.

Ham-handed Greek electioneering

Two of Europe’s biggest governments are campaigning in the 17 June elections, France and England, and they’re both telling Greeks to get with the program and don’t give their votes to Syriza.

First, any pretense that socialism has anything to do with the new French government of François Hollande was handily dispelled by their foreign minister.

From Ekathemerini:

If Greeks want to keep the country in the euro area, they will have to show this with their vote, France’s Foreign Minister said on Monday.

“If [Greeks] want to stay in the euro — and I think a majority of them want that — they cannot vote for parties that eventually make them exit from the eurozone,” Laurent Fabius was quoted by Dow Jones as telling French radio Europe1.

“What’s at stake is whether Greeks stay in euro or not. They cannot at the same time want to stay and not make any effort,” Fabius said according to Dow Jones.

Read the rest.

David Cameron enters Greek election campaign

And he’s pushing a restoration of the ousted Pasok/New Democracy alliance that brought Greece to ruin in the first place.

His platform was a press briefing following Sunday’s G8 meetings in Chicago.

From The Guardian’s Patrick Wintour and Giles Tremlett:

A second Greek vote next month backing parties opposed to the European Union’s bailout package would be a decisive vote to leave the euro for which contingency plans have to be made now, David Cameron warned on Sunday in a dramatic raising of the stakes.

Speaking in Chicago after two days of talks with world leaders on the euro crisis, he said: “We now have to send a very clear message to people in Greece: there is a choice – you can either vote to stay in the euro, with all the commitments you’ve made, or if you vote another way you’re effectively voting to leave.” His remarks are in effect an attempt to make next month’s vote a referendum on continued membership of the euro.

Cameron indicated that he wanted to make the threat of ejection from the euro credible by showing the Greeks that preparations are being made for their departure, a change of tactics after weeks of mixed messages from the European commission on whether such plans are being laid.

It is a piece of high-stakes diplomacy since his threat may either anger Greek voters, driving them into the arms of the radical parties, or act as a sobering warning that the end game is truly imminent and renegotiation of the EU-imposed austerity package is not an option.

Read the rest.

But Spiegel says the pressure is much broader

Hollande and Cameron aren’t the only ones pushing the New Democracy/Pasok alliance.

From the article:

Despite official claims to the contrary, the governments of the euro zone are threatening to kick Greece out of the currency union. At a meeting of euro-zone finance ministers last Monday in Brussels, it was made clear to Greek Finance Minister Filippos Sachinidis just how serious the situation had become.

“If we now held a secret vote about Greece staying in the euro zone,” Euro Group Chairman Jean-Claude Juncker warned his Greek colleague, “there would be an overwhelming majority against it.” Other participants in the meeting also had harsh words for Sachinidis, with particularly strong criticism towards Athens coming from Portugal and Ireland, countries that have also accepted bailouts in the crisis.

The countries say it is unacceptable that they have made serious efforts to fulfil the European Union’s guidelines for consolidating their budgets while Greece incessantly breaks its reform agreements. It was the Greeks, they noted, who poured oil on the flames and repeatedly caused the whole euro zone to catch fire with their repeated negligence, other ministers added.

Juncker, who is also Luxembourg’s prime minister, added that new elections on June 17 would be Greece’s last chance. If the country is unable to form a government that respects the conditions for previously agreed to financial aid to Greece set by the European Union, the International Monetary Fund and the European Central Bank, “then it is over.”

Read the rest.

Ssprechen Sie Deutsch, Herr Minister?

Hollande’s Euruominister might not know it well, but he’s learning, reports EUbusiness:

France’s new European affairs minister admitted Monday he had left it late to start learning German — beginning the day before an official trip to Berlin — but still managed to squeeze out a few words.

Beginning a news conference with his host and counterpart Michael Link, Bernard Cazeneuve told reporters in German: “I am pleased to be here in Berlin … I am delighted to have found in Mr Link a partner and friend.”

He then switched to his native tongue to admit: “I just started learning German yesterday for this meeting today with my colleague.”

Read the rest.

Ah, yes. Hope™ and Change™, done the French way.

Fears of the Grexit grow more intense

One has to wonder just how serious those threats of a forced Greek eurozone exit really are.

With Northern European officials campaigning hard for the return of the Pasok/New Democracy coalition in Greece, thoughts of a possible Grexit are foremost in their minds.

Here’s yet another take on just what that might mean, from Steven Erlanger of the New York Times:

However cavalierly some European officials talk of “managing” a Greek exit, the political and financial costs would represent a fundamental challenge to the European Union and its credibility, and the point of no return may be approaching faster than anyone anticipated.

“Anyone who thinks a Greek departure would be cleansing and not cause systemic contagion is deluding themselves,” said Simon Tilford, chief economist at the Center for European Reform in London. “Already we’ve seen a sharp increase in spreads and the beginnings of capital flight in other struggling euro zone economies,” with the risk of a full-blown banking crisis in Spain, where 16 banks and four regions have just been downgraded by Moody’s Investor Service.

The stresses on the system are now so great that to contain panic and contagion, while protecting countries too big to bail out, would require political choices and financial commitments that many countries, including Germany, Finland and the Netherlands, seem unlikely to make — the prime reason they would prefer that Greece remain.

Read the rest.

And more of the same from Bloomberg’s Carol Matlack:

Greece’s neighbors have reasons to be lenient. Athens said on May 15 that it only has enough cash to last until July. If the bailout tap is turned off, the government could be forced as early as midsummer to turn back to the drachma—devalued by at least 40 percent against the euro, most economists reckon—to keep the country functioning.

That, in turn, would trigger an uncontrolled default on Greece’s euro-denominated debt. It’s a scenario no one wants—including the International Monetary Fund and European institutions that have extended tens of billions in loans to Greece. The European Central Bank, as well as foreign creditors of Greek companies, banks, and households, also would be big losers (table). Greece’s foreign liabilities, both public and private, total €424 billion ($543 billion), more than the economy of Switzerland. “There’s lots of money on the table that could be lost,” says Marchel Alexandrovich, European financial economist at Jefferies International (JEF) in London.

Default fears are already spooking investors in other countries, such as Spain and Italy, where bond prices have tumbled in the past few days. Greece, meanwhile, appears on the verge of a bank run: Depositors withdrew some €700 million on May 14, and the Central Bank warned the situation could worsen.

Politics, rather than economics, could dictate Europe’s next move. Germany’s insistence on discipline leaves it increasingly isolated, as governments across the Continent face unrest over fiscal tightening. Hollande was elected on an anti-austerity platform, and the Greeks are clearly hoping he’ll champion their cause with Merkel. The new French president “is on the European South’s side,” says Constantinos Michalos, president of the Athens Chamber of Commerce and Industry. “You cannot keep on milking a cow without feeding it.”

Read the rest.

And just how desperate is Greece’s plight?

Without an infusion of significant sums of additional cash, the outlook is grim, reports Anne Seith of Spiegel:

When the head of Greece’s central bank, George Provopoulos, recently met with his European counterparts, the session turned into a confession. His fellow Greeks had just withdrawn €800 million ($1.022 billion) from their bank accounts, within just a few days. Consequently, at a meeting of the Governing Council of the European Central Bank (ECB) last Tuesday, Provopoulos had to ask for money — once again.

Most Greek banks are currently cut off from the usual ECB lines of credit. They no longer have sufficient collateral. A number of banks are even currently operating without sufficient capital as a risk buffer for their activities. Indeed, Provopoulos had to accept last week that yet another crop of Greek banks were branded as unfit for ECB refinancing.

These zombie banks are being kept alive with help from the so-called Emergency Liquidity Assistance (ELA) — a rescue aid program managed by Provopoulos. At every session of the Governing Council, he has to have these special allocations approved.

For the time being, he has succeeded. Last Tuesday, the ceiling for the amount of aid that Provopoulos is allowed to give his banks was even raised again, from roughly €90 billion to €100 billion. But the Council is harboring increasing doubts about this permanent subsidy.

The central bankers are caught in a moral conflict. Cutting off the flow of money would have disastrous consequences: Greece would quickly run out of money. The population would soon not even have enough cash to pay for its daily purchases.

Read the rest.

Pasok leader proposes austerity revisions

The one thing the earlier round of Greek voting revealed was a surge in discontent over the draconian conditions imposed by the Troika for the Greek bailouts.

The gutting of the Greek working class and civil service ensured a further economic stagnation and political polarization.

Now even the pro-bailout parties are coming to the realization that their unalloyed support for austerity may noy be a plus at the polls.

From Keep Talking Greece:

Leader of socialist PASOK, Evangelos Venizelos, tabled a proposal with six points concerning the revision of the loan agreement between Greece and its lenders. During his meeting with acting prime minister Panagiotis Pikrammenos on Monday, Venizelos claimed that Greece can achieve the revision of MoU, even though leading EU officials dismiss such option.

In particularly Venizelos proposed:

  • No further cuts in people’s income, especially in wages and pensions
  • To protect the institution of collective bargaining agreements
  • To radically increase the levels of liquidity
  • To immediate release of public and private investment in infrastructure projects
  • To implement the political commitments of the European Council concerning the development aid package to Greece
  • To support with European funding programs for youth, community service, etc.

Read the rest.

Alexis Tsipras takes his act on the road

The leader of Syriza and the primary beneficiary of Greek voter anger during the last election is taking his message to other European lefists, a move that’s certain to have the eurocats in Brussels in a tizzy.

From Athens News:

In an interview on the eve of his first visit abroad since his surprise rise in the May 6 election, Tsipras veered occasionally into the combative rhetoric that has seduced disaffected the country’s youth and alarmed Brussels and Berlin.

But he also stressed repeatedly that he wants negotiations to keep Greece in the euro. He said he was looking to forge ties with likeminded European figures, including new French President Francois Hollande, who want to soften austerity policies by finding new ways to encourage growth.

“The first reason we are taking this trip is because we want the governments of these important European Union countries, France and Germany, to see what we stand for: what is being transmitted in Europe about us is not what we represent and want,” Tsipras told Reuters at Syriza’s headquarters.

He will not be meeting government officials, but will see fellow leftists in France and Germany, including former French presidential candidate Jean-Luc Melenchon and Klaus Ernst and Gregor Gysi of Germany’s Left party. He will hold news conferences in both capitals to get his message to a wider audience.

“We are not at all an anti-European force. We are fighting to save social cohesion in Europe. We are maybe the most pro-European force in Europe, because its dominant powers will lead the union into instability and the eurozone to collapse if they insist on austerity,” he said.

Read the rest.

Europe’s Central Bank has no Plan B

Or so they say.

And if you believe that, we’ve got a bridge to sell you in Brooklyn and some choice Florida swampland, too.

But that’s what they’re saying, as EUbusiness reports:

The European Central Bank’s “plan A” is for Greece to remain in the single currency and that is the only scenario the central bank is working on, a top ECB official said on Monday.

The ECB’s “preference is that Greece remains in the eurozone. That’s the Plan A, that’s what we’re working on,” executive board member Joerg Asmussen told a conference in the German capital.

Asked whether the central bank also had a “plan B”, Asmussen replied: “There’s already been criticism that there is none. But as soon as you start talking about ‘plan B’ or ‘plan C’ then ‘plan A’ is automatically thrown out of the window.”

In inconclusive elections on May 6, the majority of Greeks voted against the tough spending cuts and tax hikes prescribed as part of a debt bailout by the European Union and the International Monetary Fund.

Read the rest.

Greek Communists demand NATO exit

No surprises in the announcement made Monday.

From Athens News:

Communist Party of Greece (KKE) leader Aleka Papariga reiterated her party’s position for Greece’s disengagement from NATO, in a statement on Sunday as a two-day NATO summit opened in Chicago.

Papariga blasted the other political parties – those that want to govern or to participate in a coalition government – for not taking a position on the NATO summit “which will be taking terrifying decisions for the peoples of Europe, the peoples of our region and the entire world”.

She called on the political parties to take a position on what Greece’s participation in NATO should be, and on where those parties should say ‘no’.

Read the rest.

Greek corporations raise consumer prices

With their smaller paychecks, Greek voters are certain to be angered even more by this latest move from the corporate sector.

From ANSAmed:

Certain Greek companies couldn’t care less about the financial crisis consequences hurting the average Greek family and are pushing for increases in product prices while the country’s economy sinks in bottomless waters.

Trustworthy information from reports that companies, such as the Fillipou family-owned Elbisco (Yiannis and Kiriakos Phillipou), demand a retail increase of 15% despite the significant reduction of Greek household income. These, as Greek.Reporter website notes, are increases which appear absolutely unjustified due to the labor cost cuts both companies have made and cannot be accepted given the devastated market.

At the same time, it is not only the two famous food industries that want increases but also others, such as Coca Cola, which demands increases of about 5%. The price increases will not stop there, since other Greek companies want to follow in the same steps as Elbisco, arguing that the continued increase in production costs due to taxes imposed on the entire chain make the increase in retail prices unavoidable.

Read the rest.

The broken Greek social contract

From an article by Julia Amalia Heyer of Spiegel headlined “Why Greeks Will Vote for Tsipras”:

Up until the crisis, Greek politics was governed by an “unwritten social contract,” says [Stavros] Lygeros, author of the bestselling book “From Kleptocracy to Bankruptcy,” which deals with Greece’s economic collapse. According to Lygeros, this contract was based on giving and taking. Voters left the politicians alone. They didn’t complain about waste and corruption and, in return, were rewarded by the two alternating main governing parties with public service jobs and waves of new social services.

The crisis has brought this tacit agreement to an end and the social contract has collapsed, says Lygeros. Now, there is no longer any money for either side. According to Lygeros, today’s dilemma is that “the old kleptocratic system, which created these sick conditions” is bankrupt in the truest sense of the word, yet there is still no new one to replace it. At the same time, he notes that the troika consisting of the European Commission, the European Central Bank and the International Monetary Fund has lost all credibility because it has so visibly allied itself with the ruling class, which has long since been discredited.

Thus, a politician doesn’t have to be a demagogic genius to harness the enormous discontent among the population, as Tsipras is currently doing. And Chancellor Merkel’s alleged proposal that Greece hold a referendum on its membership in the euro zone only makes life easier for the left-wing candidate. She’s treating Greece “like a protectorate,” he says.

Of course the entire country has not blindly succumbed to the audacious charm of this self-appointed savior. Greek President Karolos Papoulias, who named an interim government last week under a senior judge, Panagiotis Pikrammenos, strongly urged his fellow Greeks to secure the viability of a new government when they vote in the next election. Otherwise, he said, the country will be bankrupt by the end of June.

Read the rest.

While Lygeros is certainly correct that Tsirpas is bolstered by anger at loss of the social contract, his argument is a trifle glib. What happened in Greece is little different than the process that’s unfolded throughout the Western industrial world.

The main differences are that the Greek economy was more marginal and the corruption a bit more evident.

Greece is not an exception, but more of a bellwether.

Another Greek on tour takes his act to Germany

And his message got censored.

From Greek Reporter’s Marianna Tsatsou:

Lakis Lazopoulos is on tour in Germany with sold-out performances, which apparently frustrates the Germans.

The renowned comedian appeared on stage in Düsseldorf dressed up in the traditional Greek costume (tsolias) and waited 4 minutes to start his show, as the Greek-Germans did not stop applauding.

As expected, the Greek man’s show included many hints and jokes about Greek political figures, such as former Greek PM George Papandreou and Chancellor Angela Merkel.

But the German director of the venue felt offended and demanded the translator to stop translating it into German language.

Lazopoulos became aware of this after having completed his performance while in the dressing room. “We did not do what she asked,” said the beloved comedian. “However, I consider her reaction a pretty good sign, not because I want to give anyone a telling-off but because they have to listen to things they can’t stand,” added Lazopoulos.

“We have been dealing with their state officials’ paranoid speeches for over the past two years, [which] I don’t relate to German people.”

As for Greek politics, Lazopoulos commented that, in his opinion, Alexis Tsipras is ready to govern.

Read the rest.

German workers win a pay raise

While Greek workers are suffering from massive wage and benefits cuts imposed by the Troika, with Germany in the lead, workers in a certain northern European country are faring much better.

From Deutsche Welle:

The threat of an all-out strike in Germany’s metal-working industry appears to be over after the IG Metall union won a 4.3-percent pay rise. The regional deal is expected to set a precedent for the industry nationwide.

Engineering workers in south-western Germany have won a 4.3-percent pay rise over the next 13 months.

The deal agreed between management and the IG Metall union during marathon talks just outside of Stuttgart, which dragged into the early hours of Saturday, ends weeks of partial walkouts and warning strikes.

Management had previously offered a 2.6-percent pay rise, while the union had been demanding 6.5 percent.

Although the deal only applies to workers in the state of Baden-Würtemberg it is expected to set a precedent for all of the 3.6 million workers employed in Germany’s metal-working and electronics sector. It also effectively removes the threat of the sector’s first full-blown strike in a decade. Baden-Württemberg is home to several large manufacturers including the carmaker Daimler.

Read the rest.

Immigrants head to Germany for jobs

With the German economy still strong, it’s the one sold labor market offering hope for workers from other countries, including Greece.

From Nicolas Martin of Deutsche Welle:

The latest figures from Germany’s national statistics office confirm that an increasing number of immigrants are coming to Germany from European Union countries plagued by the debt crisis. Last year, some 24,000 people arrived from Greece to live and work in Germany. That is about 10,000 more than in 2010 – an increase of 90 percent. Immigration from Spain also rose 50 percent.

In all, the number of new immigrants to Germany last year topped 958,000, which is 20 percent more than 2010. Another reason for the exceptionally high immigration rate was the end of restrictions on people looking to immigrate from new EU member states in eastern and southeastern Europe: Poland, Hungary and Romania.


Since the demand for highly qualified workers cannot be met from within the European Union alone, the German government has been focusing on recruiting academically trained people from non-EU countries. The introduction of the so-called “blue card” has made it easier for foreigners to immigrate to the EU and Germany. If a person can verify that they have a university degree and can prove they have a work contract with a salary of at least 44,800 euros ($57,050), then they can live and work in the EU.

Read the rest.

A fifth of Danish banks in trouble

That’s the worrisome report from Politken.DK in Copenghagen:

Some 19 Danish banks were in such a precarious condition at the beginning of the year that customers and investors should be keeping a wary eye on them, according to an analysis of 91 Danish and Faeroese banks from Niro Invest.

The analysis lists banks and financial institutions depending on a 19-factor risk evaluation based on 2011 accounts, with the banks with the largest numbers being seen as the most risky.

“It is unlikely that several of them will be able to continue as independent banks,” says Nicholas Rohde of Niro Invest. “The 19 banks concerned have an index value of over 475,” he adds.

Read the rest.


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