quarta-feira, 15 de fevereiro de 2017

Greece defies creditors over more cuts as economy shrinks unexpectedly / Schäuble strikes again

Greece defies creditors over more cuts as economy shrinks unexpectedly
Athens’ refusal to further austerity intensifies standoff over €86bn aid package that requires government to implement economic reforms

Helena Smith in Athens
Tuesday 14 February 2017 19.57 GMT

The standoff between Greece and its creditors has escalated, with the embattled Athens government vowing it will not give in to demands for further cuts as data showed the country’s economy unexpectedly contracting.

As thousands of protesting farmers rallied in Athens over spiralling costs and unpopular reforms, the Hellenic statistical authority revealed that Greek GDP shrank by 0.4% in the last three months of 2016.

After growth of 0.9% in the previous three-month period the fall was steep and unforeseen. On Monday the European commission announced that the eurozone’s weakest member was on course to achieving a surplus on its budget of 2.3% after exceeding its 2016 fiscal targets “significantly”.

The setback came as prime minister Alexis Tsipras’ lefist-led coalition said it would not consent to additional austerity beyond the cuts the country had already agreed to administer under its third, EU-led bailout programme.

Speaking on state TV, the digital policy minister Nikos Pappas, Tsipras’ closest confidant, insisted that ongoing differences between the EU and International Monetary Fund over how to put the debt-stricken state back on the road to recovery were squarely to blame for the failure to conclude a compliance review at the heart of the standoff. The IMF has argued vigorously that extra measures worth 2% of GDP will have to be enforced with immediate effect if Greece is to achieve a high post-programme primary surplus of more than 1.5%.

“The negotiations should have ended. Greece has done everything that it was asked to do,” he said and added there would be “no more measures”.

The future of the €86bn financial aid programme is contingent on Athens implementing agreed economic reforms. The IMF has repeatedly said it will not sign up to the programme unless the crisis-plagued country is given more generous debt relief in the form of a substantial write-down.

With Greece facing a €7bn debt repayment to the European Central Bank in July, fears of a Greek default have once again hit markets with shares falling and interest rates on Greek debt rising.

But Tsipras is also under pressure from back-benchers in his fragile two-party administration. After seven years of adopting grueling austerity in return for emergency bailout aid many are openly questioning the wisdom of applying yet more measures that have already put Greece in a permanent debt deflationary cycle.

All eyes are now on a flying visit Europe’s economics chief Pierre Moscovici will make to Athens on Wednesday. Government sources said they were hoping the EU commissioner would come with an “honourable compromise” acceptable to all so that stalled negotiations could resume with the return of auditors as soon as possible.

But the eurozone chief, Dutch finance minister Jeroen Dijsselbloem, warned it was unlikely a solution would be found before the next meeting of finance ministers representing countries in the currency bloc on 20 February – raising the spectre that Greece could be headed for a rerun of 2015 when it teetered towards euro exit.

On Monday, Christine Lagarde, the IMF’s managing director, raised the stakes further saying Greece could not be singled out for special treatment. “We have been asked to help, but can only help at terms and conditions that are even-handed,” she told Reuters. “In other words we cannot cut a special sweet deal for a particular country because it is that county.”

Despite the delay, Greek officials have repeatedly voiced optimism that the review will soon be concluded. Amidst the uncertainty the real economy has been put on hold with non-performing bank loans and private debt ballooning. This week the head of the Greek public power corporation, DEH, said lack of liquidity was such that the body was on the verge of bankruptcy.

Schäuble strikes again
Athens has largely kept its part of the third bailout bargain. Germany should heed the IMF and commit to debt relief for austerity-fatigued Greeks.

By PAUL TAYLOR 2/14/17, 9:40 PM CET Updated 2/15/17, 7:47 AM CET

PARIS — Is Wolfgang Schäuble about to exact his revenge?

Less than two years after he narrowly failed to force Greece out of the eurozone, the German finance minister has once again taken a hard stance, dismissing calls for debt relief and insisting on yet more austerity.

Schäuble‘s intransigence adds a stiff dose of curmudgeonry into the latest episode of a long-running three-way struggle between Athens, its European Union creditors and the International Monetary Fund.

His demand — that Greece meet a budget surplus target before debt service payments of 3.5 percent of GDP in 2018 and for a decade thereafter — has been dismissed by the IMF as unrealistic. It comes just as Greeks are finally starting to emerge from an eight-year depression that wiped 25 percent off their economic output and left nearly a quarter of the workforce out of a job.

This tough stance has increased doubts about the IMF’s willingness to support Greece’s third financial bailout, agreed with the eurozone in July 2015, and clouded chances of keeping the program on track before Dutch and German elections this year. That’s one reason why eurozone bond markets are suffering their worst bout of jitters since 2015.

EU and Greek officials hope to clinch an agreement to conclude the review in time for eurozone finance ministers to give the green light to a new slice of aid at their next meeting on February 20.
After Britain’s vote to leave the EU, the Trump administration’s apparent eagerness to break up the bloc and the rise of populism, the last thing the Continent needs is another eurozone crisis. Indeed, potential investors are already taking fright at the risk of another Greek debt drama.

If Schäuble wants the IMF on board in Greece to guarantee tough enforcement of reforms, as he has promised the German parliament, he should heed the global lender’s advice and commit now to easing Athens’ debt burden in the future.

This need not require a “haircut” — reducing the amount Greece owes its European creditors. The goal could be achieved by stretching out repayments over decades, extending an interest payment moratorium and reducing interest rates. After all, Britain only finished paying off its World War I loans in 2015, a century after borrowing the money.

Schäuble, 74, who revels in playing the grumpy Uncle Scrooge of the eurozone, has long contended that Athens is incapable of reforming its economy and public finances and should be ejected from the currency area. He tried to put that into practice in 2015 after Greek voters rejected the terms of a previous bailout in a referendum, proposing Athens take a “temporary break” from eurozone membership — a move that would almost certainly lead to Grexit.

The veteran conservative was overruled by German Chancellor Angela Merkel, who agreed to a €86-billion eurozone rescue package after leftist Greek Prime Minister Alexis Tsipras accepted tough terms he had previously resisted. Merkel understood it was safer to hold the eurozone together than to open up the possibility that membership in the monetary union is reversible.

Now Schäuble is calling that into doubt again, even though Greece actually exceeded its fiscal targets last year due to improved revenue and a strong tourist season. Athens has to pay €7 billion to the European Central Bank in July, for which it needs the next instalment of eurozone rescue loans. They can only be unlocked if the creditor institutions, including the IMF, sign off on a review of Athens’ compliance with the bailout program.

EU and Greek officials hope to clinch an agreement to conclude the review in time for eurozone finance ministers to give the green light to a new slice of aid at their next meeting on February 20. But with Schäuble and the IMF at loggerheads, a decision could drag out until April or May.

The reason the crisis is bubbling up again comes down to domestic politics. Schäuble had tried to kick the Greek debt issue into the long grass, putting off a decision until after September’s German election. In doing so, he bet that the IMF would go along with deferring discussion of substantial relief until toward the end of the bailout program in 2018.

But IMF staff, stung by critical internal and external reports, saw their credibility at stake and refused to massage the numbers and declare Greece’s debt (now 179 percent of GDP) sustainable when they consider it to be on an “explosive path.”

Tsipras has done Greece no favors by demonizing Schäuble and picking fights with the IMF to appease his leftist base, especially since the fund is Athens’ ally in its quest for debt relief.
Schäuble does not want to be accused of going soft on Athens in the run-up to an election in which the hard-right Alternative for Germany and the liberal Free Democrats are both campaigning to kick Greece out of the eurozone. Aiding the Greeks is deeply unpopular among conservative German voters and media, who blame Athens’ woes on fiscal profligacy and fecklessness rather than excessive austerity. They revere Schäuble as a guarantor of fiscal rectitude at home and a stickler for the rules in Europe.

But Schäuble would be wise to remember the main threat to his and Merkel’s center-right Christian Democrats comes not from farther right but from the resurgent Social Democrats, whose new leader, former European Parliament President Martin Schulz, is arguing in favor of giving Greece more breathing space. Schulz rightly says flirting again with pushing Greece out of the eurozone plays into the hands of anti-EU populists in Europe and the United States and would certainly not be in Europe’s or Germany’s interest.

While former U.S. President Barack Obama publicly advocated debt relief for Greece, Donald Trump has not yet taken a position or nominated a new U.S. representative to the IMF. But his self-proclaimed putative envoy to the EU, Ted Malloch, has poured oil on the fire by saying Greece should have left the monetary union four years ago and might well have to sever ties with the euro if Germany and the IMF remain on a collision course.

To be sure, it is possible Schäuble’s tough talk is just a tactic to drive a hard bargain on those economic reforms. German officials accuse the Greek authorities of dragging their feet on the privatization of state enterprises and measures to make it easier for employers to lay off workers.

Tsipras has done Greece no favors by demonizing Schäuble and picking fights with the IMF to appease his leftist base, especially since the fund is Athens’ ally in its quest for debt relief. But Merkel should not let her finance minister take a wrecking ball to Greece’s bailout. After doing all she has done to save the eurozone, her own legacy is at stake.

Paul Taylor, a contributing editor, writes POLITICO‘s Europe At Large column.

Sem comentários: