By Gideon Rachman
The shuttered banks of Greece represent a profound failure for the EU. The current crisis is not just a reflection of the failings of the modern Greek state, it is also about the failure of a European dream of unity, peace and prosperity.

Global equities, the euro and German Bund yields are all sharply lower as markets react to the imposition of capital controls in Greece. Greek banks are closed this morning, triggering long queues at ATMs.

 

Another chapter will be written this weekend in Greece’s proud, painful history of national suffering, defiance and martyrdom, real as well as imagined, at the hands of foreign oppressors.

Whether Greece’s radical leftist-led government capitulates to the demands of its eurozone partners and the International Monetary Fund, or whether it rejects them, the essentials of this narrative will not vary much.

Here is the reason: thanks to the way that Greece and its creditors have mishandled the debt crisis since it erupted in October 2009, the only available choice now, from the perspective of ordinary Greeks, is between extremely bad and worse. Read more

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Satellite image of man-made islands in the South China Sea

This week I have had the pleasure of escaping from Europe’s obsession with the Greek crisis and travelling to Sydney for the Australia-UK Asia dialogue, which is taking place at the Lowy Institute – Australia’s leading foreign-policy think-tank. The idea is to bring together British and Australian experts to discuss trends in Asia – and, it is hoped, to form common views and approaches. But, after the first day of discussion, I was left wondering whether the “tyranny of distance” may ensure that the Brits and the Australians will struggle to form a common view.

It is not so much a difference of interpretation, between the two sides, as a gap in urgency. For the Australians, the rise of China overshadows all other issues and raises fundamental questions about the role and future of their country – as an outpost of the west in the southern Pacific, with a rising China to the north. For the moment, however, the British can still treat the rise of China as a second-order issue – while policymakers in London obsess about Europe and keep a wary eye on Russia and the Middle East. Read more

After another day of negotiations the Greek government has failed to reach an agreement with its bailout monitors – the International Monetary Fund, the European Commission and the European Central Bank – on Athens’ reform plans.

Eurozone finance ministers are going to meet again on Saturday to try and broker a deal before the Greeks’ June 30 deadline to repay €1.5bn to the IMF.

 

Nato renews its commitment to collective defence
Defence ministers from the Atlantic Alliance’s 28 members are meeting in Brussels to discuss the reinvigoration of the alliance in the face of Russian aggression. The US is to make the biggest reinforcement of its forces in eastern Europe since the fall of the Soviet Union. Ben Hall discusses the development with Geoff Dyer and Sam Jones.

Greek Prime Minister Alexis Tsipras flew to Brussels on Wednesday morning to try to salvage a bailout deal amid increasing signs of unease among his nation’s creditors over the compromise offer he presented on Monday. Eurozone finance ministers held a meeting on Wednesday evening but without an agreement in place after a day of tense negotiations, it was expected that talks would have to continue on Thursday, the first day of a planned EU summit of national leaders.

By John Aglionby, Ferdinando Giugliano and Mark Odell

 

By Gideon Rachman
As EU leaders head into this week’s emergency talks , they face a choice of three hazardous routes out of the Greek crisis. Route one involves making concessions to Greece. Route two involves standing firm and allowing Greece to leave the euro. Route three involves Athens largely accepting the demands of its creditors.

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  • Marco Rubio is rattling assumptions and could upend 2016′s US presidential election, writes Edwards Luce
  • Can South Africa’s first female public prosecutor save the country from itself? (New York Times)
  • The Dominican Republic’s tortured relationship with its Haitian minority (Foreign Policy)

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Eurozone leaders are scheduled to hold an emergency summit on Monday evening to try to reach a last-ditch deal with Greece on a new bailout and to prevent it from defaulting on debts that are due at the end of next week. Athens submitted new reform proposals overnight but eurozone finance ministers said after a meeting there would not be a deal today. Markets, which rallied early on Monday on the cautious optimism, remain upbeat despite the politicians delaying the deadline.

By John Aglionby, Ferdinando Giugliano and Mark Odell

 

What happens if Greece defaults?
Is Greece about to default on its debts and if so, what happens next? Gideon Rachman and his guests Tony Barber and Martin Sandbu discuss what has gone wrong between Greece and its eurozone creditors and whether the political rifts can be repaired.

David Cameron says that Britain’s relationship with the rest of the European Union is deeply unsatisfactory and must change. He is pressing ahead with his plans to demand reforms in Europe and to put the results to an “in-out” referendum in Britain – probably next year. But if you look at current events in Europe, Britain’s deal does not look at all bad – in fact, it is strikingly good. There are two major crises currently underway – involving Greece’s debts and refugees arriving in Italy. And yet because of opt-outs negotiated by previous British governments, the UK has been able largely to avoid the painful choices facing the other Europeans. Read more

A man pushes a trolley with recyclable materials past graffiti in central Athens

Spectators of the debt drama starring Greece and its eurozone creditors are shuffling uncomfortably in their seats. They do not know the ending, but every twist in the plot suggests that it is extremely unlikely to be happy.

The Greek state is slipping closer to official default on its loans, and even exit from the eurozone. This creates an impression that the drama, which began in 2001 with the fatal decision to admit Greece into Europe’s monetary union, is approaching a sort of Act V dénouement. But real life is not a play, when the curtains come down after a fixed period of action.

Some high-level eurozone politicians – by which I mean prime ministers and finance ministers – have made it clear for at least five weeks that they are ready to let Greece default and, if necessary, drop out of the 19-nation currency area. Yet not all have thought hard enough about what might follow. To say “good riddance to the Greeks, they’ve been unreliable and irresponsible, we’ll be better off without them” does not amount to a serious policy. Read more

By Gideon Rachman
When the radical left won power in Greece in January much was made of the fact that Yanis Varoufakis, the new finance minister, is an academic economist. Many expected that Greece’s negotiating strategy would display a new subtlety and brilliance, now that it was guided by the co-author of Game Theory — A Critical Introduction.

Greek bailout negotiators have come up with a set of revenue-raising projections for 2015 and 2016 that troubles even the most optimistic Athens economist.

The leaked eight-page proposal published by Kathimerini includes administrative measures aimed at raising €1.6bn in the second half of this year and €2.3bn next year and include the following measures: Read more

  • Greece cannot lose by rejecting this week’s final offer from international creditors – and leaving the eurozone would achieve a better outcome for its economy, argues Wolfgang Münchau
  • Foreign companies are finding ways of circumventing economic sanctions on Russia, enabling the provision of goods and services like banking to blacklisted entities
  • As the government in Athens fast runs out of money – and nervous depositors pull cash from the country’s banks – there is growing talk of the extraordinary use of capital controls in Greece
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  • A Chinese entrepreneur who took just 19 days to build a 57-storey tower says he has triggered a construction revolution. And his dreams soar far, far higher (BBC)

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Turkey’s dramatic change of direction
Turkey’s dramatic election results have set back the political ambitions and increasingly personalised rule of President Recep Tayyip Erdogan. Gideon Rachman discusses what this means for the country’s future with Daniel Dombey and David Gardner.

The president of the World Bank has warned that a pandemic could kill tens of millions people and wipe out between 5 to 10 per cent of GDP of the global economy. Jim Yong Kim said in Frankfurt on Tuesday the world was “complete unprepared” for an outbreak on the scale of the Spanish Flu outbreak witnessed in 1918, which killed between 3 to 5 per cent of the world’s population at that time.

Quoting research commissioned by Bill Gates, founder of Microsoft, Dr Kim said a Spanish flu-like pandemic in the modern era would kill 33m people in 250 days. The recent Ebola outbreak had, the former physician, who has headed the World Bank since 2012, said, “revealed the shortcomings of international and national systems to prevent, detect, and respond to infectious disease outbreaks.”

It was also, according to Dr Kim, by far the biggest risk to the global economy. Read more

It is possible, of course, that the Greek crisis will once again derail their plans. But as things stand, one subject under discussion at a Brussels summit of European leaders on June 25-26 will be how to improve economic governance in the 19-nation eurozone.

The most succinct explanation for why Europe’s leaders must get their act together on economic governance appeared in a speech last November at the University of Helsinki by Mario Draghi, the European Central Bank president. He said: “Doubts over the viability of EMU [European monetary union] will only be fully removed when we have completed it in all relevant areas. This means banking and capital markets union; it means economic and fiscal union. In a monetary union, no policy area can be seen in isolation.”

What a shame that these fine words, and various thoughtful proposals for enhanced eurozone integration that are circulating in EU capitals, appear likely to produce next to nothing in terms of concrete progress at the Brussels summit. It will be a wasted opportunity – or, to put it more strongly, yet another wasted opportunity. Read more