A former colleague on the FT (no names, but he now runs the UK’s Office for Budget Responsibility) used to muse that a useful all-purpose headline for any story about an emerging market economy was “[Insert Name Of Country Here]: Structural Reform?”
Putting “Greece” into that formula after Syriza’s resounding victory in Sunday’s election, where do we stand? Every pundit in Europe is retailing some version of the insightful observation that it is all about whether Syriza — and its leader, Alexis Tsipras, Greece’s new prime minister (above) — can be induced to do enough structural reform to buy the fiscal leeway and debt relief it wants.
The problem with this view is that “structural reform” is a crude and unhelpful term. Read more
By Gideon Rachman
Syriza have won the Greek election. But, perhaps just as startling, the “far left” party is making considerable headway in the struggle to win over elite opinion in the west.
The triumph of the anti-austerity Syriza party in Greece’s general election has put back on the table the vexed question of what to do with Athens’ debt. Economists tend to disagree over how sustainable this burden really is: some point to the sheer size of the liabilities, saying Athens will never be able to pay them back. Others emphasise the favourable conditions which the Greek government has secured on official sector loans in two rounds of restructuring: these include heavily subsidised interest rates and a lengthening of the average maturity of the debt, which now stands at 16.5 years, double Italy’s or Germany’s.
One figure on which everyone tends to agree, however, is that Greece’s public debt is 177 per cent of gross domestic product, the highest level in the eurozone. Well, everyone but a private equity group and a number of accountants, who think the relevant figure could be as low as 68 per cent. Read more
Here’s one prediction if Alexis Tsipras and his radical left Syriza party win Sunday’s Greek parliamentary elections: 595 women with mops and rubber gloves are going to be very happy.
They are cleaners whom the outgoing government, led by Antonis Samaras of the centre-right New Democracy party, fired from their jobs at Greece’s finance ministry as part of its effort to cut public expenditure and root out clientelism.
The cleaners’ dismissal caused a right old uproar in Athens. Mr Tsipras, terming their treatment typical of callous measures adopted to please Greece’s EU and International Monetary Fund creditors, has promised to reinstate them.
Everyone I’ve met this week in the Athens political world is sure he will do exactly what he says. Long live the revolution! Read more
Greece’s parliamentary elections on Sunday are set to put in power the nation’s most leftwing government, led by the radical Syriza party, and its youngest prime minister, 40-year-old Alexis Tsipras, since the second world war.
But some familiar names and faces will survive Syriza’s expected victory. Despite six years of economic slump, and despite the reappearance of serious concerns about Greece’s ability to stay in the eurozone, the old Greek political order is not about to be swept away in its entirety. Read more
Will the Greek election reignite the eurozone crisis?
Snap elections are being held in Greece later this month in which the radical left Syriza party is expected to come out on top. Gideon Rachman is joined by Kerin Hope, Athens correspondent, and Tony Barber, Europe Editor, to discuss the implications for Greek debt restructuring and the eurozone.
By Gideon Rachman
The euro crisis is back. An election in Greece next month and the probable victory of Syriza, a far-left party, will frighten politicians and investors. Once again they will be engaged in a grim discussion of a connected series of possible horrors: debt-default, bank runs, bailouts, social unrest and the possible ejection of Greece from the eurozone.
Greece’s latest annual survey of living standards, published on Monday by the country’s independent statistical agency Elstat, highlights the deepening impact on households of a wrenching six-year recession. Some figures leap off the page, even though observers in Athens are used to a flow of gloomy statistics. Read more
The consensus, such as it is, on the eurozone crisis was neatly summed up on Monday by Hugo Dixon, author and editor at large of Reuters News: “The euro crisis is sleeping, not dead.”
What about the crisis in Greece? Over the past four to five years Europe, supported by the International Monetary Fund, has invested more time, effort and money in Greece than in any other struggling eurozone state. The aim is to reform a country so inefficiently governed, so riddled with corruption and so burdened with debt that it seemed, for certain spells in 2011 and 2012, to pose a threat to the eurozone’s survival.
So it seems reasonable to ask: if this time, effort and money have not changed Greece for the better, what has it all been for? Read more
The news that Greece is returning to the markets as an issuer of sovereign-debt is symbolic of the resurgence of interest in Europe among international – and particularly US – investors. As ever there is a circular logic in play here.
Because most investors no longer fear a collapse of the euro, Greece can come back to the markets. And the sight of Greece returning to the markets will confirm the prejudices of those who argue that the crisis in the eurozone is over.
But just as international investors were, in retrospect, too panic-stricken about Europe in 2012 – I suspect they are probably too relaxed now.
Greece’s return to the markets is one striking sign of this. Another is the fact that 5-year Spanish bonds now have a lower yield than their US equivalent – despite the fact that Spain is barely growing, that its budget-deficit continues to bust EU rules, while unemployment is more than 25 per cent. Read more
While officials at the debt management agency prepare to trumpet Greece’s return to international capital markets, for long-suffering Athenians it is just another day marked by anti-austerity protests in the centre of the capital.
The five-year bond issue will be snapped up by investors eager for extra yield. But Greek risk, though diminishing, is unlikely to disappear soon. Here is a quick checklist of informal indicators tracked by local analysts. Read more
The arrest of the leader and deputy leader of Golden Dawn – alongside other Golden Dawn MPs and party members – has been greeted with applause by liberals inside and outside Greece.
There is little doubt that Golden Dawn is a genuinely nasty party whose members are guilty of rhetorical and actual violence against immigrants and whose leadership revels in paramilitary and fascist imagery. All those who fear that economic turmoil will undermine Greek democracy have been able to point to the gains made by Golden Dawn.
And yet, while the party is undoubtedly authentically horrible, I wonder whether the crackdown is really such a great idea. Mass arrests of legitimately elected politicians should always spark unease. As several commentators have pointed out, the last time this kind of thing happened in Greece was after the fall of a military junta, in 1974. Read more
A protestor outside the Greek parliament (Milos Bicanski/Getty Images)
It’s no secret in Athens that austerity-weary Greeks would like to see a grand coalition emerge from Sunday’s elections in Germany. The participation in government of Peer Steinbrück and his Social Democrats, say café pundits, could bring a softening of the “keep-them-on-the-reform-treadmill” approach associated with Angela Merkel’s previous term as chancellor. Read more