Sunday, 10 December 2017

Grandstanding “derails” Greek-Turkish rapprochement

This article was published by Al Jazeera International. 

Tayyip Erdogan and Alexis Tsipras (R) pose for pictures before entering the Greek prime minister's office (Handout)

Turkish President Tayyip Erdogan's visit to Greece was supposed to be historic, because it was the first by a Turkish president in 65 years.

If it is to be remembered, it is likely that it will be for a public spat between Erdogan and his Greek counterpart, Prokopis Pavlopoulos, over a 94-year-old treaty.

"I don't think the meeting will stand up to history," says Haralambos Tsardanidis, head of the Institute of International Economic Relations. "The meeting between the presidents rather poisoned the relationship."

In an interview televised in Greece the night before Erdogan's visit, he set the agenda. Erdogan expressed the wish to "update" the 1923 Lausanne Treaty, which fixed the border between Greece and Turkey and provided for protections of minority rights and customs in both countries.

Greece is against any revision of the treaty, and Pavlopoulos, a constitutional law professor, told Erdogan on it as soon as they met, calling it "non-negotiable".

"It has no gaps. It needs neither revision nor updating. It stands as it is, it covers absolutely the issues that it needs to cover, and stresses that among other things it leaves no leeway for grey zones or minority issues," Pavlopoulos said.

Erdogan replied: "In Western Thrace they can't even stand the word Turkish. They abhor seeing it on a school sign or a club. We need to get past this. When I talk about updating, this is exactly what I mean."

Erdogan said he would like the Muslim community in Thrace to be called Turkish, to be free to elect its head mufti [who is currently state-appointed] and to enjoy a higher standard of living.

Greek observers were surprised. "I must say, I've never seen a substantive negotiation take place in front of the cameras," commented Yiorgos Koumoutsakos, Greece's conservative shadow foreign minister.

Conservatives on the street were happy, however. "I think Pavlopoulos has scaled the pinnacle of his political career," said right-wing radio commentator Yiorgos Trangas.

Nor did the atmosphere greatly improve when Erdogan met Alexis Tsipras, the Greek prime minister. During their discussions, they sparred over the ongoing division of Cyprus, whose northern third has been occupied by Turkish troops since a 1974 invasion.

Erdogan blamed the Greek side for two failed rounds of talks to reunify the island in 2004 and this year. "The Greek Cypriot side wanted to walk out of talks and I said, 'No, we will sign an agreement.' In the referendum that followed, 60 percent of the Turkish-Cypriots accepted the Plan but 60 percent of Greek-Cypriots rejected it. The Greek Cypriots promised us that we would solve the Cyprus problem but that's not what happened. Recently we met again in Switzerland but who walked out? The Greek-Cypriot side again."

Tsipras responded: "I am 43 years old, and for 43 years Cyprus has been an ongoing issue ... this issue remains open because 43 years ago there was an illegal invasion and occupation of the northern section of Cyprus."

A leading Turkish newspaper, Hurriyet, saw the acrimony as a deliberate deflection of attention from US President Donald Trump’s controversial decision to recognise Jerusalem as the Israeli capital. “Today is the first Friday after Trump’s decision and millions of Muslims are expected to take to the streets across the world after Friday prayers by midday,” wrote senior editor Murat Yetkin. “[Erdogan] chose to focus on Lausanne, showing his mastery on how quick he could change the agenda. Perhaps thanks to this manoeuvre he tried to maintain a degree of control over the potential anti-U.S. protests that would erupt… and at the same time caught the Greeks off guard.”

Bilkent University's Ioannis Grigoriadis blames the Greek side for what he calls a "derailment". 

 “I don’t think Erdogan intended to cause problems during his visit, but since the Greek president put things to him in public he felt obliged to respond,” says Grigoriadis, a political science professor at Bilkent University.  

Presenting Turkey as the protector of Muslim minorities in the Balkans is a standard Turkish foreign policy position, and Grigoriadis believes Erdogan would have mentioned the Muslim minority in Greece anyway, but in a less acrimonious way.

"He wanted to appeal to his right wing. That's his base, and he’s afraid of losing part of it to the MHP-splinter ‘Good Party’ that has been recently founded,” Grigoriadis says.

Erdogan was elected to the presidency in 2014 with a sliver of a majority - 52 percent - and he failed to carry Turkey's largest cities - Istanbul, Izmir and the capital, Ankara, in an April 16 referendum granting the presidency increased powers.

He faces re-election in 2019. “He has reason to worry about the elections despite the state of emergency,” says Grigoriadis. “His polls are declining. The economy is in a fragile mode. There are many parameters that could shift against him.”

Falling international confidence in the Turkish economy is reflected in the Turkish lira, which has dropped to 26 cents on the dollar, from almost 60 cents four years ago. Some of that confidence gap stems from the increasing isolation of Turkey, since a July 2016 attempt by military officers to unseat Erdogan.

The Greeks sought this meeting partly because it was an opportunity for Greece to act as a mediator between Europe and Turkey.

Since then, Turkey’s state of emergency has distanced Erdogan from European leaders even further. Greece’s invitation to Erdogan is only the second from an EU country since the coup.

Greece is also alarmed by the rise in refugees arriving across the water from Turkey, from an average of 50 a day in the spring to four times that number. That rise has come with renewed tension in the Aegean - some 3,000 airspace violations by Turkish fighter aircraft this year, marking a five-year peak. In a statement last month, Foreign Minister Nikos Kotzias said that “the danger of an accident in the Aegean is on the rise,” as Greek fighter jets take off to meet Turkish ones. And Greece says territorial water violations number 1,600 this year, a ten-year high.

In this area of security, the two sides may have achieved something, believes Tsardanidis.

"What was salvaged was that the two sides agreed to talk about confidence-building measures and [delineating] the continental shelf. Both are important to the Greeks because they can lower tensions in the Aegean," he says.

However, he cautions against over-optimism. "It's open to question whether the climate that was created will allow for progress, because there are people in Greece and Turkey who don't want to see a substantial negotiation between Greece and Turkey, and they are very uncompromising."

Tuesday, 24 October 2017

Government failures create a Greek class of working poor

The latest reports on Greek workers’ income make dismal reading.

More than one in three Greeks is at risk of poverty and social exclusion - the highest rate in the Eurozone and second-highest rate in the EU after Romania and Bulgaria (40pc) - the latest Eurostat figures reveal.

This is partly because of unemployment, which remains stubbornly high after an eight-year recession. By the official figures it stands at 23 percent, but a Labour Institute report, which also takes underemployment into account, puts it at 28 percent (compared to the Eurozone’s 9 percent).

The Labour Institute also highlights the second reason for Greek poverty risk: the fact that people are simply being poorly paid. Due to the weakness of the Greek recovery, new jobs are almost entirely part time, and underpaid. A third of full-time workers and one in four part-time workers are being paid an average of €397 euros, even less than minimum wage €431 per month) which is roughly the statistical poverty level (and this is already defined as a very low €4,500 per annum in Greece, compared to, say, €12,765 in Germany).

The Institute, Greece's main labour think-tank, blames low rates of investment. Given current rates, it says, Greek employment would reach pre-recession levels in 2033.

These readings underline how the medicine of austerity is still failing to produce notable results in Greece, long after Spain and Portugal graduated from their programmes and are now achieving higher rates of growth than the Eurozone average, while Ireland is approaching zero rates of unemployment.

It is true that thanks to austerity, Greece balanced its budget in 2014, but the recession produced by public spending cuts only ended this year, and the recovery is in the order of 0.8pc of GDP in the second quarter, failing to meet predictions of 2.7pc growth. 

Why is this? Partly because the Greek recession was deeper than those of other programme countries, wiping a quarter of the economy out; and partly because the Greek debt is known to be unsustainable, frightening investors away, and the Eurozone has been slow to reschedule it. But the answer also lies in the reluctance of Greek governments to challenge vested interests (with the exception of the Piraeus Port Authority, all of Greece’s major privatisations went to oligarchs), build an effective tax enforcement mechanism (the government’s conservative estimate of tax evasion from fuel smuggling, for instance, is €1bn), or to stimulate investment, exports and job creation.

This last is the most complex problem. It is partly due to the fact that banks cannot finance enterprise, because they have enormous levels of non-performing loans after years of dithering on governments’ part on how to dispose of these. Then there is the reluctance of governments to simplify procedures for opening and closing businesses, licensing and permitting, because that would involve staff cuts in the state – the country’s most influential client base. Third, there is the impossibility of offering tax cuts to businesses and consumers, because the combination of a bloated state and inefficient tax collection machinery mean high taxes for all. And finally there is the inability of most Greek politicians to comprehend how money is made, because few of them have worked in the private sector.  

Sunday, 24 September 2017

Nurzai’s Odyssey

This article was published in the Spring 2017 issue of The Sewanee Review


When Nurzai was eight years old, a shootout at the Afghan-Iranian border separated him from his family. It was late at night, and the family was trying to cross into Iran. Instead of being met by border guards, they found themselves negotiating with smugglers.

“They told us to get out of the car and walk… We had been warned by the smuggler’s own henchmen that he is a thief and might kidnap children, even if we paid him… we thought that if we ran for it we might escape,” says Nurzai, who was travelling with his parents, an older brother and an older sister. “They opened fire spraying bullets everywhere… Everyone else ended up in one group and I was on my own.”

Nurzai, who prefers not to reveal his real name and hometown, is now a demure, soft-spoken 14 year-old. He has spent the last six years making his way, alone, to Greece – the first European foothold attainable from Asia. The fuzz on his upper lip suggests a sophomore, but the experiences he has been through, his composure as he relates them, and his very survival, suggest resourcefulness and maturity rarely found in adults, let alone children.

Friday, 22 September 2017

Greek asylum chief calls for a massive legal migration into Europe

This article was published by Al Jazeera International.

Greece's asylum chief is calling on Europe to resettle “several hundred thousand” refugees a year directly from the Middle East, rather than allowing them to suffer the hazards of illegal crossings.

“That’s the number of people coming into Europe anyway,” says Maria Stavropoulou, who has overseen Greece’s Asylum Service since it was founded in 2013. “This past year [Europe] has had a million asylum applications. We know who makes these applications. The majority is people coming irregularly into Europe. So what are we doing? We’re just giving business to smugglers.”

The European Union runs a Resettlement programme, through which refuges can be admitted directly from Turkey, Lebanon and Jordan, but it has a ceiling of 22,504 over two years.

Thursday, 14 September 2017

Gold miner’s woes cloud Greece’s investment skies

 This article was published by Al Jazeera International

The extended plant at Olympias, which received a permit on Friday 15 Septemebr

ATHENS, Greece – The fate of one of Greece’s biggest foreign investments hung in the balance on Wednesday, as relations between the government and Canada’s Eldorado Gold Corporation seemed close to breaking point.

Push, literally, came to shove outside the energy and environment ministry, as dozens of yellow-vested miners tried to force their way past a blue wall of riot police to gain an audience with minister Yiorgos Stathakis.

“The miners are going crazy. They don’t know what’s going to happen tomorrow,” said Yiorgos Hatzis, a senior member of one of the four unions that chartered overnight buses from northern Greece to picket the ministry.

Saturday, 29 July 2017

Greece’s Pivot toward China

This article was published by The Weekly Standard under the title, "How China acquired a major port in Europe". 

COSCO's first of two 80,000-tonne capacity floating docks, new additions to the Piraeus Port Authority's ship repair division. (Handout photo)

ATHENS, Greece - In the Salamis strait where an Athenian-led fleet of 380 ships once sank a Persian fleet of more than a thousand and altered the history of the Western world, the China Ocean Shipping Company (COSCO) is redrawing global trade routes. The strait lies just outside the port of Piraeus and is the heart of its cargo business. Container ships arrive around the clock to be loaded or unloaded with pinpoint precision. The only sound is that of whirring motors as containers are lifted from decks and placed on flatbed trucks to be stacked on the quay.

Since 2008, when it signed a 35-year lease from the Piraeus Port Authority to operate two container piers, COSCO has increased throughput from 700,000 twenty foot-equivalent units (teu) to what it estimates will be over four million this year. Within the next five years, Piraeus is scheduled to handle 7.2mn teu a year, making it the Mediterranean’s biggest cargo hub and putting it behind only Rotterdam, Antwerp and Hamburg in Europe. COSCO has sunk €600mn into shoring up the strength of the piers to shoulder the weight of container cities stacked six storeys high, doubling the size of the second pier, and installing 33 of the tallest gantry cranes in the world, capable of loading and unloading container ships so large, they have not yet been built. By the time COSCO finishes its investments, Piraeus will be the only Mediterranean port capable of harbouring five giga-container vessels simultaneously.

Friday, 16 June 2017

Eurogroup grants the beginnings of long-term debt relief for Greece

This article was published by Al Jazeera International. 

Greece came away from Thursday’s Eurogroup meeting with a $9.5bn (€8.5bn) loan instalment and the beginnings of a commitment to longer-term debt relief – the Syriza government’s key demand since it came to power in 2015.

The six hour-long meeting of Eurozone finance ministers effectively brought the International Monetary Fund on board with Greece’s third bailout loan, currently held only by European institutions, because the IMF insisted on debt relief as a precondition.

“Nobody claims that this is the best solution,” said IMF chief Christine Lagarde, who attended the Eurogroup session. “That would have been a final approval on debt relief so that there would be clarity. This is second best.”

Tuesday, 6 June 2017

Banks to liquidate €11.5bn of property

Attention is focused on whether Greece will receive a rescheduling of its public debt at the June 15 Eurogroup. Less attention is lavished on private Greek debt. 

The Bank of Greece on Tuesday published its targets for the reduction of non-performing exposures (loans that haven’t been serviced for at least 90 days), which have reached a staggering €105.2bn, or 60 percent of GDP.[1]

IMF chief offers Eurozone time on Greek debt relief

Christine Lagarde

International Monetary Fund chief Christine Lagarde is offering to wait a little longer before Germany and other Eurozone countries come around to the IMF’s analysis on the Greek debt.

“If the creditors are not yet at that stage where they can agree on and respect our assumptions, if it takes them more time to get there, we can acknowledge that and give them a bit more time,” she told Handelsblatt on Tuesday.

Friday, 2 June 2017

Greece raises pressure on Eurogroup for deal

Greece ramped up pressure on its creditors this week to deliver a policy package that renders its debt sustainable.

“The Greek government feels it has done its part of what it promised,” finance minister Euclid Tsakalotos told journalists in Athens on Monday. “We feel that the ball is very much on the side of our creditors and the IMF [International Monetary Fund]. There are no excuses for not getting this overall deal that the Greek economy so desperately needs to access the markets and be able to leave the programme as planned in the summer of 2018.”

Saturday, 27 May 2017

China sees opportunity in the West’s loss of confidence

This review was published in the Weekly Standard under the title Tigers at Bay. 

There is little doubt among economic forecasters that over the medium term Asia’s emerging economies, China and India foremost among them, are expected to drive global economic growth. Taken as one, the region from India to Japan is not only the biggest market for raw materials, energy and the shipping industry that carries them; it is both the European Union’s and the United States’ biggest trading partner.

As a region, it is also more robust than either the EU or the US, where the International Monetary Fund forecasts that growth will rise from 1.6 percent last year to two percent next year. In contrast, ASEAN will grow by more than double that rate - 5.2 percent in 2018 - and even though growth is forecast to slow in China, it will still stand at an enviable six percent next year. In India, it will be 7.7 percent.

Wednesday, 3 May 2017

Greece and creditors reach a compromise of two conflicting working hypotheses

After four months of talks, Syriza reached an agreement in the small hours of Tuesday with its creditors, the Eurozone and International Monetary Fund, that allows the government to keep receiving bailout funds.

On the austerity side, Greece agrees to cut pensions by one percent of GDP in 2019, and raise personal income tax by one percent of GDP in 2020. Total savings: €3.5bn.  

On the expansionary side, the treasury gets to spend the same amount of money on a social spending programme that includes such things as school lunches, rent subsidies for the poor and job creation schemes (see full list below). The Eurogroup still has to approve the deal on May 22. 

This is how government spokesman Dimitris Tzanakopoulos described the agreement: 

“The Greek government believes that despite the delays caused by lenders’ unreasonable demands throughout the talks, the final agreement is balanced and sustainable. Despite the IMF’s initial insistence on measures worth 4.5 billion euros, we succeeded in a deal that has no fiscal impact. There will be austerity measures worth two percent of GDP, and expansionary measures worth two percent of GDP.”

Why the symmetry? Partly because Greece and the IMF appraise the economy entirely differently. The government says these latest measures are not strictly necessary. From the IMF's point of view, they are to ensure that Greece continues to produce a primary surplus of 3.5 percent of GDP beyond next year - that money going to pay off the debt. But Greece already produced a surplus of 3.9 percent last year on existing measures. Creditors simply aren’t convinced that that is sustainable. 

So the compromise is partly to pass contingency measures for the bad case scenario. The austerity measures are also designed to pay for the spending measures if the government's more optimistic view of tax revenues holds up. This, too, stems from the different views between Syriza and the IMF on what is good for the economy. Syriza believes in Keynesian pump-priming as the key to growth; the IMF believes the austerity measures to be necessary simply to maintain treasury savings, which it says will ultimately be undermined by creeping pensions spending. 

This compromise of two conflicting hypotheses demonstrates not only how different are the perspectives of Syriza and the IMF; it shows how difficult forecasting Greece has become.

The conservative New Democracy opposition points out that in December 2014, when Syriza led an expose of the conservative government’s commitment to a billion euros’ worth of cuts, the price tag for remaining in the eurozone was far smaller. It refuses to vote for the new package, allowing it to pass on the slim ruling majority of 153 seats in the 300-seat legislature.

This will expose it to criticism that it is playing politics as usual. The deal at least unlocks bailout funds Greece needs to keep receiving if it is to service ECB bonds in July. 

ND's stance will also come under fire for not supporting two important riders of this agreement: one, that the government won a return, in principle, of collective bargaining after 2018. This in theory means better working conditions and improved wages. And two, the deal clears the way to have a discussion on rescheduling the Greek debt over a longer repayment period to make it sustainable – something Syriza unsuccessfully fought for in 2015.

As finance minister Euclid Tsakalotos put it, “I am sure that there will now be the discussions on the debt because there is no longer any excuse that we don't have an agreement on the measures.”

Measure for measure: 
The austerity measures and counter-measures agreed for 2019-2020 

1. Austerity: €3.5bn

Greece will cut pensions to the tune of one percent of GDP. In practical terms, one third of pensioners will lose an average of nine percent of their income. 

The treasury will raise the equivalent of one percent of GDP by lowering the tax exemption salaried employees enjoy, from €6,836 to €5,681, or 17 percent. This is an effective personal income tax hike of about 3.5 percent.

Source: Eurogroup of 7 April and Greek government 

2. Expansion: €3.5bn

-       Greece won’t allow unlimited mass layoffs. These will remain capped at five percent of payroll per month.
-       Sectoral wage agreements will come back into force after next year.
-       Free preschools nationwide
-       50 percent of primary/secondary schools will serve free lunches
-       Increased rent subsidy of 100 dollars month on average for 600,000 households
-       €260mn on higher child subsidy for 3rd and 4th child  
-       Co-payments for medicine will go down or be eliminated for people earning under €1200 a month.
-       €250mn in labour expenditures (job creation)
-       €250mn in public works expenditures (again, job creation)
Source: Labour ministry - unofficial information 

Thursday, 6 April 2017

UNICEF says half of Greek children live in poverty

Although it passed with little notice, UNICEF recently published a stunning 2017 report on child poverty in Greece. Here are the three most shocking findings:

1.     Half of Greek children live in poverty.

UNICEF takes the Eurostat definition of poverty, which is living on less than 60 percent of average income. By that measurement, 27 percent of Greek children were poor in 2014.

But UNICEF says that because average income has declined so much since the crisis began in 2008, this is a misleading measurement. So it has taken the additional step of looking at how many children live with less than 60 percent of average 2007 income – the last year before the crisis. By that measurement, 55 percent were poor in 2014, by far the highest proportion in Europe (see table below).

Relative childhood poverty by year (blue line) and in terms of 2007 income (red line)
(Source: UNICEF based on Eurostat figures)

Almost half of all children are materially deprived

In addition to measuring average income, Eurostat also surveys how many people meet nine criteria for material well-being. Failure to meet three or more of these classifies a person as materially deprived.

More than half of Greek households cannot pay utility bills without difficulty (59pc), go on holiday for a week each year (56pc) or meet an emergency expenditure (54pc). Another 30pc cannot provide adequate heat and 17pc cannot put meat or fish on the table every other day (see table below).

Many of these figures are double what they were eight years ago. By this yardstick, 45 percent of Greek children lived in material deprivation in 2015.

Material deprivation of children in Greece based on nine criteria (2015 in blue)
(Source: UNICEF based on Eurostat figures)

3. The youngest are the most vulnerable to poverty.

The most shocking fact is that the younger you are in Greece today, the more likely you are to find yourself materially deprived, rather than protected.

UNICEF’s estimate, based on the same Eurostat figures, is that a little over a third of retired people are poor. The figure rises to 42 percent for the working-age population and soars to 45 percent for minors (see table below).

Material deprivation by age group
(Source: UNICEF based on Eurostat figures)

Seniors are somewhat protected by their pensions, even though many of these are barely enough to live on (58 percent of pensioners earn less than €800 a month). But the figures clearly show that children are the most vulnerable group, and that Greece lacks the resources or policies to protect them. 

Tuesday, 28 March 2017

Greece shrinking

Business at fertility clinics is down an estimated 25-50 percent compared to 2008 because Greeks feel they can't afford to raise children, or more than one child. 

About five percent of births are estimated to be in vitro, though accurate industry figures do not exist. The fact that Greeks are turning away from in vitro fertilisation in addition to the fact that live births of naturally conceived babies are declining, shows that the decline is due to economic reasons. 

Births in 2015 numbered just under 92,000 compared to 118,000 in 2008, a drop of one fifth. Over the same period, deaths soared by 12 percent, from 108,000 to 121,000, meaning that on the basis of reproduction alone, Greek society is shrinking at a rate of about 30,000 people a year. 

Live births.
(Source: Hellenic Statistical Authority, ELSTAT)

(Source: Hellenic Statistical Authority, ELSTAT)

However, there is further shrinkage due to emigration. About 45,000 more people left the country in 2015 than took residence in it. Emigration rates have accelerated since the onset of austerity in 2010 (see table below). Since then, assuming 2015 trends continued in 2016, an estimated 700,000 people have left while 400,000 have taken up residence. 

Immigration and emigration since the fall of the Iron Curtain.
(Source: Hellenic Statistical Authority, ELSTAT, 1 Jan 2017)

Taken together, reproductive and migratory trends mean Greece is shrinking by about 75,000 people a year, or 0.69 percent. The economic crisis is no longer an existential concern just for individual families, but for the nation as a whole, and needs urgently to be addressed with growth-promoting policies and pro-child policies. 

Read more on the government's current impasse with creditors

Tuesday, 21 March 2017

Down to the wire

Greek finance minister Euclid Tsakalotos on Monday offered a new timeline for the conclusion of Greece’s current review: the first round of the French presidential election on April 23.

Speaking after the Brussels Eurogroup meeting, he said he, his deputy and labour minister Efi Achtsioglou would remain in Brussels to resolve the last remaining issues: labour reform and pensions. Greece has been resisting another cut to pensions spending and a stiffening of labour laws to allow mass layoffs and restrict the right to strike.

“Our strategy is to remain here, make substantial progress, and leave very few issues, if possible none at all, to have the institutions return to Athens and have a deal, a package of measures, we will have agreed upon before the April 7 Eurogroup in Malta,” said Tsakalotos. “After that I think the process can speed up even more and we can go to the International Monetary Fund’s spring meetings in April (21-23) to seal the final details.” 

The French election will likely see a shift to conservative government, since the frontrunners, the Front National’s Marine Le Pen and the centrist Emmanuel Macron, are running well ahead of socialist candidate Benoit Hamon. Any such government is likely to be less sympathetic to the Greek plight than current socialist president Francois Hollande.

The fact that the Greek side wants to take negotiations down to that particular wire suggests three things; first, Tsakalotos and premier Alexis Tsipras have decided to make a show of being tough on creditors; second, they need time to rally their MPs’ support behind unpopular measures, particularly for the left; third, they are reluctant executors of this particular round of reform, and want that to be abundantly clear.

Eurogroup chairman Jeroen Dijsselbloem confirmed the intensification of talks on “key issues” in Brussels this week but warned that, “there is no promise that all the work will be done by [April 7], but there is a strong agreement and a strong will between all parties involved.”

A Bloomberg analysis on Monday pointed out the danger of Greece slipping into another prolonged period of negotiation until it defaults on its creditors, as happened in June 2015. 

Friday, 17 March 2017

Why Greece and its creditors still disagree (or, Everything you wanted to know about Greek taxes but were afraid to ask)

Two statistics published this week speak volumes about the heavy yoke Greek private sector workers labour under.

The first concerns unpaid taxes. Under Syriza, which came to power in January 2015, these have soared, but the government keeps breaking its own record.

According to the Independent Public Revenue Authority, unpaid taxes for January alone amounted to €1.63bn. That’s partly because on January 1st a new law took effect that changes how many Greeks pay for social security. It attempts to make up for the fact that pension contributions have fallen from €11.5bn in 2009 to €9.1bn in 2015 due to rising unemployment and falling wages.

Unfortunately, the new law makes up for this shortfall by overcharging the 3.5mn people left in the workforce. Until January, salaried Greeks paid a percentage of earnings and the self-employed - more than a million taxpayers – paid a flat monthly fee. 

As of this year, the self-employed also pay a percentage of earnings for health and pension contributions – 27 percent of gross income, due to rise to 31 percent over three years. Once other expenses have been deducted, income tax of between 22 and 45 percent is calculated on the remainder. For most, this amounts to a sharp increase in social security contributions.

The staggering level of taxation is one reason why many young people are leaving the economy, and even established professionals with client bases are closing their tax books. The government’s inability to collect has now forced it to twice push back the January social security contributions deadline from February 28 to March 17 and March 31.

The state’s past performance in tax collection does not make inspiring reading, either. Taxpayers now owe a record €91.78bn, up from €81bn last year, €71bn in 2015 and €60bn in 2014.

Most of that will never realistically be recovered. Nine billion euros are owed by public sector companies, which are used to government handouts and easy loans backed by state guarantees. The culture of non-payment begins at the top. Another €13bn is owed by private sector companies that have folded. Even the €69.58bn that is owed by non-bankrupt individuals and companies in the private economy will not realistically be recovered, since it is difficult for people with little or no income to pay taxes.

Under pressure from its creditors, the International Monetary Fund and the eurozone, the government is moving on the country’s four million offenders: 851,000 are in the process of having property or deposits confiscated, while twice that number are in danger of confiscation.

The new figures are sure to hurt the government’s claim that the austerity measures taken over the years are enough to produce a primary surplus of 3.5 percent of GDP demanded by creditors. The IMF believes more measures are needed.

The main reason Greece’s current review by creditors is such a dragged-out affair is that there are no easy answers to the question of how to tame Greece’s main expense: its pensions.

The government argues that after 13 rounds of cuts, pensions are already low. The chart below, supplied to The New Athenian by the labour minister on February 20, shows a breakdown of Greece’s 2.65 million pensioners. A good 58 percent of them earn under €800 a month before additional benefits.

Source: Greek Labour Ministry, Feb. 20 2017

The government also argues that cutting pensions before restoring growth to the economy is problematic, because studies reveal that pensions are now the principal source of income for half of Greek households. 

The IMF, on the other hand, argues that the economy will never recover while pensions remain the government’s biggest budget item, absorbing at least a third of tax revenue.

The government’s own pensions bill, brought to parliament last May, revealed staggering social security costs: notably that fully one half of the Greek debt, some €154bn, had been incurred by borrowing to pay pensions.

It is little wonder that the IMF insists on tax relief for businesses, rather than maintaining high taxes to redistribute the wealth to the poorest. Syriza argues that the latter will boost consumption and help business. The IMF argues that high taxes make business globally uncompetitive, and boosting consumption at home without boosting exports will create another unsustainable economy akin to that of the 1990s.

Earning gap between private and public sectors persists

The second heart-sinking statistic of the week was the other big reason for high taxes in Greece: the income gap between private and public sector workers. It is best illustrated by the table below: 62 percent of private sector workers net under €900 a month, whereas 66 percent of public sector workers net between €900 and €1,800 a month.

Source: Kathimerini, March 14 2017

Yet those private sector workers spend a billion euros a month paying the salaries of their public sector counterparts, making the public payroll the government’s second-highest budget item.

Neither group earns good money by European standards, but the figures, which were published by the Labour Institute, a think tank, seem to disprove a popular myth of the left, which Syriza also upholds: that what is suffered by one group is eventually suffered by the other. The figures rather seem to confirm that privileges earned through political pressure persist, even if diminished. In other words, the labour aristocracy Pasok created in the 1980s is still a 700,000-strong voting bloc capable of swinging elections.

Greece, like France and Italy, has long been a statist culture and will remain so for the foreseeable future. This is good in that it provides strong popular support for socialised medicine and decently funded public education – essential prerequisites for a secure and civilised society. But it is bad in that it allows a class of party-appointed ne’er-do-wells to dwell inside the state culture and destroy its value for taxpayer money. Until political parties realise they must divest themselves of their appointees, Greece will run the risk of throwing out vitally important state services provided by hard-working doctors, nurses and teachers at great personal sacrifice, along with the louts they must carry.

Thursday, 16 March 2017

A Syrian refugee family's year-long Greek Odyssey

Refugees in Greece finally swapping canvas for bricks and mortar

The surviving members of the Alali family on the balcony of their second storey flat 

This article was published by IRIN News

THESSALONIKI, Greece – By the time Ilida Alali was 16, she had been a prisoner in her own home for four years. Both government and rebel ordnance fell without warning on the hotly contested Karm al Myassar neighbourhood near Aleppo’s airport where she and her family lived. In any case, she had nowhere to go. The Free Syrian Army had occupied the area’s schools since she was 13.

In January last year she asked her father, Ahmed, if she could go buy some potato chips. “I said ‘okay’,” he recalled. “She went as far as the corner shop and that’s when the bomb fell. When I heard the explosion, I ran out and I found the place covered in dust and my daughter in pieces.”

Ilida’s death was the final straw for the family. Ahmed’s wife, Ramia Aldaher, had already lost a sister and three brothers to the war. A month later, the entire extended Alali and Aldaher families – some 41 people – stole out of Aleppo under cover of night.  

“We took nothing – just the clothes we were wearing and our IDs,” said Ramia. They trekked more than a thousand kilometres to Izmir on Turkey’s Aegean coast and crossed to the Greek island of Lesvos in a rubber dinghy.

The Alali family had fled a civil war only to land in the midst of a humanitarian crisis. An estimated 850,000 refugees and migrants arrived in Greece during 2015 and another 150,000 during the first three months of 2016. Most continued through the Balkans towards northern Europe where member states were increasingly desperate to stem the flow.

Fences went up on the Greek border with the Former Yugoslav Republic of Macedonia three weeks before the Alali family arrived. They managed to leave Lesvos just two days before the EU-Turkey agreement went into force, which would have kept them there during their asylum process, but their plan to reach Germany on foot had to be scrapped.

The closed border had left more than 50,000 refugees stranded in mainland Greece - too many for civil authorities to house. Under pressure from the European Commission, the Greek military set up 30 tent cities on industrial sites and disused army bases across the country.

Most of these camps were far from urban centres and difficult for aid organisations to reach. With almost no time to prepare the sites, they initially lacked basic amenities such as running water, bathrooms, heat and electricity.

The brick warehouse where the Alali family lived for six months, behind Gate 10A of the Thessaloniki commercial waterfront. It is now used for storing potatoes
On 17 March, the Alali family arrived at the place they would be forced to call home for the next six months – a cavernous warehouse behind Gate 10A in Thessaloniki’s port.

“For about the first month we slept on the floor in sleeping bags given out by the army. Then the mayor visited us and asked the army to send us cots,” said Ahmed.

The mayor also ordered the delivery of heating units, portable lavatories, showers and electricity, but 450 people were still sharing a space where blankets hung from ropes provided the only modicum of privacy. 

These arrangements came to an abrupt end when an electrical fire broke out one September morning as people slept. The warehouse was cleared and the Alali family was moved to a tent in Langadikia camp, east of the city.

“The sun hit our tent at seven in the morning and we had to get up. During the middle of the day we had to go to the forest and sit under the shade of the trees,” Ahmed told IRIN. “When winter came, it rained and the whole tent was drenched. The water came up through the ground... Sometimes we asked for new blankets and were told that there weren’t enough, so we slept under wet blankets.”  

Worse was to come. In mid-December, overnight temperatures dropped below freezing and in January, rain turned to snow. Residents of the camp tried to take refuge in the few brick buildings available, “but there wasn’t enough room for everyone,” said Ramia.

A young Syrian man is engrossed in his mobile phone as he sits in the Diavata camp on the western outskirts of Thessaloniki 
And yet there was plenty of room in Greece. The financial crisis and the introduction of a new property tax in 2011 had brought property sales virtually to a standstill. Hundreds of thousands of apartments stood vacant as unemployed adults moved back in with their parents.

In December 2015, the European Commission had announced an €80 million rent subsidy programme to provide 20,000 accommodation places for refugees in Greece during the following year. The UN’s refugee agency, UNHCR, was tasked with implementing the scheme but progress was slow. By early October 2016, it had secured only 13,000 spots leaving thousands of families still living in tents and warehouses during the height of Greece’s coldest winter in years.  

“We had this horrible winter and the conditions in camps deteriorated so badly that we were really afraid at one point that people would actually die of hypothermia in the camps - especially newborns, who were turning blue,” said Anne Forget who manages the Urban Response programme of the Norwegian Refugee Council.

A Syrian man reprimands his daughter for littering during their evening walk at the Diavata camp 

The NRC wanted to help address the housing problem before it became a crisis, but it was a latecomer to the housing programme. The European Commission funded its project proposal in September, and it wasn't until November that Forget's teams could start touring half a dozen camps in the area to identify those in greatest need of being moved into bricks-and-mortar housing. 

But despite the housing glut, the NRC struggled to find apartments to rent. Landlords were wary of a programme that was funded for only months at a time and of having refugees as tenants.

“Mainly the objections were, ‘I don’t want to rent to refugees because they are dirty, they have diseases, they will break my apartment. I don’t want to rent for a short period of time. Your rate is too low,’” said Forget.

In an effort to stay ahead of the worsening weather, the NRC decided to move 400 individuals into hotels. This enabled pregnant women, the sick and elderly and families like the Alalis to move out of tents, but the cost was high. The NRC paid €25 a night for each hotel resident – some €4,500 a month for the Alali family of six alone.

UNHCR eventually stepped up its efforts and by the end of 2016 had housed 21,000 refugees, nearly 12,000 of them in apartments. The agency’s spokesperson in Greece, Roland Schoenbauer, said the scheme was designed to provide temporary accommodation for asylum seekers while they awaited relocation to another EU country and that many more would have benefited if EU members had honoured their pledges to take in a total of 63,000 refugees from Greece. To date, less than 10,000 refugees have been relocated from the country.

Greek Migration Minister Yannis Mouzalas has also come in for criticism for the slow rate of progress on refugee housing despite unprecedented levels of EU funding. “You are responsible for 60,000 people with a billion euros, more than anyone ever had at his disposal,” said conservative MP Miltiadis Varvitsiotis in parliament last month, referring to the funds the European Commission says it has earmarked or disbursed to Greece for refugees since 2015. “I think any local government official would have done a better job than you.”
A Syrian woman fries a supper of courgettes, aubergines and potatoes at the Diavata camp 
Over the last month, the NRC has finally begun to transfer refugees into longer-term housing. It has put the Alali family up in an apartment for a quarter of the cost of the hotel, and estimates that through such savings it will be able to house some 2,168 people in apartments by July 2018.

For now, furnishings are sparse: “it’s mattresses on the floor; one mattress per person, one pillow per person, a fridge, a double stove… There’s no tables, no chairs, no frames, even, for the beds and no Wi-Fi,” said Forget.

The Alalis don’t seem to mind. After walking across Asia Minor and living in a warehouse, an open-air camp and a hotel, here, for the first time, they have a space of their own, and they are living among Greeks rather than refugees. They beckon guests to their only furniture – a sofa bed left by the owner, whose springs have long caved in – and sit cross-legged on the tile floor while their four children, aged six to 17, retire to equally empty bedrooms. “We are happy that we are in Greece. We are not in a good situation, but we are safe and better than before,” said Ramia.

Menios Skordas, a hotelier who rents nine studio apartments to Syrian and Afghan families referred by the NRC, admits that he was hesitant at first, but that “when I saw the faces of the children I lost every inhibition.”

He has noticed that they, too, have acclimatised. “For the first two months, they were very afraid,” he told IRIN. “Now they’re going to the supermarket. Once or twice they’ve taken the bus… The kids are amazing learners. In two months, they are able to communicate in Greek.”
Syrian men prepare to roast strips of beef for supper at the Diavata camp 
Schoenbauer of UNHCR described apartment living as a double benefit. “Just a few weeks ago, I visited a Syrian family in an apartment close to our office, he said. They told me, ‘every day our Greek neighbours are knocking at our door asking whether we needed anything.’ This is the kind of interaction that starts the process of integration from both sides and this is an underestimated benefit of the whole programme.

There are benefits for the Greek economy as well. The crisis has depressed real estate prices by over 40 percent since 2007, and 45 percent in the Thessaloniki area. Rents have fallen proportionally. UNHCR spent the European Commission’s €80 million plus another €5.4 million in donations on apartments and hotels last year. It could top that budget this year.

The money [landlords] get is much, much better than what they’d get on the [open] market, said Thessaloniki real estate agent Stefanos Vasileiadis, commenting on clients who have rented to Syrian families via the NRC.

Of the original group of 41 Alali and Aldaher extended family members, 27 have been relocated to Germany. Most of the rest are scattered across camps in northern Greece, where conditions are not as bad as they once were. Tents have been replaced by mobile housing units, adults receive a monthly stipend of €150 to feed themselves, and children can now attend Greek schools.

Mouzalas assured parliament last week that another 10,000 people will be moved to apartments in 2017 and a further 10,000 in 2018, doing away with the need for all but a handful of camps “if the EU-Turkey agreement holds”. Such schemes exclude the islands where, under the terms of that agreement, 13,200 people remain in camps with an official capacity of just under 9,000, while their asylum claims are processed.

Ahmed and Ramia have also applied for their family to relocate to Germany, a process that may take many more months. In the meantime, they are enjoying the privacy and space of their apartment, but they aren’t enrolling their children in Greek schools or putting down roots. They are waiting to start their lives in Germany.