The Greek debt

The International Monetary Fund will on February 6 likely deal a blow to Germany's ambition to involve it in the current Greek bailout. On that day it is expected to declare the Greek debt unsustainable, which bars it from involvement. An IMF report prepared for the meeting, leaked to Kathimerini and the Financial Times, says the Greek debt, which is currently worth €330bn, or 180pc of GDP, will grow to 275pc of GDP in the next four decades.

The debt’s sheer size threatens not only to unravel the bailout. It is the principal cause of Greece's inability to grow. The government has to impose such high taxes to keep up payments to creditors, there is little money left over for re-investment in new business.

New figures from the General Secretariat of Public Revenue show that Greeks reneged on a record level of tax obligations last year -  €13.9bn. Together with past tax arrears, the total is a record €95bn, about half the value of the economy. The government has managed to produce a surplus in 2016, but only by withholding vast amounts from its suppliers, which further starves the economy.

Against this backdrop of institutional gridlock, the Greek government is also at an impasse regarding the implementation of the next round of austerity, which it feels will spell political suicide. Without those measures, Greece will be unable to receive more loan instalments. Economists give it until July to go bankrupt if nothing is done. 

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Greek Supreme Court rules against extradition for Turkish officers

This article was published by Al Jazeera International. 

Turkish officers are visibly relieved after their non-extradition verdict. Their lawyer, Christos Mylonopoulos, stands at right.

Greece’s Supreme Court has ruled against extraditing eight Turkish air force officers, in a decision likely to complicate relations between the two countries.

“It is a great victory for European values, for Greek justice,” said the claimants’ lawyer, Christos Mylonopoulos. “The legal thinking is obvious. It is the observation of European values, the observation of legality, and the conservation of judicial civilisation.”

Turkish authorities want the officers to stand trial for their alleged involvement in a coup last July, which nearly toppled the government. They stand accused of attempting to dissolve the constitution, overthrow parliament, placing civilian human life at risk and stealing army materiel.

The eight have been in police custody since landing at Alexandroupoli airport in a Turkish army helicopter on July 16. The court set all of them free, but it wasn’t clear when that freedom would take effect.

They had sat petrified in court ahead of the decision, but as the first decisions were read out, they began to smile and nod in acknowledgment.

“We didn’t escape the war. We jus saved our lives, and waiting has changed our lives,” one officer later told Al Jazeera on condition of anonymity.

He says he and his colleagues made up their minds to escape after Turkish President Recep Tayyip Erdogan called on his supporters to rise up against the coup, leading to clashes with troops and bloodshed.

“From our iPads we saw what was happening,” says the officer. “We couldn’t reach our commanders. We waited six or seven hours.”

Turkey has dismissed an estimated 100,000 people from public sector jobs on suspicion of political affiliations hostile to the ruling AKP Party. An estimated 36,000 have been arrested on suspicion of collusion in the July 16 coup attempt.

“The arguments were that first of all they were in danger to undergo inhuman and degrading treatment. The reintroduction of the death penalty in Turkey was an additional danger,” Mylonopoulos told Al Jazeera.

A tall order

The request for extradition was always a difficult proposition, because of the thickness of the legal requirements.

Turkey is a signatory to the European Treaty on Extradition, which forbids extradition for political or military crimes, and gave Greece the right to refuse extradition if the crimes are punishable by death. Turkish President Recep Tayyip Erdogan has said that he may hold a referendum on the return of capital punishment.

Under the European Convention on Human Rights, which Greece has ratified, the officers are deemed to be refugees if they are at risk of torture, execution or inhumane treatment and serious bodily harm in Turkey. Also under Article 6 the Convention, they may not be extradited for legal process unless they are assured of a fair trial.

Partly on these legal and humanitarian grounds, three Supreme Court criminal prosecutors have in the past weeks weighed against extradition. All outside legal opinions the court has heard have also weighed against it.

The decision is final. The Greek government cannot overturn it. Asked if this raises the possibility of more Turkish nationals fleeing what they fear is political persecution, he said, “The circumstances under which these people came here were very eloquent, it was very obvious that their prosecution was due to political reasons. This does not mean that everybody who has a problem with Turkish authorities can come to Greece to find a shelter.”

The officers have applied for asylum in Greece, a process likely to take months. Asked what they want to do now, one officer replied, “We would like for none of all this to have happened. We would like to go home and be with our families.” 

Tsipras digs in his heels on his second anniversary in power

Alexis Tsipras

Prime Minister Alexis Tsipras says his government won’t bring another austerity bill to parliament on the eve of a crucial Eurogroup meeting focusing on Greece. Greece’s creditors – its fellow-eurozone countries – are reportedly pressing him to accept a raft of austerity measures that would kick in after the current austerity programme ends in mid-2018.

“There is no way we are going to legislate a single euro of measures beyond what the agreement says, and that applies especially for the period after the [adjustment] programme ends,” he told national daily Efimerida ton Syntakton today, on his Syriza party’s two-year anniversary in power.

Days ago, conservative opposition leader Kyriakos Mitsotakis decried the upcoming anniversary. “Never in the last seven years – ever since the crisis so violently struck Greek society – was the horizon darker for the ship of Greece. Runaway taxation is strangling every productive Greek.”

Tsipras lashed out against the opposition’s accusations of incompetence. “Do [New Democracy and Mitsotakis] … believe that we should agree to legislate in advance for 2019? Do they think we should pass a reduction of the taxable income threshold and a further cut in pensions?”

While Tsipras rules out any possibility of a Greek departure from the eurozone, creditors are concerned about his leftwing government’s tendency to increase social spending, and his ability to maintain a primary surplus of at least 3.5 percent of GDP. That is the amount of tax revenue creditors want Greece to set aside to repay them.

The International Monetary Fund, in particular, believes that the reforms currently undertaken by Greece are not enough for it to achieve such a surplus. It also disagrees with the goal of a 3.5 percent primary surplus, because this “would generate a degree of austerity that could prevent the nascent recovery from taking hold.”

According to figures released on Tuesday, Syriza has managed to generate an unexpectedly large surplus, because tax revenues are above expectations. The finance ministry reports earnings of €54bn last year, €1.68bn above target. This helps to give the state a primary surplus of €4.4bn rather than the target €1.98bn.

That surplus has come at a high cost. Public health sector workers protested outside the prime minister’s office on Wednesday, saying that the national healthcare system “is crumbling”. Contrary to government promises to spend more on health and education this year, the health ministry’s 2017 budget has been cut by €129mn to €4.268bn.

The high surplus also comes in part from delaying government payments to suppliers. The health workers’ union says hospitals owe their suppliers €1.8bn, up from €0.7bn when Syriza assumed power. The union also says no new hires have been made, contrary to Tsipras’ post-election promise to hire 4,500 doctors and nurses.

Greek living standards have also crumbled since Syriza assumed office. A report by the Labour Institute out on Tuesday says that 37 percent of Greek households subsist on less than €10,000 a year.

Three quarters of all households saw their income fall last year, according to the Institute, the private sector’s main labour think tank. Fully one half of households now depend on a pension as their main source of income.

European Commissioner Pierre Moscovici has ruled out an agreement between Greece and its creditors on Thursday, on how to implement the next round of austerity measures. He believes February 20 is the last-ditch Eurogroup before France and Germany - and possibly Italy and Spain – become embroiled in general elections, whose outcome may well make an agreement with Greece even more difficult. 

Greek living standards crumble

Greek living standards are crumbling as the government and its creditors seem deadlocked on how to implement the next round of austerity measures.

A report by the Labour Institute out today says that 37 percent of Greek households subsist on less than €10,000 a year.

Three quarters of all households saw their income fall last year, according to the Institute, a think tank belonging to the National Confederation of Greek Labour, the private sector’s labour federation. Fully one half depends on a pension as its main source of income.

These findings come days after the labour ministry revealed that one in five workers is employed part-time, while one in ten earns under €600 a month.

Unemployment seems stuck at 24 percent after a high of 28 percent in 2013, with over a million people out of work.

The latest austerity measures, voted in last year, include higher sales tax and higher social security contributions. These have hit the self-employed and sole traders hard, but the hardest hit of all are farmers, for whom these measures have coincided with higher income tax plus elimination of benefits such as subsidised diesel and reduction in European Union subsidies. This week farmers took to the highways in their tractors to protest that the new measures are too much for them to absorb all at once. 

The government is also under pressure from creditors to implement further cuts to public spending in order to produce a 3.5 percent primary surplus next year. That is the amount of money left over to pay creditors, once domestic needs have been catered to. The International Monetary Fund does not believe the current budget cuts will achieve this.

The Syriza government has been trying to pry the IMF loose as advisor and observer of its adjustment programme, and deal only with its European partners on political terms rather than the IMF’s purely economic criteria. The powerful German finance minister last week clarified that without the IMF there would be no programme.

European finance commissioner Pierre Moscovici said today that Greece will not close its second assessment at this week’s Eurogroup meeting. The optimistic scenario is that it may conclude by February 20. After that, however, with elections coming up in major Eurozone economies (France and Germany, possibly Italy and Spain) this year, a speedy conclusion seems increasingly unlikely.

Greece is bullish on one count – its tax revenues are above expectations for 2016. The finance ministry reports today earnings of €54bn last year, €1.68bn above target. This helps to give the state a primary surplus of €4.4bn rather than the target 1.98bn. Questions remain, however, as to whether this is sustainable on the back of an economy which is seeing close to zero growth and falling worker incomes.  

The argument for a Greek election

While the government's official position remains that Greece will hold its next election in 2019, the corridors of parliament are buzzing with rumour that Prime Minister Alexis Tsipras may announce one by the end of this month. 

This would essentially be an abdication. The latest opinion poll out today gives him just 16pc of the vote, versus 30pc for the conservatives, and is in line with polls over the past few months. Nonetheless, he may have come to the end of the road as far as implementing the adjustment programme is concerned. Some Syriza MPs are in open rebellion as he struggles to negotiate his second assessment. He is being asked to allow mass layoffs - practically inconsequential, but symbolically powerful to the left - and to demonstrate how he will generate a 3.5pc primary surplus in 2018. Some of the money may have to come from higher sales tax. He may decide to throw in the towel before his approvals go down even further. 

The second rationale for an election now rather than later in the year is that an election held within 18 months of the previous one, i.e. mid-March, is not contested by individual MPs fighting for their constituency in the classic fashion. Instead, party leaders hand pick a number of MPs in accordance with their share of the national vote. This would enable Tsipras to campaign with his MPs' mouths shut and lose with the highest possible share of the popular vote. 

Apart from regime change in Greece, a political crisis here could affect the German election. An analysis in Suddeutsche Zeitung is that a Greek implementation debacle "can cause terrible damage in Germany and Europe" by exposing the federal coalition's European policy - loans in return for austerity - as flawed. Scheauble sold the third Greek bailout to the Bundestag partly on the basis that the IMF would oversee it. The IMF is currently only an observer, it disagrees with the Europeans on whether this programme can generate a 3.5pc surplus, and it has openly clashed with Germany over the need to restructure the Greek debt. 

Cyprus talks "coming very close" to settlement

UN Cyprus talks in Geneva on 12 January (UN)

The most promising United National efforts in 14 years to reunite the island of Cyprus were inaugurated on Thursday in Geneva. 

The UN's new Secretary-General, Antonio Guterrez, and European Commission President Jean-Claude Juncker, were on hand for the opening of direct talks between the President of the Republic of Cyprus Nikos Anastasiadis and president of the Turkish Cypriot community Mustafa Akinci. Also in attendance were the foreign ministers of Cyprus' so-called guarantor powers, Greece, Turkey and Britain. 

Remarks on all sides were broadly optimistic. "We are coming very close to what is the settlement, in relation to the creation of a bi-zonal, [bi-communal] federal institution in the Republic of Cyprus," said Antonio Guterrez. He warned journalists to be patient, however. "You cannot expect miracles or immediate solutions. We are not here for a quick fix," he said. 

Greek-Cypriots struck down a previous peace proposal in an April 2004 referendum. The key difference between that proposal, known as the Annan Plan, and this round of talks, is that the Annan Plan was handed down to the two sides by then UN Secretary-General Kofi Annan. This time, Greek and Turkish Cypriots have spent 20 months preparing proposals themselves. 

Anastasiadis and Akinci, who enjoy a rare rapport, have already discussed most aspects of the deal. The Geneva talks are expected to focus on the key aspect of security, which is likely to be the biggest hurdle to a final deal. Greece, Cyprus and Britain currently guarantee Cypriot security under the terms of the island's independence in 1960; but guarding the guardians has turned out to be the biggest problem with this arrangement. Greece attempted to install a puppet Cyprus government by coup in 1974. Turkey invaded the island in response and continues to occupy 37 percent of it by force. 

Greece and Cyprus, which is Greek Cypriot-dominated, now take the position that the Treaties of Guarantee are out of place in a sovereign EU member state, and need to be scrapped. Turkey disagrees, and according to some sources wants to establish a permanent military base on the island in return for giving up its status as guarantor power. Greece and Cyprus publicly denounce any such permanent military presence by Turkey. 

Greek Foreign Minister Nikos Kotzias stressed on Thursday that Turkish troops should depart immediately upon the adoption by referendum of a deal: "We want a constant flow - a large departure in the first week, if not the first day, and then a continuous departure." One of the main objections expressed by Greek-Cypriots to the 2004 proposal was that it scheduled the departure of Turkish troops over 19 years. 

Kotzias did publicly voice a compromise proposal: "We could agree to the creation... of an international team, which will observe and compose, under the auspices of the UN Security Council, reports on the implementation of decisions." 

"Our position, and the Turkish Cypriot side's position on this matter is the same," Turkish Foreign Minister Mevlut Cavusoglu told reporters after the day's talks, according to Reuters. "The guarantorship of Turkey and the existence of Turkish soldiers on the island will continue... This is an indispensable demand of the Turkish Cypriot people and the most sensitive issue for them."

The Greek and Turkish Cypriot negotiating teams are to continue talks on January 18. The UN Conference is to resume once they have submitted their reports.