November 20, 2014

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Sense of crisis returns to Greece

There is once again a sense of crisis in Greece, after the stalled talks with the troika. As there is a clear possibility of early general elections, coalition members started to lay blame on each other. On Tuesday, ND parliamentary spokesman Adonis Georgiadis publicly blamed Pasok for holding up negotiations with the troika because of its opposition towards reforms. Pasok’s spokesman Dimitris Karydis responded by accusing Georgiadis of acting like a troika representative. “Mr Georgiadis is asking us to pull down our trousers in the face of absurd demands.” Never before has there been a public spat with this level of intensity, writes Macropolis. This is how they analyse the situation:

"New Democracy and Pasok find themselves in a tricky balancing act between completing negotiations with the troika and preparing themselves for the possibility of early elections… Should the troika review not be completed on time and an agreement with the eurozone on a precautionary credit line not be reached, the government will suffer serious political damage. It is likely at that point that each of the two governing parties will try to limit the impact by placing the blame on the other, especially as the probability of the coalition failing to secure the election of a new president in February will grow."

There are other signs of concern: Gikas Hardouvelis took the unusual step of meeting President Karolos Papoulias on Tuesday. Upon exiting the talks, he told reporters that talks with the troika are at a sensitive stage and that now is not the time for populist or rash decisions.  He said that Grexit is still an option that cannot be excluded and that they will "keep Greece in the European family,” a statement hinting at some serious concerns that have been expressed behind closed doors. Also, there are reports that Antonis Samaras and Evangelos Venizelos may call Alexis Tsipras in for talks. There are discussions about this, writes Kathimerini, but no decision has been taken. Tsipras recently proposed a meeting of party leaders to agree on a date for general elections, on a presidential candidate and a common strategy for debt relief.

Hardouvelis is now to table the final draft of the 2015 budget in parliament on Friday without having secured the approval of the troika. Kathimerini quotes sources as saying the troika has insisted on last-minute changes to guarantee that the 3% primary surplus target is attained, which the government clearly rejects as unnecessary on the grounds that the troika had been over-pessimistic in the past. The coalition might now opt for a wait-and-see strategy like last time, to see which side was right about their estimates. If the troika turns out to be correct with its forecast of a fiscal gap of up to €3.6bn for next year, the government would then have a choice between two options, either to revise its estimates in the next midterm fiscal plan in February/March 2015 or to table a supplementary budget. 

Our other stories

We also have more stories containing details on Juncker’s CDO; on Brussels pressing France for more fiscal efforts; on a general strike in Italy and an unusually humourous response by the Confindustria; on another outspoken central banker, this time from Italy; on what the eurozone’s current account really means; and on Andrew Ball’s comparison between the BoJ and the ECB.

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