Tuesday 23 January 2018

D-Day for Greece looms large amid latest crisis talks

Greek Finance Minister Yanis Varoufakis
Greek Finance Minister Yanis Varoufakis
Colm Kelpie

Colm Kelpie

Greece will top the agenda once again this week, as eurozone finance ministers gather today to try and thrash out a deal to ensure the country doesn't run out of money.

Last week's emergency gathering ended in disarray, and today's Brussels meeting was expected to be D-Day in attempts to broker a compromise.

The rhetoric has been toned down somewhat, leading to hopes that maybe, just maybe, progress can be made. Greece and its international creditors started talks last Friday on reforms needed to keep the country financed, increasing the possibility of an interim compromise deal today.

Today's talks between the bloc's finance ministers and Greece are regarded as key, because they are the last moment for the new Greek government to ask for a technical extension of the bailout programme, which runs out at the end of the month.

Greece needs such an extension to ensure continued official financing at a time when market borrowing is too expensive for Athens, and to be eligible for negotiations for more time to repay the loans already received.

As we all know by now, the stakes for the country are high.

Last Friday, Reuters quoted a senior EU officials supposedly close to the talks who warned that if Greece did not ask for a bailout extension today, which it has as recently as last week opposed, the programme, with the financial cushion it provided, would expire and Athens would have to apply for a new, fully fledged bailout - the country's third.

"It's not crucial to extend. One could also agree to start discussions on a new programme. That is a distinct possibility. I would not exclude it," the official was quoted as saying.

Finance Minister Michael Noonan is due at the talks.

He struck a fairly downbeat tone ahead of last week's gathering, saying he was pessimistic at that stage that a deal could be found.

Unlike last week, today's meeting is not an emergency one, but the usual monthly gathering. It will be followed tomorrow by a meeting of all European finance ministers for the so-called Ecofin gathering.

While Greece will dominate today, it will likely be put aside tomorrow as other, more rudimentary matters are dealt with.

Topics include progress made on the investment plan for Europe as well as a discussion on a proposal to establish a European fund for strategic investments.

The rotating presidency of the EU, currently held by Latvia, and the commission will inform the council about the G20 meeting of finance ministers and central bank governors which took place last week in Istanbul.

Outside of Brussels, on Wednesday, the European Central Bank's governing council will meet in Frankfurt but there will be no announcements on interest rates.

The last time the governing council met, in late January, it announced its landmark quantitative easing programme in a bid to kick start the sluggish eurozone economy.

On the home front, the Central Statistics Office will announce the latest consumer price index data on Thursday, which will provide further information about the inflation picture in the country.

Last month, the data showed that the tumbling price of oil and a decline in food prices prompted by supermarket wars pushed inflation into negative territory.

The cost of living was 0.3pc cheaper in December compared to the same month a year earlier, and was down 0.4pc on the previous month as the sharp drop in global oil prices started to feed through to the petrol pumps and into home heating costs.

But when energy-related costs and mortgage interest costs were stripped out, prices actually rose.

Oil prices have plunged almost 60pc since June, partly because supply hasn't been cut and because of a boom in shale oil in the United States.

That slump in prices is finally translating into lower prices at the pumps, and that's had a knock-on effect on transport prices here, which fell 3.8pc in December compared with the same time last year.

Petrol fell 7.5pc and diesel was down 9.6pc in December, compared with the same period in 2014.

Thursday's data will show whether that trend has continued. There's little evidence to suggest that it hasn't.

Newsmaker - Yanis Varoufakis

Like most overnight wonders, Yanis Varoufakis has been around a long time and enjoyed a cult following among austerity opponents in Athens before he suddenly became Europe's man of the moment.

Likened to Bruce Willis in Die Hard 6, hailed as a sex icon, feted by fashionistas, he is certainly an exotic creature among Europe's somewhat staid finance ministers. One wonders what Finance Minister Michael Noonan makes of his 53-year-old colleague, who is the only finance minister to have his own Facebook page for supporters.

So who is this self-described accidental economist and former libertarian Marxist and where did he learn his trade?

The son of a wealthy 89-year-old Greek industrialist, he attended the expensive Moraitis private school in Athens, which has nurtured many members of Greece's political and economic elite.

Like many Greeks, Varoufakis later chose to study and live overseas; earning his doctoral thesis from the University of Essex and later teaching in the universities of East Anglia, Cambridge, Glasgow and Sydney. He spent the past three years in Austin, Texas, as a visiting professor. His academic speciality is game theory, which seems right for a man who has an eye for fashion and is currently challenging Europe in a giant game of chicken.

He has dual Greek-Australian citizenship thanks to his first marriage and is now married to installation artist Danae Stratou.

Varoufakis is such an individualist that he deliberately misspelt his name Yanis with one 'n' and he is not a signed-up member of Syriza, the party he now represents in the Athens parliament.

"I had an aesthetic problem with the double 'n'," he said once. "So I decided to write my name with one. My teacher gave me a bad grade, which made me very angry and I've kept writing my name with one 'n' ever since."

After his years teaching overseas, he returned to Greece in 2000 thanks to a combination of nostalgia and an "abhorrence of the conservative turn of the land Down Under".

Like many Irish academics, he shot to fame during his country's financial crisis by condemning the bailout and warning of impending destruction.

It is that record that has since propelled him to fame and high office; it is as if mutatis mutandis that UCD professor Morgan Kelly were to become finance minister here. An interesting experiment.

Irish Independent

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