Friday 30 January 2015

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In early 2010, fears of a sovereign debt crisis, the 2010 Euro Crisis developed concerning some European states. What should be the response? How should economic and financial policies be coordinated at the EU level?


Short and mid-term economic policies of SYRIZA

Posted by on 26/01/15



Courtesy: Dimitris Arvanitis ©

SYRIZA’s landslide is definitely something many media and political analysts would not expect. Over 900 correspondents from European and international media were in Athens these last weeks to cover one of the most interesting and crucial elections in the Union. Why? Because the radical left party of SYRIZA, a party that until 2010 was around 5-7%, achieved to immensely increase its electoral appeal, reaching around 37% and making history in Greece. In the center of the debate was the economic program of SYRIZA, with the majority of media correspondents  struggling to clear up what the priorities and policy planning of the new government are.

As the next weeks and months will be -once again- of paramount importance for Greece, it is vital to know what the short and mid-term goals are.

Short-term Goals

1. Restitution of the minimum wage of 75o euro in the private sector;

2. Restitution of collective agreements in the labour market;

3. Introduction of bill protecting these vulnerable parts of the population having overdue debts (i.e. mortgage loans for first home/propriety), along with the establishment of regional / peripheral resolution committees dealing with fiscal claims;

4. Reinstatement of legislation that protects employees from being subject to massive layoffs;

5. Reinstatement of the minimum pension wage of 36o euro for those not being covered by social security nets;

6. Resolution of social security burdens for the self-employed and people with disabilities;

7. Re-issuance of licensing for media corporations from zero basis to combat against corruption, bribery, nepotism and bring about financial and administrative transparency and capacity;

8. Granting of free electricity for 300,000 households that cannot afford the relevant bills.

Mid-term Goals

1. Introduction of growth clause as prerequisite for debt repayments and public debt cut on its biggest part (i.e. provision aligned with the Maastricht Treaty’s limit of 60% debt on GDP);

2. A 5 billion public-led investment program to soar and invigorate the domestic economy and create 200,000-300,000 new job positions;

3. Combat of corruption and tax evasion, while increasing taxation for highest incomes and pushing-up minimum non-taxed annual income to 12,000;

4. Re-evaluation and rationalization of property taxes to address the real capacity of tax payers.

The broader aim of the party is to re-balance wealth distribution, create conditions that will increase consumption, facilitate state’s income burdens in order to financially support the most vulnerable parts of the population, and bring liquidity in the state’s social security funds.

Personal Comment

The IMF has officially and repeatedly admitted grave mistakes in Greece’s aid packages, especially with regards to the improper planning that did not take into account the special conditions of the domestic economy and market.  In addition to that, the previous government did not implement structural reforms, therefore leaving the major side-effects of spending cuts and increased taxation to the shoulders of tax payers.

In this respect, the Junker’s stimulus plan and the quantitative easing of ECB’s President Draghi can be both considered as clear decisions that acknowledge the weaknesses of austerity and the need to address growth and soar the economy through massive investments, not only through borrowing.

What is more, we need to point out that excessive and destructive debt rates is not only Greece’s problem. It only takes to have a look on Italy’s, Spain’s, France’s public debt to acknowledge the depth and gravity of the problem. Therefore, the discussion over an EU Debt Relief Summit will soon come into Eurogroup’s agenda. Departing from that, Eurozone needs an investment-led convergence and recovery program to avoid a complete collapse, and not some short-term, frivolous, and irrational remedies.

To contact the author:

Dimitris Rapidis at

Can Quantitative Easing be successful in Europe?

Posted by on 25/01/15
Does this week feel like a prompt about turn? The announcement this week of QE for the eurozone seems to suggest that all those years of pain to bring budgets and debt levels down were not worth it. “We tried spending and borrowing less, though borrowing still went up, so now we are going to [...]

Davos: How Europe can tackle extreme wealth inequality

Posted by on 25/01/15

By Àngela Corbalán, Oxfam’s Head of EU Communications and Deputy Head of EU Office

As world leaders arrive in Davos for the first day of the World Economic Forum, storm clouds are gathering overhead. Skyrocketing global inequality has shone a flashlight onto the murky workings of global finance, with Davos becoming center stage this week of how to address this imbalance of power.

Ahead of this year’s conference, a new Oxfam study has shown how wide the chasm now is between the ‘haves’ and ‘have nots’. Wealth: Having It All and Wanting More demonstrates that if current economic trends continue, next year the wealthiest 1 per cent on the planet will own more than everyone else combined. This staggering imbalance of wealth is holding back the fight against poverty at a time when 1 in 9 people do not have enough to eat, and more than a billion people live on less than $1.25 a day. Extreme inequality used to be seen as a problem solely for developing countries, where presidential jets flew over slums and shanty towns. Now it affects us all.

World leaders such as US President Barack Obama, French President François Hollande and IMF chief Christine Lagarde have already spoken about the dangers runaway inequality can cause. Other European leaders must also take up the call. The EU should act to stem the torrent of wealth flowing from the poorest people in the world to the richest – starting with these three concrete steps.

Firstly, the EU must take decisive action to fight tax dodging both within Europe and beyond. Tax evasion and avoidance by large companies and wealthy individuals cost Europe at least €120 billion in lost tax revenue every year, not to mention the billions siphoned away from developing economies in desperate need of revenue to fund public services like health and education.

Secondly, the EU must support ambitious plans to fund the upcoming UN-backed Sustainable Development Goals, including a re-commitment to providing 0.7% of their annual GDP as overseas aid to developing countries. A new UN tax body is also badly needed to re-write the current unfair international tax rules that deprive poor countries of millions in revenue, and should be agreed at the third International Conference on Financing for Development in Addis Ababa, Ethiopia in July.

Finally, a mandatory register for European lobbyists must be set up to shed light on corporate practices that keep the cogs of global inequality spinning. Twenty per cent of billionaires have interests in the financial and insurance sectors, which spent €550m whispering into the ears of policy-makers in both Brussels and Washington in 2013. The pharmaceutical and healthcare sectors – also favorites of the super-rich – spent €500m lobbying both the EU and the United States in the same year.

Oxfam is concerned that the lobbying power of these industries is road blocking the major reforms needed to the global tax system, and giving stringent intellectual property rights priority over the health of the world’s poorest people.

Increasing evidence from many sources, including the International Monetary Fund, shows that economic inequality isn’t just bad for those at the bottom but also damages economic growth. Putting the brakes on extreme wealth inequality must happen now for everyone’s benefit, before the storm clouds really do come rolling in.

Grexit? Brexit? Don’t bet on it.

Posted by on 22/01/15
By EU Perspectives The old cliché “who’ll blink first” has never seemed more appropriate when it comes to Greece’s election as Merkel and Tsipras face each other.

Davos: How Europe can tackle extreme wealth inequality

Posted by on 21/01/15
By Àngela Corbalán, Oxfam’s Head of EU Communications, Deputy Head of EU Office As world leaders arrive in Davos for the first day of the World Economic Forum, storm clouds are gathering overhead. Skyrocketing global inequality has shone a flashlight onto the murky workings of global finance, with Davos becoming center stage this week of how [...]

Geldpolitische Atombombe

Posted by on 21/01/15

In der Europäischen Zentralbank sind die Würfel gefallen. Am Donnerstag wird EZB-Chef Draghi das tun, was er im Juli 2012 angekündigt hat: Er zündet die geldpolitische Atombombe. Nach der Devise rette sich wer kann hat die Schweiz dem Euro schon adieu gesagt. Jetzt geht auch die Kanzlerin in Deckung. Ihre eindringliche Mahnung an Draghi, die EZB dürfe nicht Staaten finanzieren und so alle Reformanreize zerstören, ist bemerkenswert. Nur selten fahren Staatschefs der unabhängigen EZB so in die Parade. Allein: Die Warnung kommt zu spät. Wäre es der Kanzlerin ernst gewesen, hätte sie Draghi früher stoppen müssen. So aber kommt ihre Erklärung daher wie eine Protokollnotiz. Was immer jetzt passiert mit dem Euro, dem Geldwert, den Haftungsrisiken: Merkel wäscht ihre Hände in Unschuld.

There is life after €uro

Posted by on 20/01/15

With Greek election only a few days away, I am reminded of a friend’s prediction that this time even loyal voters may vote for a different party that they used to. After having to leave Athens because of the crisis, he is struggling to keep his doctors practice afloat on the small island of Aegina.

Since the early 80’s the Greek state has been managed in a deplorable way by the two major parties in the republic. A closed circle of politicians monopolized power and alternately governed the country. During these years, they developed an extreme political clientelism with as result the creation of two parallel administrations.

This practice, which de facto substituted the official state, is one of the major factors of the actual social and economic bankruptcy of Greek society. If we add to that : (1) the large amount of debt accumulated by public and private spending ; (2) the reckless lending to Greece by dangerously under-capitalized northern European banks and ; (3) euro zone’s blindness and visionless economic policy dictated by Berlin that imposed unsustainable demands, then we understand Greek reality.

Greece enters the eighth year of deep recession. The human toll of the economic crisis is huge. Unemployment is above 25 per cent, and among those aged 15 to 24 it is close to 60 per cent. A study published in the European Journal of Psychiatry in March 2014 provides evidence of a 55, 8 per cent increase in suicides between 2007 and 2011.

Despite the austerity, that has been extremely intense and inhuman, the Greek public debt has increased and now exceeds 170 per cent of GDP. The country lost 25 per cent of its GDP since it has been undertaken by the Troika program.

Here are 5 reasons why Greeks will vote for anti-austerity in the upcoming election:

Greeks don’t buy the fear campaign of #Grexit

The strategy of fear that the actual government is campaigning on clearly does not work. Endorsement of this strategy by European politicians and EU institutions does not help. In the contrary, it has a boomerang effect. Greek citizens are not buying that the opposition constitutes a danger. The EU institutions failed to take into account the social and political implications of the severe austerity programs they imposed in countries like Greece.

Lack of trust towards government coalition

The simplest definition of trust from the perspective of the citizens is the personal confidence and absence of disbelief. When trust is absent, like in Greece, it is replaced by uncertainty, lack of confidence, and the expectation that actual political leaders will do things that are adverse to the interests of the people. Greece has much more debt than the country could ever hope to repay. Denying this reality condemns Greek citizens to a very long period of misery.

EU and the euro lost their credibility

In May 2012 Mario Draghi, the head of the ECB, declared that the crisis had exposed the inadequacy of the financial and economic framework set up for the euro monetary union launched in 1999. The euro was meant to bring convergence to the economies of the EU. Yet it has caused even greater divergence. The emphasis on austerity might have been politically necessary when the debt crisis began, in order to discourage governments from expecting more EU bailouts. However, this policy has also brought EU growth near to zero, encouraged deflation, fed exasperation across the continent and led to the impoverishment of large parts of the Greek population and, other euro zone countries. Under present conditions, the question of staying or not in the euro zone may not be very relevant to the average Greek. Nevertheless, Greece will probably stay in the euro, whoever wins the election. If it doesn’t, I am sure that there is life after euro, even if this will demonstrate complete lack of cohesion and integration inside the euro zone.

Troika is seen as foreign intervention

The International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC), form the so-called Troika, which intervened in 2010 to keep Athens from defaulting on its debts and having to leave the euro zone. Greece was put under a system of forced administration. In 2013 the IMF admitted that it made major mistakes on the first bailout, setting excessively optimistic expectations for the country’s economy and underestimating the effects of the austerity measures it imposed. The rescue package kept the country afloat, but it came in exchange for exaggerated austerity measures that have deepened recession and encouraged extremist political parties and polarization.

Leftwing Syriza is moving to the center

In every opinion survey leftwing Syriza is in the lead. The difference with the second party is 3 to 4 per cent and it does not seem to close. Syriza, is retreating from leftist rhetoric by confirming that no unilateral decisions will be taken on obligations towards creditors. It would not be the first party to become more pragmatic once in power. However, many of the party’s policies are unlikely to be accepted by the Troika, despite Syriza’s position having moved to the center recently.

The belief of the leader of Syriza, Alexis Tsipras that there should be a transparent and sustainable re-negotiation of debt, has won applause from other parties in Europe and may lead to a pan-European large-scale anti-austerity strategy. Nevertheless, Tsipras will be obliged to do business with other euro zone countries if he wins the election.

European Central Bank’s room for manoeuvre provisionally confirmed

Posted by on 18/01/15

Last week saw a confirmation of the powers of the European Central Bank (ECB) to address the crisis with the delivery of the (non-binding) Opinion in a case before the Court of Justice of the European Union (CJEU, or European Court).

By René Smits

The Advocate General (AG) confirmed the wide discretion, which the ECB has when taking unconventional monetary policy measures. At the same time, the AG suggested the Court that the ECB be required, when implementing such measures, to be fully transparent in the reasons behind them (motivation requirement) and to respect the proportionality principle (the measures are to remain well within the limits of the necessary to obtain the stated goal). He warned that the ECB’s involvement in economic policy setting and monitoring should end in respect of Member States whose bonds the ECB would buy under such unconventional measures: an end to the troika (troixit). The AG addressed the relationship between the CJEU and the highest court of the largest Member State, which had referred the question to be decided by the European Court. The AG opinion should be seen against the background of a battle for supremacy of the law (Union versus State law), and a battle for the public’s mind in Germany on the need of unconventional measures, as well as their role in preserving the euro and the composition of the currency union. The Opinion will support the ECB in deciding on further unconventional monetary policy measures, and underlines the primacy of EU law.


AG Opinion: another step in legal battle on ECB crisis powers

The ECB’s response to the euro area debt crisis came under attack from Germany, with several measures being challenged before in court. The present case concerns the ECB’s ‘bazooka’ response to the crisis. Mario Draghi’s announced, in the summer of 2012: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” The translation of this announcement in the ECB’s decision to engage in so-called Outright Monetary Transactions (OMT) was challenged by citizens, academics and a fraction in the Bundestag (the German Parliament’s Lower House) before the German Constitutional Court (GCC). For the first time ever, the GCC requested the CJEU on a preliminary ruling on the validity of the ECB’s announced OMT. On Wednesday 14 January 2015, AG Pedro Cruz Villalón outlined how the Court should, in his view, respond.


The crisis response by governments and central banks: bail-out and conditionality

A word of background on the crisis response is due. Policy makers and central bankers responded to the Euro area debt crisis by adopting unconventional measures. Governments established financial assistance schemes (‘bail-out funds’) for Member States that found themselves unable to borrow for on-going public expenditure. Central banks infused massive liquidity into the financial system, acted as lenders of last resort to banks in distress, extended credit to commercial banks on the basis of ever wider collateral, and instituted programs to kick-start the economy when their traditional major weapon (interest rate reductions) had lost its effectiveness with rates at, or below, zero. Interest rates are also central to understanding what happened to government funding. Rates on bonds of ‘peripheral’ Member States spiked, making it impossible for the governments of Greece, Ireland, Portugal and Cyprus to finance their budget deficits on financial markets. Without recourse to markets, governments needed to be financed by fellow governments, and by the International Monetary Fund (IMF). Special arrangements were put in place. The European Financial Stability Fund (EFSF) and the European Financial Stability Mechanism (EFSM) were followed by the European Stability Mechanism (ESM). The legality of these arrangements were tested before courts. The GCC had to rule on challenges by citizens, as had other national courts, notably the Supreme Court of Ireland, whose reference to the CJEU on the ESM lead to the Pringle judgment in 2012. In Pringle, the Court made a distinction between monetary policy and economic policy. It interpreted the no bail-out clause of the Treaty on the Functioning of the European Union (TFEU) in such a manner that the ESM Treaty was considered compatible with EU law. Lending by the IMF and the EFSF/EFSM/ESM was effected on the basis of strict adherence to ‘conditionality’: rafts of incisive economic policy measures and budget cuts to address the weaknesses undermining the competitiveness of the ‘peripheral’ economies and to restore budgetary soundness. The drafting and monitoring of this conditionality falls on the European Commission, the IMF and the ECB. The three form the ‘troika’.


European Central Bank’s response: unconventional measures, including OMT

As its cross-Channel and cross-Atlantic counterparts, the ECB responded by adopting unconventional measures. There was a specific European issue to address: trust in the single currency, and the unity of financial markets through which the ECB’s policy response normally translates to the real economy. The extremely high level of interest rates in ‘peripheral’ States thwarted the transmission of the ECB’s monetary policy: interest rates reductions didn’t any more translate across the Euro Area. Investors were not only weary of buying or holding public debt, they also openly speculated on States leaving the currency union, and on the demise of the euro. The mere announcement of the ECB’s willingness to defend the euro, and of OMT, calmed the markets and led to sharp reductions of interest rates.


AG’s core reasoning: OMT constitute a valid unconventional measure but implementation requires heeding legal parameters (reasoning, end of troika role, proportionality)

The OMT are lawful. The ECB has a wide discretion to act and a broad margin of assessment of what is appropriate in the circumstances.  The AG says:


“The Courts, when reviewing the ECB’s activity, must therefore avoid the risk of supplanting the Bank, by venturing into a highly technical terrain in which it is necessary to have an expertise and experience which, according to the Treaties, devolves solely upon the ECB.”


Note the plural used here (‘Courts’), unmistakeably a hint to the referring German court. During the oral hearings, Portugal and Poland had empathically argued that there should be no ‘judicialisation’ of monetary policy and the Court should not take upon it to decide in such highly technical matters for which an independent expert organ has been given responsibility.

Nevertheless, when adopting unconventional monetary policy measures, which the ECB is competent to do, it should abide by legal parameters. This concerns, first, the motivation of the OMT which the AG sees wanting when looking at the September 2012 press release alone. There should be extensive reasoning for their activation. Secondly, the ‘dual role’ which the leftist party in the German Parliament saw as incompatible with the ECB’s monetary policy mandate, should be reconsidered once OMT become operational. The ECB is then to withdraw from its deep involvement in economic policy prescription and monitoring, at least in respect of the Member States whose bonds the ECB would start to buy. While he acknowledges that limiting OMT to Member States with an EFSF/ESM programme may be necessary to avoid moral hazard and accepts a regular role for the ECB in these programmes, the AG thinks that activation of OMT should end the ECB’s troika role. Thirdly, the AG extensively discusses the need for the OMT, when operational, to comply with the proportionality requirement to which acts by all EU institutions are subject (Article 5(4) TEU). OMT should serve to re-establish the transmission mechanism of monetary policy but may not become a source of cheap government financing. The latter would also run counter to the prohibition of monetary financing, laid down in Article 123(1) TFEU. This basic provision of EMU bars central banks from extending credit to the public sector, and from buying public sector bonds on the primary market. Such transactions are an essential element of central bank operations. The AG’s analysis concludes that the ECB should heed the underlying concerns behind the prohibition of monetary financing and the ‘no bail-out’ clause (Article 125 TFEU).


Market issues: preferential status, default risk, holding until maturity, selectivity

Addressing the GCC’s concerns with OMT, the AG relies on a draft decision and a draft guideline on OMT which have not yet been adopted or published but which the ECB submitted to the CJEU. These draft legal acts make clear that the ECB would observe a ‘lock-in period’ (‘embargo period’ in AG parlance) between the issuance of public debt and its purchases on the secondary market, thus allaying the first of the GCC’s nine fears, on the timing of the purchase and the price formation. The AG notes that central bank operations always entail risk so that (2) default risk cannot be excluded. But he considers this not such as to render the OMT program contrary to the prohibition of monetary financing. On the related issue (3) of preferential treatment, the ECB’s stated intention to oppose any restructuring proposals that may be made under the terms of the bond is considered sufficient. Collective action clauses (CACs) inserted in bond documentation provide for a (super-) majority of bondholders to decide on possible write-downs. The ECB, ranking pari passu with other creditors of a sovereign, may become subject to restructuring. Just these past days, ECB Board member Bernard Coeuré has reaffirmed, on two occasions, that the ECB would vote against any restructuring proposals; a write-off would implicate the ECB in granting credit to a Member State contrary to Article 123 TFEU. The GCC’s further fear (4) of market distortions resulting from the ECB holding bonds until maturity is allayed as well: the ECB has stated its intention not to do so, its practice under the Securities Markets Program (SMP) has also been to sell bonds before their maturity date, and the maturity band indicated by the ECB (1-3 years) implies that there will be no prolonged ownership of public debt. For strategic reasons, the ECB will not pre-announce any quantitative limits on the program of bond buying (5) when activating OMT: this would lead to speculation and undermine the effectiveness of the OMT. But there will be limits in practice so that this <dubious> aspect of OMT no longer raises proportionality issues. The GCC’s concern (6) that OMT encourage Member States to undertake even more debt would not materialize in the AG’s view as there will be no pre-announcement of OMT. But, the AG adds, this concern necessitates that OMT should be proportional to the aim the measure is seeking and not go any further. The AG accepts (7) selectivity as inherent in a program seeking to remedy the blocking of monetary policy transmission in specific Member States. He addresses the GCC’s issues with the (8) conditionality (OMTs will only be effected in bonds of States that are in a program with the ESM) and the (9) parallelism between the ECB acting in the same manner as the ESM in the context of the distinction between monetary and economic policy.


Other issues and outlook

Although, as the AG notes, monetary policy forms part of wider economic policies, in the context of the attribution of powers in the EU, it is necessary to distinguish between the two. Monetary policy is an exclusive Union competence, for the Member States that have adopted the euro (Article 3 (1) (c) and Article 127(2), 1st indent, TFEU). Economic policy remains largely with the Member States (Article 5 TFEU), subject to certain principles, prohibitions and procedures (Articles 119-127, 136 TFEU) and a limited own competence for the Union to act (Article 122(1) TFEU). For the ECB to act in a manner which may resemble an economic policy measure (selectively buying government bonds) may seem to be overstepping the dividing line between monetary policy, for which it is exclusively competent, and economic policy, which rests with the States and with other Union institutions. The AG considers  that both the objectives (as the Court held in Pringle) and the instruments define a policy as either ‘monetary’ or ‘economic’ in Treaty terms whilst any policy should adhere to the fundamentals of EMU. Among these: the prohibition of monetary financing and the absence of shared fiscal liability (‘no bail-out’). Emphasis on these fundamentals meets the request by Germany which, during the hearing, requested the CJEU to emphasize the ‘stability nature’ of EMU in response to the concerns of the GCC.

The general relationship between the Luxembourg and Karlsruhe courts forms the background to the OMT referral. This blog can only note in passing the discommode vis-à-vis the CJEU’s supremacy felt by supreme judicial instances of several Member States. The AG clearly finds the reference by the GCC to be subject to a reserve. The GCC has made clear that it will decide ultimately on the acceptability of the ECB’s OMT under German law. Conspicuous by its absence, in the AG’s Opinion, is a reference to the supremacy of EU law which the European Court has declared on numerous occasions to be an essential element of the Treaties. It is to be hoped that, in its judgment, the Court will re-affirm its case-law since Costa/ENEL (Case 6/64).

The European Court may be expected to give a final ruling in the coming months. Barring an unexpected surprise (the CJEU is not bound by this week’s AG Opinion), the ECB’s Governing Council knows, when deciding to engage in QE later this month, that it is likely to be given ample discretion to adopt unconventional measures. The requirements of transparency (reasoning) and proportionality that apply to the activities of any EU institution must be heeded; troixit is imminent.


René Smits holds a chair in the law of economic and monetary union at the Amsterdam Centre for European Law and Governance, and is an alternate member of the Administrative Board of Review (ABoR) of the European Central Bank. His website can be accessed here.

There is no #Grexit, just another economic strategy

Posted by on 08/01/15

The major topic / concern of EU, international and domestic media towards parliamentary elections in Greece is -again- whether the country will stay in or leave Eurozone. Actually it is an artificial dilemma as front opposition SYRIZA, leading the polls, never claimed against the fate of the country in the monetary Union. Therefore, it is time to drop “Grexit” from the discussion table.

The most important thing we need to point out is that the political environment in Greece is extremely fragmented these last days and it is expected to be even more in the coming days. Nonetheless, I believe it is time to point out some fundamental policy concerns that the next government in Greece should inevitably take into account.

A. Economic Recession Must Finally Get Addressed

Unemployment, poverty, growth, and investment rates remain extremely low in, in comparison with tax rate and spending cuts that remain high. The effect of tourism in real economy is also low, even if it shares a considerable part of national GDP. Priority sectors such as energy, health, education, and social security are still faced with structural constraints and bureaucratic burdens, a fact that weakens the prospects for a business friendly environment.

The next government should re-negotiate the terms and conditions of the bailout programme in the EU Summit scheduled for February and emphasize on growth clauses and public investment to unlock productive forces and improve debt management.

B. Media Should Focus More On Quality Information

Ten days now European and International Media irresponsibly re-produce the term “Grexit”, completely ignoring what is at stake in Greece. Instead, analysts and political commentators should invest on presenting the programs of the political parties, the different strategies, the profile and ideas of candidates and political leaders of the parties. At this stage, and all the way towards the election, what the European public should learn is that the Greek economy is faced with a deadlock while mounting grievances are spread in the society. Media correspondents should also seek for alternative sources of information in the country, bloggers and independent analysts, as a great part of domestic media is split between or siding the political camps.

C. Hear What The Greek Youth Has To Say

While discussing about the devastating effect of austerity over unemployment, there are no channels of expression for the majority of Greek youth. Media and political parties systematically ignore what the youth demands, dreams of and envisions. In this respect, all apolitical parties have pledged to revitalize their candidates’ lists with young people, but none of them did so. Therefore, for one more time, this group will be underrepresented in the Parliament.

D. Why Business And Investments Do Not Come In Greece?

The answer is simple. It has nothing to do with “political instability”, but primarily with a broad perception that Greece since 2012 is at a constant state of defaulting, which is that there is always the fear (and risk) that investing in Greece will be a waste of money. Capitals flee from the country, whereas labor-intensive investments are “on hold” waiting for a full normalization of the Greek economy. Such “normalization” will not come as long as the European leadership cannot properly understand that the national economy -and, to bring it further, the European economy- need to re-evaluate and re-set the goals of the Stability Pact.

E. SYRIZA Does Not Pose A Threat To Lenders And Political Stability

Neither SYRIZA nor any other party – other than extreme right parties – pose any threat to the lenders of the country or to political stability in Greece or Eurozone. The party has the strong ambition that it can re-negotiate the terms of the consolidation programme towards a better accommodation for all parts involved, especially for the Greek society and economy. In this respect, the great risk is to misconceive or mix the determination and the alternative economic policy that SYRIZA is planning to implement with a default on the consolidation programme. More possible would be an extreme upheaval in the Greek society and the rise of fascists should the current economic mindset in Europe remain, than a complete collapse of the Greek economy.

Open data on Greek local authorities: reengineering European funds

Posted by on 05/01/15

Rania Tsopana, Municipality of Nea Ionia Attikis Graduate of Division of Local Government TEI Kalamata

Fotis Zygoulis, Municipality of Heraklion Attikis, PhD candidate at the University of Athens (Business Process Reengineering)

Key words: transparency, open data, government policies, consultation, budget, citizens, interoperability.

Open Data Policies in Greece

Open public administration data is data of any kind can be used for any purpose without restriction and produced by public bodies. The use of open public administration data is directly related to the activation of citizens. Enabling citizens’ observatories aimed at transparency and accountability of public entities. In modern information society in which we live it is easy to understand that the availability of data produced by governments, results in the achievement of good governance because of transparent decision-making.

Transparency in the public sector means unrestricted and free disposal of administrative operations and procedures in order to ensure legality and legitimity. Transparency remains a constitutional requirement in Greece.

Open availability of public administration data can lead to cooperation between the civil society, professional groups, NGOs and universities.  Such data could include everything from geo-spatial data, administrative operations, infrastructure, environment, culture, civil service, transport data, election results, crime, licenses, business directories, etc.

Interoperability through public bodies can be readily achieved by the use of open public administration data. The Greek Republic has made some efforts in recent years concerning the development of open data policies

Public open data are being produced and published in many cities of our country but there are not easily read and processed, they are not machine readable, they are not produced by open licenses [e.g.CC]. A recent study on this issue has been drawn the Greek part of the Open Knowledge Foundation which has demonstrated (by the ratio of open data) that most cities :  do not have data available in the category transport data in real time, they have no data budgets that are machine-readable as it is in the form of pdf, public geospatial data are available to the public in a special place reserved for GIS apps, public procurement contracts soar in pdf format in the Central Electronic Registry public Contracts and are recorded simultaneously on the website of Diavgeia[1] (with open license CC), public data for  building licenses are available at the website of Diavgeia in pdf format, citizens’ demands for public services are being allowed only at the municipalities of Athens where it seems that exists a serious electronic platform.

In Greece, after the memorandum with Troika, the need for adaptation of public institutions to the requirements of transparency and the fight against corruption has led municipalities to develop policies concerning open data.

The participation of citizens in decision-making and good governance in Greek municipalities.

The availability of open data in the official sites of Greek Municipalities is strongly related with the trust between Greek local government and the Greek people.  This confidence is translated to ways of using this data. The use of data is not necessarily related to material – economic exploitation but it can be related to participation in public political life through public consultation.

The concept of the public consultation is attached to the concept of open government [Open Governance]. The open government allows the participation of citizens in shaping the legislation. The open public sector, particularly the open local government embodies a transparent decision-making center of power, through which the municipalities are closer to the citizen.

The available open data therefore leads to both democratic legitimacy of local government and the participatory concept of e-democracy.

The ideal shape of the citizens to access towards public consultation inside the Greek municipalities is constructed as follows:

ü  A) Passive Information

ü  B) Active Information

ü  C) Consultation

ü  D) Dialogue and Negotiation

ü  E) Enable & Participation

ü  F) Configuring policies

A synthesis of access to public documents and public control of power can implement the above scheme. In an attempt to highlight the great contribution of open government [open public governance] to e-democracy, a common interconnection between transparency and low level of corruption could possibly prevent officials from government abuse of power.

The Greek reality is disappointing regarding the issue of transparency and open data. There is a lack of mayors who are pursuing policies based on a public consultation (which is based on open data). The program Diavgeia saves the situation somehow. But we Greeks as a country are walking a long way behind the global progress in open data policies. The infamous introversion that always characterized the Greek local authorities regarding the administrative structures and practices is an important feature.

While the implementation and the success of the European Funds processes in Greek Municipalities will pass through public consultation in the new programming period 2014-2020 it is revealing  what  Lucy Chambers, spokesman OKFN, writes after a visit to Greece in the summer of 2012: “Only Diavgeia application operates as a platform for open data in the municipalities of Greece. Lucy Chambers connects the level of transparency in Greek local authorities with the overall need for real transparency in public finances of our country.[2]

Another study (2014) conducted by OGP is based on the measurement of countries (based on indicators of the implementation of open data) remains a slap in the face for our country. The countries included Greece are being called pretenders; regarding the success of implementation of open data policies along with Romania and Estonia[3]. This means that the administration let alone local government in our country are insufficient in open data. We are good at design but we fail in the implementation.

On the image below we can see the open-spending infographic[4] that reflects the amount of money spent by each Greek ministry.

Open – spending applications are being used in Greece on the basis of Diavgeia application. A new scientist Vangelis Banos has developed such an application called “HyperDiavgeia”. The fact is that we can extract some results related to the operational cost of each Ministry but there cannot be extracted a lot of categorized data. This happens due to the lack of categorized data. Only a few municipalities like Athens, Thessaloniki, Gortynia and Heraklion Crete can offer us such data.

The Law for Open Data in Greece 2014

  1. Examples of Open Public Data in Greece


It is an application Introduced for the first time in Greece based on the legal obligation to display the decisions of governmental bodies and administration on the Internet. Every citizen can access the set of laws and decisions adopted by the governing bodies, the local government and Independent Authorities. All decisions cannot be executed if not posted on the website  Each decision acquires a unique number who certifies the public document.



It is an action under the auspices of open government initiative, which aims to bring forth creative ideas, people and ways in order to introduce innovation in civic relations and business within the Greek public sector. The online platform is forum and it is going to gain a new dimension, participatory and decentralized planning and implementation of public e-services.



All public entities are required to be registered in the Central Electronic Registry Public Procurement Platform. On this app documents that are related to public contracts for works,  goods and services during all the execution stages, regardless of process and source of funding (except those which by law are published in the Government Gazette), with a budget exceeding 1.000,00 €  are being published. A unique number is being given too.



In data are depicted simply and daily related to the spending of the Greek government, which are being extracted from the decisions published on Diavgeia app. Which are the public bodies with larger payments? Which public bodies spend taxpayer‘s money and who pays? Who are the public contractors that they are being choosed to execute public works?

  1. Institutional Framework for the public open data – How we got to Law 4305/2014


The Law 4305/2014 “Open disposal and re-use of documents, information and data in the public sector” has been a legal obligation upon the Greek Ministries.  Next time, it is estimated to be implemented upon the Municipalities.

Provided that, within three months each public body will finalize the list of data that is available to publish, we expect to see public open data on air on the summer of 2015.


Actually the current Law is a modification of N.3448 / 2006 concerning the «re-use of public sector information”. That law, following the Directive 2003/98 / EC obliged public bodies to make their documents available for re-use.[5]

The battle between the OKFN Greece and ELLAK

While Open data policies are being developed in Greece, a battle is on the air; that between two concepts[6] of open data policy. There is the ELLAK which has a long tradition on open data policies inside the Greek public sector and the OKFN Gr department. ELLAK is consisted of many persons who have been working a lot on the basis of the open data implementation inside the Greek public sector. Diavgeia application is a product of the team that now governs ELLAK.  On the other side, OKFN Gr has dramatically implemented a lot of open data policies in a systematic way that conforms to the OKFN movement.

A compromise is needed in order to achieve better results. It is a fact that when a policy has revealed aspects of exploitation a lot of serious scientific branches are emerging.

Why we are going to fail in the implementation regarding the European Funds in Greek Local Government (lack of institutional cooperation, applications’ interoperability and managerial synergy)

Yes, there is a problem here. If a Greek municipality would like to be funded by the European Funds to create, build or reengineer a structure, this cannot be succeeded unless it has allowed a public consultation regarding the results, the consequences of the project to be funded.

In Greece, where democracy has been born, there is a lack of Public Consultation, regarding the Electronic Governance Tools. While Greek municipalities are not prepared to achieve public consultation due to the lack of open public data sets that can allow that kind of public consultation.








[4] This infographic can be found in the OKFN Greece blog

[6] What is the difference between ELLAK and OKFN GR? Sometimes I wonder what the differences are.


Griechenland Hilfskredite

Posted by on 05/01/15

Tsipras will einen Teil der Hilfskredite nicht zurückzahlen. Die anderen Euro-Länder, also auch Deutschland, sollen also auf viele Milliarden Euro verzichten, die sie Griechenland geliehen haben. Und schlimmer noch: Gleich im März oder April sollen sie die nächste Milliardentranche Hilfskredite an Griechenland überweisen; sonst wäre das Land nämlich pleite. Mit dieser Strategie aber wird Tsipras nicht durchkommen. Er wird keine neuen Kredite bekommen, wenn er die alten nicht zurückzahlen will. Mit dieser Strategie droht tatsächlich die Staatspleite in Griechenland schon im Frühjahr…

Für die anderen Euro-Länder wäre ein Austritt Griechenlands aus der Eurozone sicherlich verkraftbar; für Griechenland aber wäre es der endgültige Absturz. Doch so weit wird es nicht kommen, denn letztlich wird auch Alexis Tsipras Kompromisse machen müssen… Syriza wird auf Koalitionspartner angewiesen sein. Bei möglichen Koalitionspartnern wird es immer unübersichtlicher: Im gemäßigt linken Lager ist am Wochenende nun noch eine neue Partei hinzugekommen, die der frühere Regierungschef Papandreou gegründet hat. Diese Parteigründung ist ein gefährliches Experiment, denn sie zersplittert die Parteienlandschaft noch weiter.

Aber der konservative Ministerpräsident Samaras reibt sich jetzt die Hände. Er hofft, dass Papandreous neue Partei auch von der Linkspartei Syriza Wähler abzieht, mit dem Ergebnis, dass die konservative Nia Demokratia letztlich doch die Wahlen gewinnt. Für Griechenland wäre das sicherlich nicht die schlechteste Lösung. Ministerpräsident Samaras hat in den vergangenen zweieinhalb Jahren vieles erreicht. Wenn er weiterregiert, hat Griechenland die Chance, schnell aus der Krise herauszufinden.

Ukrainian crisis and Russian policy

Posted by on 30/12/14

A year passed since the Maidan Square events in Kiev, provoked by Moscow’s henchman Yanukovych and his sponsors in the Kremlin. Those events were followed by a chain of drastic developments: annexation of the Crimea, raging of extremism and separatism in the Eastern Ukraine and then Russian military incursion into Ukraine’s mainland. Russia’s aggressive actions have broken the European order, formed after the WWII, and jeopardized international security system.

Amidst these challenges Ukraine keeps on moving towards the EU. The country elected the new pro-European president and a new European-oriented parliament. A new government was formed. It mapped out so needed democratic and economic reforms, aimed at gaining a full membership in the EU in the future. The EU-Ukraine Association Agreement was signed. Ukrainians had chosen their path and paid a stiff price for it. Ukrainian people prove their right to be Europeans at the cost of lives of average Ukrainian men and women.

Neighbouring Russia has not accepted the choice of Ukraine. The Kremlin hasn’t rejected the idea to restore Soviet empire and expand its control over Ukraine. Russian leader characterized change of power in Ukraine as a coup d’état inspired from outside. President Putin accused the EU and the USA of planning to reshape traditional spheres of influence in the world and to undermine Russia’s strategic positions. Putin stated unequivocally that Ukraine is an area of Russian strategic interests and no political and economic arrangements with Ukraine can be acceptable without Russia’s participation.

European attitude towards developments in Ukraine is evolving too. The first reactions to the Maidan Square events were quite restrained. But when Russia annexed the Crimea and began to stoke unrest by pro-Russian separatists in the east and south of Ukraine it become impossible for EU to ignore violation of the Budapest Memorandum. Signing the Budapest Memorandum in 1994, Russia (together with the USA, the United Kingdom, France and China) granted security assurances against threats to use force against the territorial integrity or political independence of Ukraine. Kiev, in exchange, gave up the world’s third largest nuclear weapon stockpile. The USA, the United Kingdom and France were outraged by this breach of obligations to Ukraine, all the more, the Party of the Budapest Memorandum and the guarantor of security and independence was the violator. Russia set a dangerous precedent of foreign territories forced seizure and reshaping of internationally accepted borders. It has put under threat global security system and defamed the idea of nuclear disarmament.

Now Russia is waging a “hybrid” war against Ukraine; it is using a wide range of political, economic, military and communication means. Moscow came to a valid conclusion that “a pen is equal to a bayonet” long ago. Therefore, the Kremlin is intensively campaigning to manipulate public opinion inside the country and abroad. Russian media and the media, which are under Russia’s control, are distorting information about Ukrainian developments. The messages are stuffed by hypocritical expressions of sympathy with Ukraine and fake “facts” giving rise to hate and scorn for Ukrainians. The role of the USA and the EU in the events in Ukraine is distorted and grossly exaggerated by Moscow. It exerts itself to create the atmosphere of mistrust and misunderstanding between EU MS and between the USA and the EU. President Putin has affirmed that Ukrainian conflict is not the conflict between Ukraine and Russia, it’s even not the conflict between Russia and Europe, it’s a clash of Russian and American interests.

Russian leaders and Russian propaganda have still denied presence of the RF forces in the territory of Ukraine. They have stressed that Ukraine goes through an inner conflict between new Kiev authorities and population of some Ukrainian regions. They have depicted their own actions as disinterested aid to a suffering fraternal nation, whose sons and daughters are dying because a villainous government in Kiev doesn’t respect their right to speak Russian. The Kremlin prefers not to mention that separatists kill people with Russian arms; trained by Russian instructors they destroy buildings using Russian-made explosives; they even shot down civil aircraft with missiles launched from Russian anti-aircraft complexes. Moscow from time to time sends so called “humanitarian convoys” to rebellious regions. Moscow is its own master in this case. It doesn’t take into account real needs of the people. It consults with nobody, it coordinates its actions with no one. Nobody knows the contents of the cargos. No one can check veracity of invoices. Neither Red Cross organization nor OSCE mission have opportunity to control this aid distribution among civil population. That is why Kiev has every reason to state that Russia provides military supplies to insurgents. They do receive arms, ammunitions, fuel, food from Russia to be able to continue the war. One can easily observe a direct relation between “humanitarian convoy” arrival and aggravation of the conflict in the Eastern Ukraine. It’s an example of humanitarian aid which leads to humanitarian catastrophe. This year more than 1,5 Mio people in Ukraine have lost their homes and became displaced persons and immigrants.

Large Russian Army units (up to 10,000 men strong) deployed in close vicinity of Ukrainian border are also always ready to “help” a neighbour in need. Russia has already tested such assistance scenarios in Moldova (the Transdniestria conflict) and in Georgia (the Abkhazia conflict). The Kremlin wants to create a new frozen conflict to have a leverage to destabilize situation in Ukraine in the future.

Russia’s aggressive steps forced Europe to take tougher approach towards Moscow. The accident with Malaysian Boeing over Ukrainian territory, when nearly 300 people were killed, became a turning point in this context. The EU ventured to impose the third wave of sectoral sanctions, which have a real negative impact on Russian economy.

Ukraine together with the international community is developing the peaceful ways to resolve the conflict. Peace initiatives proposed by President Poroshenko were supported by UN, OSCE, NATO, the EU and Member States and the USA. They aimed at creating peaceful democratic state, where people enjoy equal rights, in particular the right to chose the language of communication.

Taking into consideration the scope of Ukrainian crisis and possibility of its expansion across Europe, international community should focus its efforts on forcing Russia to stop supporting separatists in the eastern regions of Ukraine. It’s obvious if Russia had withdrawn its troops and heavy armament from Ukrainian territory and stopped to back up separatists, the conflict in Ukraine would have been settled by itself.

Now Moscow is not ready to give up its ambitious plans and to put an end to separatists’ activity despite the sanctions imposed and rapid deterioration of economic situation in Russia. The Kremlin instead tries to blow the conflict; it has even resorted to a new tactics of subversive operations and terrorists attacks in the regions neighbouring to the conflict area. One cannot be sure that Russia will not want to provide the very same “assistance” to neighbouring European countries and to support national minorities by organizing explosions and shelling residential building, schools and hospitals.

It’s urgent need for international community to concentrate efforts to oppose Russia’s belligerent policy.

Russia encroaches on the Baltics

Posted by on 14/12/14
Russia is very persistent in the pursuit of the goal to expand its influence inside the EU at all levels and in all spheres. Moscow is constantly seeking opportunities to influence European politics and public opinion and to turn them to its own advantage. The Kremlin effectively uses numerous Russian-speaking diasporas in the EU Member States; it also provides financial support to a large number of pro-Russian organizations. Adhering to this policy line, Moscow has appeared capable to consolidate its positions in some European countries, in particular, the Baltic states. The Kremlin runs large-scale propaganda campaigns in these countries through the media which are under its control, e.g., notorious “Russia Today” and newly presented “Sputnik”.

One of the most effective leverages used by Russia for lobbying its interests is intense cooperation with the left-wing and the far-right-wing parties. For the last few years leftists, ultra-rightists and nationalists have managed to enlarge their electoral base and to increase the number of their parties’ representatives in the national parliaments and the European Parliament, exploiting economic problems and social discontent.

The Kremlin is using a whole bunch of mechanisms and instruments to deepen collaboration with these forces. Special funds and information centers creation, conferences and fora organization, exchange of visits, sharing of the best dirty campaigning practices are pressed into service. Meanwhile Moscow doesn’t forget about financial incentives to the top people and leaders. In fact, it’s a well-tuned and smoothly running bribery scheme. They are rendered assistance in exchange of some “insignificant” turn in the future. Qui pro quo. Usually they are asked to back or oppose a certain decision. One can see the impressive output of these coordinated actions. Some far-right and nationalist parties, for instance, expressed their approval for the “independence referendum” in the Crimea and acknowledged its results to please Russian tutors. The international community condemned even the fact of conducting this illegal voting; Russia’s allies, however, sent their observers to the Crimea… and there were many of them: “Jobbic” (Hungary), the Front National (France), the Freedom party of Austria, the Flemish interest (Belgium), the Attack party (Bulgaria).

Russia has been working hard to cement its influence in the post-Soviet and Eastern-European countries for a long time. The Revolution of dignity in Ukraine and signing the EU-Ukraine Association Agreement struck a blow to Russia’s imperial plans. The Kremlin reacted aggressively and violently. Russia annexed the Crimea and became a sponsor of the warfare in the Eastern Ukraine. Putin’s regime can’t afford Ukraine’s drifting apart towards the EU because it may set a precedent which the other former Soviet republics and the federal subjects of Russia will likely want to follow (It will surely lead to breakup of Russia).

Therefore, some experts consider that Ukrainian scenario recurrence in Latvia, Estonia, Lithuania is rather probable. Latvia is the most obvious target for the Kremlin’s campaigns. There is a large Russian diaspora there and an influential pro-Russian political alliance “Concord center”. However, Putin acts more cautiously towards the EU Member States. Russia’s threats are rendered by Eurasianism spinners and odious politicians (Vladimir Zhirinovsky and those of his ilk).

The Kremlin is effectively conducting propaganda among Russian-speaking population to form favorable for Russia public opinion. It is feeding popular dissatisfaction and sponsoring street protests. Moscow defames the Baltic states by manipulating public opinion and political mudslinging. It forms the image of Nazi-states, where Russian-speaking citizens are deprived of their rights; the governments cultivate hostile attitude towards Russia and Russians, etc.. Opinion polls confirm that the level of negative perception of government home policy is increasing among Russian-speaking population in the Baltic states, in particular, in Lithuania which is known for its anti-Russian stance.

Russian propaganda is disseminating the idea of so called “Russian world”. Taking actions through friendship societies, Russian language fans’ clubs, Russian compatriots abroad associations, Russia laboriously strengthens its humanitarian influence. Such organizations as “Good Russians”, “World without Nazism”, “Russian movement”, “For the progress in Latvia”, “The republic of Uzupis” are of great help to Moscow.

The Kremlin combines humanitarian expansion with threat of war. For instance, this year Russian warships approached to Latvia territorial waters more than 50 times. Russian aircraft also repeatedly conduct maneuvers near the Baltic states’ airspace. However, Moscow is not able to intimidate the Baltics because they are NATO members and the Alliance will always protect them. NATO has already approved wide-ranging plans to boost its defense capacities in the Eastern Europe, aiming to reassure anxious allies about Russia’s military ambitions. The Baltic states’ governments have already expressed their complete readiness to resist Russian war threats. Dalia Grybauskaite, the president of Lithuania, unequivocally called Russia a ”a terrorist state that is engaged in open aggression against its neighbor”. She is sure that if Russia “is not stopped then that aggression might spread further into Europe”.

Lithuania is planning to increase its defense budget by 40% in 2015. Moreover because of a rise in the activity of Russian forces in the western part of the Russian Federation, Lithuania made a decision to put several of its rapid response units on a higher state of preparedness. The country is also taking part, together with Poland and Ukraine, in the formation of a joint military init to participate in peacekeeping operations. Latvian president Andris Berzins has announced the defense budget increase up to 2% GDP. Estonia has taken measures to strengthen its defense capabilities too. The government has requested NATO to deploy its contingent in the country.

The Baltics has also agreed actions to withstand Russian propaganda. They consider that it’s necessary for the EU to finance alternative media broadcasting in Russian, to develop communication strategy towards Russia and toughen the EC regulations concerning audiovisual sector content.

What Is The Opposite Of Venture Capital?

Posted by on 11/12/14
Whilst walking home from a client meeting this afternoon I bumped into a close friend, the Danish novelist Christian Jungersen (here). My client is a highly innovative sports related technology start-up called Oulala. They are in the process of raising venture capital to enable them to help grow and scale the business. As I was [...]

Was Greece right to call a snap Presidential election?

Posted by on 09/12/14
Open Europe's Raoul Ruparel asks this question over on his Forbes blog, concluding it was probably the correct political choice but that plenty of risks remain in the process. Full post below:
The news out of Greece has been improving slightly in the past few months in a welcome change from the trend of bleak economic and political news out of the struggling Eurozone state. However, the next few months could see the country reverting to trend somewhat.

Eurozone finance ministers agreed yesterday to allow Greece a technical extension of 2 months to its bailout which is due to finish at the end of this year. This is to allow the final quarterly review of the bailout to be completed – a necessary step to ensure the reforms are in place which in turn will allow for release of the final cash payment from the Eurozone.

Following the agreement, the Greek government announced that it will hold the first round of its Presidential election on 17 December, moving it up from February.

Together these announcements have crystallised some long standing economic and political risks for Greece going into the New Year. However, there are some key questions which spawn from these decisions and also some further risks which remain unanswered, I outline them below.

How does the Presidential election work and what is the likely outcome?
  • The President (a largely ceremonial role) is elected by the Greek parliament. In the first or second round the candidate must gain 200 out of 300 votes from MPs. If this is not done then he needs 180 in the third round. If no candidate is found after three rounds, snap general elections are called (these would be around the end of January if they did happen).
  • Currently the New Democracy and Pasok coalition holds 155 seats, while the opposition Syriza party has refused to back a joint candidate (a compromise often used in the past) since it is leading in the polls and wants snap elections.
  • The government today announced former European Commissioner and Greek Foreign Minister Stavros Dimas as its candidate. 
  • There is a chance that the government can gain the 180 seats – many of the smaller parties and independent candidates would lose seats to Syriza in a new election and therefore want to avoid having one. Currently, Greek officials put the chance of success at around 50:50 (not exactly inspiring but better than some had expected previously).
What questions still need to be answered?
  • It remains unclear exactly how the extension of the bailout will play out. It is assumed the two sides will reach an agreement as before, with Greece eventually pushing through tough reforms. This is probable again but not guaranteed – the room for manoeuvre for the government is limited by the threat of elections. There is only so much they can do without harming their vote share further. Furthermore, the coalition partner Pasok is almost wiped out as a political force and therefore is scrambling for some way to boost its presence. This could lead to radical choices with an election looming.
  • There has also been little progress on exactly how Greece will fund itself for next year. The Eurozone has said it is supportive of granting Greece an precautionary credit line – but this is complicated by a number of factors, not least that it is not very precautionary since it seems almost guaranteed that Greece will need to tap it.
  • Furthermore, the involvement of the IMF remains unclear. Greece harbours significant resentment towards the IMF and wants to move away from their funding, even though they are still due to pay out another €9bn in 2015 and 2016. If they stay, they will need guarantees that Greece will be able to fund itself for 12 months, and if they leave their funding stream will need to be replaced.
Was the government right to move up the vote?
  • It is a risky play, but I think it was probably the correct decision (at least from a political perspective). The key reason is that the uncertainty around what comes after the current bailout (which now ends in February) takes some power away from Syriza. The government has proven it can negotiate with the EU/IMF/ECB Troika and has a track record of managing crises. Syriza does not. As we have seen in Greece over the past few years, fear of uncertainty and possible increasing the chance of Grexit once again can be an important factor in peoples’ voting and thinking.
  • Furthermore, the ideal position for Syriza is that a follow on programme would have been negotiated before the vote on the President and potential elections. This would have provided certainty and a platform which Syriza could try to negotiate a new bailout programme and a restructuring of Greece’s debt.
  • One key question which remains unanswered is, what would happen if elections take place and Syriza win? While Syriza claim to support euro membership they want a fundamental change in the way Greece approaches European issues. Notably they want a debt restructuring and a complete overhaul of the programme for reforms and consolidation in Greece which accompanies the bailout (or presumably which would tie into a restructuring). This seems very unlikely to materialise, but it is not clear if they would push for a Greek exit from the euro if their demands are not met or if they would temper their position.
  • All that being said, if this doesn’t pan out, then Greece will face elections early next year, in a climate of serious uncertainty with no clear plan to exit the bailout. Then again, this was always the risk and may always have materialised.
Overall, risks are coalescing in Greece once again. The fundamental questions over how to fund Greece in the medium term (as it economy tries to recover) or how it will continue to deal with incorrect interest rates and a too strong currency have never been answered. The government’s plan to move up the election is a risky one but politically probably the correct option. Ultimately, the next few months will be a bumpy ride for Greece, but the wider Eurozone should not be too affected since it has plenty of buffers in place to deal with such a crisis.