Greek deadline approaches

Following 'Very Difficult' Troika Teleconference, Greece Nowhere Near A Deal As Sunday Night Deadline Approaches

Zero Hedge,

4 January, 2012

It is not shaping up to be a pleasant weekend for Greek finance minister Evangelos Venizelos, who as a reminder until June 17, 2011 was the Greek defense minister and likely the man responsible for buying up all that European military equipment  (with whose money nobody knows), or his boss, G-Pap successor and former ECB VP Lucas Papademos. 

The reason is that Greece is scrambling to reach a deal with the Troika that permits the €130 billion second bailout to be disbursed (unclear how the €15 billion add on would be theater), yet a key precondition of Troika demands is labor reform (a cut of the €750/month minimum wage, and various headcut reductions across the nation), which however as reported yesterday has seen all three coalition cabinet member throw up on. 

In other words, Greece has about 24 hours to do the impossible, unless of course it simply delays and does nothing once again. 

Alas, the real issue is that unlike before, there is a hard deadline of a bond maturity cash outflow on March 20, and absent resolution, which especially on the PSI issue should come far in advance as an exchange offer takes at least 6 weeks to finalize, there will be no deal. 

So while this weekend may come and go, without anything being resolved, the days can kicking, as Zero Hedge said back in January, are ending.

Reuters' take:

Greece has agreed with euro zone partners on how to recapitalise Greek banks after a planned bond swap, but has yet to resolve issues related to labour reform and spending cuts in talks with lenders, the country's finance minister said on Saturday.

Evangelos Venizelos described a conference call on Saturday with counterparts from fellow euro zone nations as "very difficult" and said talks related to Greece's rescue plan must be concluded by Sunday night.

"The Eurogroup teleconference was very difficult," Venizelos told reporters.

"There is great impatience and great pressure not only from the three institutions that make up the troika but also from euro zone member states, each of whom have their own criteria, their own problems, their own priorities." 

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Some more from Kathimerini:

Greece’s official creditors remain will not give in on their demand for changes and wage cuts to the labor status in the private sector, Skai radio said on Saturday afternoon citing an unnamed government official, as talks about the new loan contract continue in Athens.

It followed a broad meeting of ministers who hold key posts in the government, under Deputy Prime Minister and Finance Minister Evangelos Venizelos after his lengthy talks with the mission from the International Monetary Fund, the European Central Bank and the European Commission, known collectively as the troika.

The ministerial meeting heard that there will be no further staff cuts in the health sector, but there will be cuts in expenditure amounting to 1.1 billion euros, out of which 1 billion will concern pharmaceutical spending.

The defense sector is set for cuts amounting to 400 million euros in the next two years.

Finally, this is a translation of Venizelos last ditch attempt to pretend he still has some control left:

After completion of the telephone conference Eurogroup and departing on his meeting with Prime Minister, Deputy Prime Minister and Finance Minister Evangelos Venizelos, made ??the following statement:

The teleconference of Eurogroup was very difficult. There is great anxiety and pressure of three institutions that make up the troika, but also by Member States of the Eurozone, each of which has its own criteria, its own problems, its own priorities.

The distance that separates the successful completion of the procedures by which an impasse may be a coincidence, or due to a misunderstanding, is too small. The line is too thin. We are on the razor's edge. We hold, focusing here the Ministry of Finance, a very tough and delicate negotiations.

Already, we have accomplished many things, we basically agree on issues such as how recapitalization and reorganization of the Greek banking system, privatization, many institutional reforms and structural changes, leading to a characteristic example of the need to finally be in our country a effective monitoring mechanism and pressure on prices, especially prices that make up the basket of the poor and middle households.

Open are two major issues related to each other: industrial relations, and thus their earnings in the private sector and financial measures to be taken to be absolutely objective in 2012, given that we have recorded a good result, in almost Our predictions as to the 2011 budget target. Here, we have managed to reduce the too-trading. But there are still unresolved issues and need to finalize the shape.

Now I go at the Maximos Mansion in order to inform the Prime Minister detail to the point where we are for what was the Eurogroup and the spirit and atmosphere of the discussions with institutional partners and Member States of the Eurozone. It is very likely to take place later meeting with the Prime Minister heads the troika, because now we are at those points on which they must decide and commit political forces and thus the leaders of three parties involved in government and support it.

It's time commitments. It should not just be engagement, but to place all the prerequisite steps that we can stick to the schedule, make a public offer for the PSI and get valuable money the first major installment of the new program, not only for PSI not only to support banks, but also to breathe in terms of market liquidity.

The time is very critical. We all have to be completed by tomorrow evening. We have closed all the issues have been undertaken commitments, have initiated procedures so that we can be on time, given the maturity of bonds in March.

Less healthcare, but Greece is still buying guns

Greeks furious at 'intact' arms spending as eurozone leaders insist on cuts to their public services

the Independant,

6 November, 2011

As Greece is forced by European leaders to abandon a referendum to allow the people the chance to vote on its latest bailout conditions, the country is preparing for yet another dose of austerity.

The conditions of the next €130bn rescue package will be severe, yet there is an elephant in the room: the extent to which the German but also the French military industries rely on Greece.

The small, crisis-hit nation, whose prime minister, George Papandreou, narrowly survived a vote of confidence on Friday, buys more German weapons than any other country. Some Greeks want to know why it is that France and Germany are demanding cuts in pensions, salaries and public services, but the buying of arms is allowed to continue unabated.

Yanis Varoufakis, professor of economics at Athens University, says: "When Greek hospitals are running out of bandages, the only bit of the budget not being attacked by the EU and IMF is military expenditure."

Greece is the highest military spender, in terms of percentage of GDP, in the EU. Professor Varoufakis adds: "Greece is a disproportionately crucial customer for the arma-ments industry. In comparison to Greece's size, it's preposterous."

Despite its dire financial straits, the country's military expenditure has risen during the global financial crisis. It spent €7.1bn in 2010, compared with €6.24bn in 2007.

Some 58 per cent of Greece's military expenditure in 2010 went to Germany, according to the Stockholm International Peace Research Institute (Sipri).

The US is the major beneficiary of Greek military expenditure, with the Americans supplying 42 per cent of its arms. In second and third place are Germany, with 22.7 per cent, and then France, with 12.5 per cent.

Professor Varoufakis believes: "The EU and IMF keep giving loans to Greece to stop it going bankrupt, but countries such as Germany need to justify this to voters, hence the demand for spending cuts. But with Greece being such a crucial arms customer, it only takes a phone call to the German government from an armaments manufacturer to ensure that Greece's military budget stays intact."

Greece's defence budget is historically high due to the perceived threat from neighbouring Turkey. Arms companies have benefited by playing the two sides off against each other. Professor Varoufakis says: "Typically, one side buys, say, a frigate, and then the other buys the same frigate – with the only difference being the colour of the paint."

However, critics in Greece argue that, as an EU member, Greece should be guaranteed protection from Turkey by its more powerful allies. Although the EU is not a military alliance, common sense suggests that Greece could reasonably expect support if it was attacked by Turkey.

Kostas Panagopoulos, co-head of the Greek polling agency Alco, says: "We have had a huge military spend for the 40 years since the junta, due to our issues with Turkey. But people are saying we must change our priorities. I believe Germany and France are pressuring Greece to keep spending. It is not clear if it is part of the bailout deal – it is a hidden issue."

Greece's importance for the military exports of both countries is clear from a closer look at data from Sipri. During the five years up to the end of 2010, Greece purchased more of Germany's arms exports than any other country, buying 15 per cent of its weapons. Over the same period, Greece was the third-largest customer for France's military exports, and its top buyer in Europe, with 12 per cent. In that time, only 1 per cent of UK arms sales went to Greece, all of which were in 2010.

As their government kept snapping up guns and ammo, ordinary Greeks suffered through the cuts. Yiorgos Droggitis, 30, has not been paid for almost two months. An administrator for one of Greece's debt-laden local authorities, Haidari, in north-east Athens, Droggitis says his finances are increasingly stretched: "One day, over the summer, I did not even have 80 cents to buy bread."

To top it all, Droggitis is only now able to open the windows of his apartment after several weeks during which the street where he lives was strewn with stinking rubbish due to refuse collectors being on strike.

He is among those angry that the EU is demanding cuts in Greece at that same time as selling the country billions of euros-worth of weapons. He says: "Germany and France are telling us to take these cuts to our health and education systems, but we keep buying their weapons."

Pavlos Spanakis, 67, a retired civil engineer in Athens, has seen his state pension cut a second time, bringing it to 80 per cent of what it was two years ago. He sighs: "The austerity measures have gone too far and we cannot afford more cuts. We must improve in other ways – and one would be for the EU to protect us