Despite 30% general unemployment, the majority of youths jobless, GDP forecasts already disappointing, and government asset sales at rock-bottom prices,
Greek leaders are preparing to blame any missed growth expectations on Russia.
As Bloomberg reports, hopes of a 2014 exit from its deepest recession in a half-century may hit a stumbling block after Russian sanctions last week. "The impact could be
quite damaging for industries such as tourism and agriculture amid the fragility of a slowly recovering economy," warns one think-tank as tourist arrivals from Ukraine are expected to drop by 50% and the 'fruit-and-vegetable' embargo will "send prices falling across Europe, hitting both the volume and value of Greek exports towards other countries."
Is it any wonder the Greeks are so vociferously slamming "blind obedience to the Cold War strategies of Brussels and Washington."
Russia is Greece’s biggest trading partner, according to data compiled by Bloomberg. The value of total trade between the two nations reached 9.3 billion euros ($12.5 billion) in 2013, surpassing trade flows between Greece and fellow EU-member Germany.
As Bloomberg reports,
“The estimated total cost of Russian counter-sanctions for the Greek economy may look tolerable, but the impact could be quite damaging for industries such as tourism and agriculture amid the fragility of a slowly recovering economy,” said Thanos Dokos, director-general of the Hellenic Foundation for European and Foreign Policy, a Greek think-tank. “It also raises questions about energy security in the coming autumn and winter.”
...
“Arrivals from Ukraine will drop by 50 percent and arrivals from Russia are expected to reach 1.1 million, instead of 1.3 million,” Petropoulos said.
Tourism contributes more than 16 percent to Greek gross domestic product, according to SETE data, and Russia has been the fastest growing source market for visitors to Greece. Tourism revenues from Russia increased 42 percent last year to 1.34 billion euros, according to Bank of Greece data.
...
“The biggest impact from the Russian embargo will be from the indirect fallout as Russia’s ban on EU fruit and vegetables means that large quantities of fresh produce suddenly become available, swamping the market,” he said. This will “send prices falling across Europe, hitting both the volume and value of Greek exports towards other countries,” Polyhronakis said.
As we noted previously, the Greeks are not happy at the "Stop Putin" Coalition's blowback...
the moment Russia retaliated, the grand alliance started to crack.
Enter Greece which has hundreds of millions in food exports to Russia, and which was the first country to hint that it may splinter from the western "pro-sanctions" alliance. According to Bloomberg, earlier today the Greek foreign minister and former PM said that "we are in continuous deliberations in order to have the smallest possible consequences, and if possible no significant impact whatsoever."
...
And making it very clear that this will be a major political issue was a statement by the main opposition party Syriza which today said that the Greek government's "blind obedience to the Cold War strategies of Brussels and Washington will be disastrous for country’s agriculture." In a moment of surprising clarity, Syriza asked govt to immediately lift all sanctions to Russia, as they don’t contribute to a solution of the Ukrainian crisis, and "instead fuel an economic and trade war, in which Greece has unfortunately become involved." Syriza concluded that the government hasn’t weighted Greece’s special interests and bilateral relations with Russia.
* * *
And sure enough, not minutes after we posted this, the EU comes to the rescue... (as Bloomberg reports).
A European-wide solution to tackle the problems caused by the Russian ban on food imports, using EU crisis response funds, is “under way,” Greece’s Finance Ministry says in statement.
Greek govt’s goal is to supplement EU funds with other tools, including national means, if necessary, in order to advance a timely and comprehensive solution: ministry
First priority is to assess damage to Greek exporters, work to begin immediately
Govt will support farmers hit by ban: ministry
News from Greece.....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_11/08/2014_542086
Gov't seeks to soften blow of Russian food embargo
Government officials were seeking ways on Monday to minimize the impact of a Russian food embargo by attempting to secure reassurances from Brussels that Greek producers will be compensated for their losses while also preparing to branch out into other export markets.
In two successive meetings held at the Foreign and Finance ministries, officials are said to have finalized the government’s strategy ahead of a scheduled meeting of agricultural experts from all 28 European Union member states in Brussels on Thursday. The aim is for Athens to secure the best possible deal for compensation which Greek producers of peaches and other products are already pressing for. “Decisions regarding the size and nature of the compensation will be taken there,” government spokeswoman Sofia Voultepsi said.
According to sources, an initial assessment arrived at on Monday during a meeting chaired by Deputy Foreign Minister Dimitris Kourkoulas and involving senior officials from the Finance and Agricultural Development ministries put Greece’s likely losses this year at 50 million euros. Sources described the projected damage as “limited” but said that a precise estimate would not be available until full stock has been taken of all Greek exports canceled by Russian importers.
As important as the issue of compensation is the identification of new potential export markets for Greece, government officials indicated. “The EC’s reassurance regarding compensation is good and welcome but compensation will not solve the problem,” Kourkoulas said, adding that a return to the Russian market or an opening to new markets would also be required.
As Athens waits for Brussels to decide what action it will take to compensate EU farmers, Greek regional authorities are immediately to begin assessing the financial impact from the embargo. It was decided at Monday’s meeting at the Finance Ministry that regional officials would provide details about the impact the import ban will have not just on fruit and vegetable producers but also on other sectors of the economy, such as road haulage.
Any compensation on a national level will need the approval of the European Commission first otherwise it could be considered illegal state aid, which Greece will have to pay back. Athens is hoping that the Commission will approve an EU-wide program to compensate farmers and others who will lose out as a result of Russian actions.
Until any decisions are reached, the only action the government can take is to try to absorb some of the unexported fruit through the military and state hospitals. |
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ekathimerini.com , Monday August 11, 2014 (21:41)
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_11/08/2014_542080
Property tax mess puts rebates off
Property owners in Greece will not receive any income tax rebates due until the resolution of the new single property ownership tax (ENFIA) issue, which caused an uproar last week due to erroneous data having been used in the calculations.
The Finance Ministry has rolled back the first ENFIA installment payment date to the end of September, aspiring to correct most of the errors by then. This means that property-owning taxpayers will not get any income tax rebates before then, the official response being that any rebates will eventually be cleared against any other taxes owed.
However the ENFIA mess is affecting businesses and self-employed professionals in a much more serious manner. Any of them trying to print a tax clearance certificate online (valid for two months) are referred to their local tax office, where they are told it cannot be obtained until the ENFIA is paid. Accountants and the self-employed are expected to inundate public tax offices this month in an effort to obtain a tax clearance certificate valid for one month.
The Finance Ministry will upload its revised ENFIA notifications on September 15, when it will also make an application available to taxpayers who wish to correct erroneous data. |
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ekathimerini.com , Monday August 11, 2014 (21:23)
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_11/08/2014_542082
Banks to trim assets, especially abroad, to boost capital bases
By Yiannis Papadoyiannis
The European Commission’s restructuring plans for Greek banks provide for a drastic scaling back of their activities abroad as well as reductions in the number of branches and staff at home.
The plans for banks National (NBG) and Piraeus were given the green light late last month, following those for Alpha in early July and Eurobank in April.
According to the blueprint, National Bank will retain a presence in neighboring Turkey by retaining majority control of Finansbank, but will have to withdraw from all other countries in Southeast Europe. By June 2018 it has to sell its subsidiaries in Albania, Bulgaria, the Former Yugoslav Republic of Macedonia, Romania, Serbia, South Africa and the branches it operates in Egypt. It will however be allowed to keep some branches in Cyprus, the UK and Malta. As regards Finansbank, it will have to proceed to an increase of at least 20 percent of its existing capital, while NBG has pledged to sell 20 percent of its Finansbank holding. It has also agreed with the Commission that its branch network in Greece will be shrunk to 550 and the number of employees reduced to 10,700 while the loans to deposits ratio will not exceed 115 percent by end-2017.
Piraeus Bank’s restructuring plan provides for a maximum of 870 branches and no more than 15,350 employees by the end of 2017. The plan also includes a drastic cutback in activities abroad. The value of its foreign assets will either have to be reduced to 3.1 billion euros by June 2018 or they will have to be sold altogether except certain combinations (Cyprus-Romania, Cyprus-Bulgaria, or Bulgaria-Albania-Serbia).
The other two big systemic banks, Alpha and Eurobank, have agreed to similar moves. Besides reducing the number of branches and employees, further goals include cuts in the cost of operations and deposits and the sale of subsidiaries such as insurance, real estate and investment arms. The moves are intended to boost their capital bases and limit dependence for liquidity and capital on the state.
Sources say the Bank of Greece has ruled out the idea of one so-called bad bank to take the bad loans of all commercial banks, and each lender will handle its own through special departments they have already created. The government’s planned changes and actions are focused on bankruptcy law, which will help with the restructuring of problematic enterprises. |
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Submitted by Tyler Durden on 08/11/2014 17:15 -0400
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