EUCOM Economic Analysis - Part I

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James Edward Miller: Greece and the EU Face Their Walt Kelly Moment, Posted by Ellen on 10 November 2011, 11:02 am, UNC Press Blog

Among the peoples attracted into the orbit of Europe during the era of Enlightenment and industrialization, Greece proved a particularly quick study. Created in 1829-33, the Greek kingdom speedily acquired a European constitution, universal suffrage, and a set of national ideas that focused on territorial expansion at the expense of its Balkan and Ottoman neighbors. Economic expansion, efficient public administration, education reforms, infrastructural development, and even military professionalization played second fiddle to “redeeming Greek” lands and people. Greece ran up. However, Greek ambitions ran contrary to the calculations of the European great powers. “Europe” repeatedly intervened to throttle Greek designs. Greece grew fitfully through concessions made to the Greeks after the powers had arranged their own interests. Greece’s large, unpaid external debts to European banks led the powers to impose an oversight board to regulate its finances in 1893.

A legacy of military defeat and repeated European encroachment on Greek sovereignty were at the core of the 1909 Goudi military revolt. The military summoned Eleftherios Venizelos to initiate long overdue internal reforms and give the country an independent foreign policy. In the wake of World War I, seeking to create a nation of “two continents and five seas,” Greece conducted a war in Asia Minor against Turkish nationalists, throwing its army into an expanding conflict without clear military objectives. “Europe” turned on Greece. The Italians and French backed Turkey, and Britain withdrew its support for Athens.

In 1922, Greece lost its army and its war. Victorious Turkey expelled over a million Asia Minor Greeks, retook Constantinople, and reasserted its territorial claims to Eastern Thrace. Defeated, impoverished, divided, Greece plunged into an era of military coups, economic stagnation, the authoritarian dictatorship of John Metaxas, and a crushing German occupation. Civil war ensued from 1943 to 1949. The United States poured money and know-how into Greece, defeating a Communist-dominated insurrection and bringing Greece into Western institutions. In 1961, Greece applied to membership in the European Economic Community (EEC).

The United States and the Making of Modern Greece History and Power, 1950-1974, By James Edward Miller

Focusing on one of the most dramatic and controversial periods in modern Greek history and in the history of the Cold War, James Edward Miller provides the first study to employ a wide range of international archives--American, Greek, English, and French--together with foreign language publications to shed light on the role the United States played in Greece between the termination of its civil war in 1949 and Turkey's 1974 invasion of Cyprus.

Miller demonstrates how U.S. officials sought, over a period of twenty-five years, to cultivate Greece as a strategic Cold War ally in order to check the spread of Soviet influence. The United States supported Greece's government through large-scale military aid, major investment of capital, and intermittent efforts to reform the political system. Miller examines the ways in which American and Greek officials cooperated in--and struggled over--the political future and the modernization of the country. Throughout, he evaluates the actions of the key figures involved, from George Papandreou and his son Andreas, to King Constantine, and from John Foster Dulles and Dwight D. Eisenhower to Richard Nixon and Henry Kissinger.

Miller's engaging study offers a nuanced and well-balanced assessment of events that still influence Mediterranean politics today.

James Edward Miller is adjunct professor in the School of Foreign Service at Georgetown University and chair of Western European Studies at the Foreign Service Institute.

Marshalling capital for euro periphery, February 24, 2012 7:30 pm, Financial Times, www.ft.com

Greeks scrambling to do the homework demanded from them by Berlin and the rest of the eurozone are being given an encouragement of sorts. It takes the form of calls by the Federation of German Industries and the European Investment Bank for a “Marshall plan” to restart economic growth in Greece. The term is a misnomer and the proposal unlikely to see the light of day. But the idea is right.

For Greece in particular and the eurozone in general, the solution to the debt crisis has been cast as public sector austerity and structural reform. While the latter is essential and should produce long-term growth, the need to buoy up demand through the adjustment has been all but ignored. In return for deficit country reforms, surplus country governments should have boosted spending. Since this seems ruled out, only the core countries’ private sectors can save the eurozone from adjusting through stagnation rather than growth.

Die griechische Regierung startet den Schulden-Umbau, 25.02.2012, 10:19 Uhr, aktualisiert 10:44 Uhr, Handelsblatt

AthenMehr als 160 deutsche Finanzbeamte stehen nach Informationen der „Wirtschaftswoche“ bereit, Griechenland beim Aufbau einer modernen Finanzverwaltung zu helfen. Für die Aufbauhelfer seien englische Sprachkenntnisse Voraussetzung, ein Dutzend spreche auch Griechisch, sagte Staatssekretär Hans Bernhard Beus aus dem Bundesfinanzministerium der „Wirtschaftswoche“. Besonders viele Freiwillige kommen demBericht zufolge aus Nordrhein-Westfalen.

„Wir sollten bei der Hilfe für Griechenland auch die Möglichkeit der Reaktivierung deutscher Steuerbeamter im Ruhestand in Erwägung ziehen“, empfahl der hessische Finanzminister Thomas Schäfer (CDU) in der „Wirtschaftswoche“. So könnten „große praktische Erfahrungen mobilisiert werden“.

Das Programm läuft bis 2042. Die neuen Anleihen sollen bis 2015 einen Zinssatz von 2 Prozent haben. Danach soll der Zinssatz stufenweise steigen - bis 2020 auf 3,0 Prozent, 2021 3,65 und danach 4,3 Prozent. Verzicht und veränderte Konditionen summieren sich nach Berechnungen von Experten auf einen Verlust von mehr als 70 Prozent des Nominalwerts der Anleihen. Das Angebot sieht vor, dass die privaten Gläubiger auch zum Forderungsverzicht gezwungen werden könnten, falls die Beteiligung am freiwilligen Schuldenschnitt zu niedrig ausfallen sollte. Der Schuldenschnitt betrifft ausstehende Anleihen mit einem Gesamtvolumen von 206 Milliarden Euro. Die griechische Schuldenlast soll durch den Gläubigerverzicht um 107 Milliarden Euro schrumpfen.

La Grèce lance officiellement son offre d'échange de dette pour les porteurs privés, LEMONDE.FR avec Reuters | 24.02.12 | 21h20 • Mis à jour le 24.02.12 | 21h20

La Grèce a officiellement lancé, vendredi 24 février, son offre d'échange de dette pour les porteurs privés d'obligations dans le cadre du deuxième plan de sauvetage de 130 milliards d'euros qui lui a été consenti. Un communiqué du ministère des finances grec confirme les modalités de cet échange telles qu'elles ont été présentées cette semaine.

Cette procédure a été finalisée après des mois de négociations tortueuses entre Athènes et ses créanciers, compliquées par les exigences sévères posées par les partenaires européens de la Grèce, la présence de hedge funds jouant la montre afin que le pays fasse défaut et qu'ils puissent encaisser les CDS sur les obligations grecques et celle de la Banque centrale européenne.

Cet échange de dette doit permettre à la république hellénique de réduire son endettement public de 100 milliards d'euros sur un total qui dépasse 350 milliards. Les banques, les assureurs et d'autres investisseurs détiennent un total de 206 milliards d'euros d'obligations grecques qui subiront une décote faciale de 53,5 % avec une perte réelle entre 73 % et 74 %.

Selon les termes de l'accord, les investisseurs empocheront des obligations assorties de maturités allongées d'une valeur représentant 31,5 % des titres qu'ils détiennent ainsi que des obligations à court terme émises par le Fonds européen de stabilité financière représentant 15 % de la valeur des anciennes dettes. Les nouvelles obligations serviront un coupon moyen de 3,65 % et seront régies par la législation britannique.