Jul 09

Reform of Greece’ s VET system

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Read the executive summary and a presentation of certain “policy benchmarks” for the implementation of the reform, as with the study run on behalf of the Greek authorities and the European institutions, under Greece’ s bailout programme; VET Reform_Planning benchmarks_Dec2016 VET REFORM_REPORT_ &  ExecSumm Short_Dec2016; VET Reform_Planning benchmarks_Dec2016

May 25

This is the latest version for the need to adopt a cash life-line solution for the Greek bailout programme, after a prolonged 2nd review process and the inherent difficulty of the actors (lenders’ representing bodies) – the EC and the IMF – to agree on their macro-economic estimates regarding the economic recovery and growth in Greece and on the relevant “Mid-term Economic Plan”. Here you find the coverage from the FT correspondent, on May 23, 2017.

FT Article_IMF & Eurozone_cash lifeline_Greece_23052017

Apr 18

En attendant Godot: waiting for closing the (2nd) evaluation round of the Greek bailout programme

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It is becoming a joke, a never ending anticipation for the soon to be coming final negotiation round, in order to reach the so-called staff-level agreement and catch up with the following Eurogroup meeting. This is happening since last April 2016, always ever closing the ending of the 2nd evaluation round of the Greek bailout programme!

It turns to be something which whenever will be reached, nobody will understand the “difference”, especially in terms of a climate change in the economy. Simply because the next evaluation round will be starting right after this one, having to meet all the pending matters – usually the reforms with the public sector -, which have few weeks earlier been  agreed with the institutions in order to be “transferred” to the next round, i.e. kicking the can further down the road. It is indeed like waiting for the never shown up Godot – Samuel Becket perfectly gave the anticipation context in this play.

And while waiting, it seems that the working hypotheses whereas all financial calculations are being agreed upon, need to change, again. Because as expected – today’ s IMF WEO is shedding more light upon – the anticipated growth rate for 2017, as in the current negotiations, is not going to be met, lagging in the order of magnitude of 0.7% of GDP (an anticipated decrease of the 2017 primary surplus of € 1-1.5bn…)

I know the counter-argument to this. It goes that the government has already from 2016 summed up a primary surplus of some € 6.5-7bn, so there is a lot of public finance leeway there. But, keep in mind that more than half of this over-surplus had to be forwarded to the private sector (economy, being public sector’ s payments due) and that nobody can be sure that the social insurance contributions during this year (2017) will meet the expectations and close the balance – contrary to that there is strong evidence that they will not!

Are we waiting in vain? Well it seems so, until at least the German elections! Unless and in the meantime, under the increasingly depressing public agenda and the conditions in the economy, the political parties understand that only a broad parliamentary majority can guarantee a less risky pathway out of the crisis. And then perhaps the political staff facilitate such a development.

Mar 24

Greece’ s schedule overrun: from bailing out the state to the economy’ s bail in!

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While the crawling 2nd round of the Evaluation of Greece’ s 3rd Bailout Programme seems to be approaching its crescendo, even by spreading “dissonant sounds” during the execution of the European anthem in Rome for the EU’ s 60th Anniversary – because of the Greeks insisting to include reference to the European acquis as it regards the social and employment agenda in the Declaration of the currently 27 Member States -, most of the engaged with this evaluation stakeholders seem to count on a smooth “fading out”. Having an agreement by mid April, in order to catch up with the corresponding Eurogroup’ s meetings, in order to agree on the transfer of the anticipated installment of some billions of Euros to the Greek accounts. So that the Greek government will mange to in-time meet its huge pending debt repayment liabilities of about € 7bn sometime in July.

Both the European institutions and the Greek government are much counting on the unexpected and significant surplus in the public accounts  (& its cashiers?) of the year 2016, originated from a huge increase of income, real estate and value-added taxes, which have contributed a lot to this public sector’ s surplus. Without underestimating the equally significant contribution to this surplus from the upholding of the third party payments of the state to the private sector, which has again reached unprecedented heights. With this surplus in hand and even with only a part of the scheduled installment from the ESM (having done part of the reforms scheduled), both the Europeans and the Greek authorities seem to be happy and live with, until just after the German elections’ milestone. The Commission (& ESM) will be happy, without having to face again the fiercely summer negotiations of the Summer of 2015, the Germans will avoid a “white noise” problem during their election period and the Greek government will prolong its survival reaching the end of year 2017!

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Jan 09

The emerging deadlock with Greece’ s 3rd in line bailout Programme

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The New Year entered having the Greek economy – and the society – facing a cloudy landscape and an ambiguous set of conditionalities. We have already stressed that Greece will not manage to successfully get out of this “vicious circle” by only scrutinizing private financial returns through an exhaustive taxation framework, without proceeding with the reforms, especially those with the public administration and being, with decreasing urgency, the judiciary, the education, training and human capital and the labour market and, of course, the health sector! We strongly believe that all parties – starting with the European institutions – need to identify and raise awareness about these priorities. And not exhausting the discussion only about meeting the balancing of public finances (primary surplus etc.). It is becoming a surviving move as you can read hereby!

Seems that with or – more probably – without closing the pending Evaluation round of the Greek bailout Programme, the… “Fast emerging deadlock with the Greek bailout programme” https://www.linkedin.com/pulse/fast-emerging-deadlock-greek-bailout-programme-nikitas-kastis

Dec 13

The IMF clarifications for the anticipated “Greek drama”

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Only yesterday, the IMF gave its own explanation of the escalating crisis (blockage) with the still pending 2nd evaluation of the Greek bailout programme, in their blog/direct at https://blog-imfdirect.imf.org/2016/12/12/the-imf-is-not-asking-greece-for-more-austerity/

It seems that the Fund is not feeling at ease with the emerging scenario of conflict, considered to be the scapegoat and be blamed – again – for its “bad cop'” s behavior, always asking for more austerity.

Yet the IMF’ s version of the state-of-play sheds, once again, some light on the potential way-out. Which I have already tried to prescribe some “posts away”. The only way out implies that the Greek government will proceed asap with the reforms, especially with the public sector and the openness of the goods’ markets, and via a well-proven way, while closing this evaluation round some time in March, shows to the European lenders and especially the other European societies, that the Greeks deserve not only the short-term, but even the mid-term re-profiling of their public debt, to be agreed upon with this evaluation. That is how the primary surpluses to-be-agreed will go down to the level of around 2%, for the period till 2022, at least. The only rational way to move on.

This is how any Greek government needs to be guided towards the breakthrough, with strong “peer reviewing” by the European partners. Independently whether it would be the present or most probably another government, but with a multi-partisan parliamentary support. Otherwise, PM Tsipras will deploy the back-up plan, having already alerted everyone about, with the announcements for the distribution of some € 617m among low-paid pensioners. And the back-up plan, for this parliamentary majority to remain in power, asks for a referendum, so that the people will say “NO” to the updated MoU that the lenders are asking for. Sorry to repeat myself, but the deja-vu is almost ante portas. Yet, with a worse than the previous one development.


NIK – Tue, December 13, 2016

Nov 28

The “Trump” anticipated

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It is sometimes the intuition working or perhaps our worst fears that imply to keep record about such an insightful view. As the one presented in this commentary by Martin Wolf, in a year 2007 FT issue. Which I am still wondering why I had downloaded and kept in my archives! I would  say enjoy it, if it would have not depicted such an awful evolution! Why America need some elements of Welfare State

Nov 13

Halfway through the 3rd Adjustment Programme for Greece: with no more opportunities in the future

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[Download piece of text note_greece-in-europe_a-relation-under-pressure_nov2016]

More than 15 months ago, at the end of June 2015, I was sharing with colleagues some thoughts about those moments’ conjuncture, with the new Greek namely radical-left government and its poor relations to the other Eurozone member countries and the EU institutions. In a text entitled “Europe with Greece or Greece in Europe: a hard-worked perspective with no more than long-term and marginal but sustainable returns” (http://www.learnovation.gr/?p=58) I was then referring to the prevailing conditions as follows.

“… How come that any rational European policy maker, and those of the IMF, could have expected that the Greeks, famous for their much emotional collective behavior, could stand for such a long period of austerity and misery, in order to save money and invest to the benefit of their children and future generations? …” While the vast majority of the political class in the country, with few exceptions, “…had, already from the start of the public Finance Adjustment Programme, adopted the argumentation that nothing such as this ‘nightmare of crisis’ would have happened, unless some ‘bad’, tax-avoiding rich Greeks and foreigners, together with the German and other ‘arms dealing multinationals’, supported by the corrupted previous governments, had not brought Greece to the verge of the bankruptcy.” Whereas, “ … the austerity was not the solution to the problem (in-famous ‘wrong recipe’) … contrary to that, it was the Programme that caused the crisis!..”

Still, even at these “high noon” moments, trying to close with some constructive thinking, I had ended like the following.

“… Europeans need to (a) set the basics for the potential follow-up Adjustment Programme, and (b) include … a strong support and peer review scheme, with technical teams in Greece. In order to consistently and patiently work with the Greek public administration on the ownership of the measures and reforms …” With two conditions “…First, …high level European politicians need to state explicitly …, making PM Tsipras and the rest of government understand that any political handling will have to be settled on the basis of a feasible technical (financial programme) agreement… (remember the “Varoufakis phenomenon!”). And “ … second, that whichever support programme, …, will have to implement the pending markets’ and the public sector’ s reforms, … which should not any more be considered an austerity policy framework, but a policy reforming one…”

That was back then, whereas it is more than evident, from what has been taking place since last summer, that the two afore-mentioned “conditions” had never been considered as fundamentals for the brokered deal. Well, how could they be?

That is why, (1) the already “closed” first evaluation of the current Programme has marginally succeeded in kicking off any of the critical reforms – as spelt out in the MoU -, apart from those with the privatizations, in fact only the ones scheduled already since 2014(!); (2) not any serious reform has been deployed not even “politically validated” before that, in any social policy sector, in public administration, the judiciary, health, education and training; (3) similar conditions prevail with the labor market and the opening of product and service markets, including the closed-shop professions (this is being in progress in the last 4 years!); (4) “foot dragging” is also the moto with all other privatizations; thus, (5) in order to make the ends meet, and reach the targeted public finance figures (with the primary surplus etc.) and the social security and pensions’ figures, the Greek economy is experiencing an unprecedented increase of taxation, ensuring a serious increase of collected taxes – while more families find impossible to have a decent life.

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Sep 28

Starting up with market values

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Reading this brief by Tim O’Reilly is helping a more radical approach to the relation between ideas, work and market values. Enjoy it https://medium.com/the-wtf-economy

N. Kastis, MENON GR Research

Jul 02

Europe with Greece or Greece in Europe: a hard-worked perspective with no more than long-term and marginal but sustainable returns

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How come that any rational European policy maker, those of the IMF included, could have expected that the Greeks, famous for their emotional behavior, could stand for such a long period of austerity and misery, in order to save money and invest to the benefit of their children and future generations?
Even worse, as if acting intentionally, in order to make the above scenario more difficult to happen, almost all the political staff in the country had, already from the start of the public finance adjustment programme, adopted the argumentation that, at first, there were some “bad” tax-avoiding rich Greeks and foreigners, together with the German and other “… arms dealing multinationals”, with the support of the corrupted governance of all previous governments, which have brought Greece to the verge of the bankruptcy. And further on, that not only the austerity could not be the solution to the problem (“wrong recipe”) of the huge public debt, but contrary to this, it was the programme that caused the crisis!

The argumentation goes that it was the programme that has brought such a misery to the society and the economy to such recession levels, without even solving the “public debt issue”, while keeping Greece in the margins. And that the governments, from year 2010 to the beginning of 2015, were sort of easily bending to the pressure from the (“cruel”) creditors and the troika, adopting measures which were not in fact necessary to bring order to the public finances, and introduce necessary reforms to the public good systems and to the product and service markets. While, they were only introduced to bring more pain and misery to the Greek people – making all assets in the Greek territory really cheap to be bought by foreign funds and companies (“… vultures stealing Greek society’ s property… ”).
I would dare say that it was a fight already lost before its start! Given that the European partners and the troika, together with really few members of the Greek society, and a small minority of Greece’ s political staff, actually those that had the experience of government posts during this difficult period, were alone giving this fight. When the prevailing majority was adopting the “story” – easily communicated by the Greek media –, the one of the “blackmailing” of the Greeks, in order that the creditors ensure that they will get their money back!
The “Syriza” party had only to win a rather easily fought election, which has “formalized” a strong representation in the parliament of all those anti-MoU parties, and which has there on been used as the “argument” to justify a radical change of policies – in fact to nowhere! Just asking for the “restoration” of previously (before the crisis, year 2009) regime, in areas like health and social security, vocational and general education and employment and labour market and the public administration – including also the “restoration” of the state-of-play as before the few reforms that were introduced, e.g. to fight the closed-shop status of many professions (drug-stores, trucks, etc.). And all these, while public opinion is still (!!) expecting increase of wages (minimum), without any increase in taxes, reaching at the same time a minimum public primary surplus, even after the recent period of more than six months with the economy diving again to recession levels.
The highly challenging job of getting a deal with the newly elected “Syriza” government is becoming even more steepening because of two complementary factors. At first, the aim of the deal is to close the extended (till the 30th June 2015) Programme and then to plan a follow-up support framework, with the necessary reforms and development policies, while staying on with the public finance adjustment effort.
The first factor corresponds to the similar one, prevailing during the beginning of the Samaras’ led government, when government posts were then taken up by anti-MoU politicians. Who had in fact to work and move on with an in-competent and ex-ante hostile administration. Yet, at that time, it was not the majority of the government posts staffed by the previously anti-MoU politicians and, even those ones, had already some experience in government, in order to get a quick touch with the reality.
In the “Syriza” & “ANEL” version almost everybody in government posts has not any clue about governance and at the same time are carrying the “only truth”: they are elected by the Greek people to radically change the policies of the Programme – rejecting in principle and ex-ante any sort of comprehension that it is this Programme that has been extended and that it is this one that needs to be finally reviewed, while preserving Greece’ s finances as a member of the Eurozone!
The second worsening factor corresponds to the dominant political argument, well set in the minds of the “Syriza” and “ANEL” politicians, that it is the implementation of this Programme, representing the most conservative and monetary circles in Europe (even worse than the US ones), that brought recession and pain and caused the crisis. And, that is why, it is necessary to change, actually by “restoring the past” and adopting demand boosting policies to get out of the vicious recession cycle!
This argumentation is further supported by naïve simplifications about preserving and even increasing pensions and public wages (boosting consumption!), and coupled by equally naïve assertions that the money we need (to sustain high public deficits to boost consumption and development) will become available by other “better” creditors, like the BRICS, especially if we get out of the Eurozone and we “get rid” of the European creditors (and the ECB). This corresponds to an ideologically strong political agenda, which unfortunately has nothing to do with the reality, but still supported by naïve arguments from well acknowledged economists, especially in the US – like Stiglitz and Galbraith (the “James K.” not the “John K.”) to name a few.
And Greek people decided to “buy” such an argumentation, preferring – being easier – to … match the reality to the ideological perceptions, than accepting the reality and understanding the problems, using rationality and evidence-based policies to address them!
Those of us considering ourselves members of the European societies and potential contributors to the great and still much promising European project, need to think and point to certain steps, which may save Greece in Europe and prove once more that Europe is the most important historical development in the global scene.
The absolute necessity here is that the European community needs to find the way for a consistent and reliable communication to the Greek society and public opinion, about the scope and the justification of the work and effort – mainly invested by the Greek people – as well as of the returns achieved and anticipated, from the adjustment programme. Especially after the adoption of the reforms introduced, in the public sector and in restoring open competition in the product and service markets – including the privatizations. The message of such a communication is that policies’ adoption and implementation, especially serving progressive reforms, is not any more an abstract ideological or political issue, but an issue of reliability and of just and competent planning and hard work as well as continuous evaluation and impact assessment. And that this approach is the only feasible for the Greek society to stay on with progressive developments of smart and inclusive growth, within Europe.
This message needs to reject the dominating argumentation of the “Syriza” government and widely adopted “story” in the Greek media. Which goes like that policy making and implementation is only a matter of political handling, just having PM Tsipras dealing with President Holland and Chancellor Merkel, and with Commission President Junker as an observer, representing the broader European interests. Adding that, in the name of the latter, “Syriza” has been “elected” in order to fight for a “better Europe” (against the “conservative” German led one, supported by the bankers – the ECB – and the IMF!).
Effective communication channels have to be established through European media, the primary message of which should be that the pro-longed “negotiations” are not taking place among former “enemies” – whereby whichever measure supported by the bad “creditors” and adopted in a potential agreement would correspond to a “loss” of the Greek people and vice versa. And that, contrary to this prevailing perception, the discussions are among partners sharing the common aim to support Greece and the Greek society to eventually enter asap to a virtuous, sustainable growth spiral, while effectively addressing the social cohesion priorities, taking care of those people heavily hit by the prolonged recession and the crisis.
Further on, trying to reach an agreement, while spreading the above-mentioned message, the Europeans, with the support of the IMF, need to (a) set the basics for the follow-up support programme, and (b) to include, both for the transition and for the new programme, a strong support, peer review scheme, with technical teams in Greece, in order to consistently and patiently work with the Greek public administration, in a direct collaboration scheme, ex ante approved (accepted) by the Greek government(s) in the next three years.
And finally, we need to face the critical question about the prolongation of the short- or even mid-term process with the so-called staff-level discussions and with the Brussels Group, which may continue towards even the end of the year 2015, to the (short-term) benefit of the “Syriza” government. It is becoming clear that, by technically preserving Greek state’ s capacity to serve its debts, pensions and civil servants’ salaries are also paid in time, the political sustainability of these government tactics are facilitated. While the economy is collapsing fast, potentially reaching an irreversible level, which will make the challenge to keep Greece in the Eurozone irrelevant at the end!
I dare present two concrete recommendations, apart from those mentioned above, about the agreement. First, that the high level European politicians need to state explicitly and consistently, with “one voice”, making PM Tsipras and other government members understand that any political handling will have to be settled on the basis of a feasible technical (financial programme) agreement. Only by meeting this condition, an agreement will be reached, which will benefit the Greek people and guarantee Greece’ s long-term sustainability in the Eurozone, with smart and inclusive growth.
And second, that whichever support programme, to sustain Greek economy’ s return to growth, will be based on markets’ and the public sector’ s reforms, keeping the same policy lines from the previous adjustment effort, which should not any more be considered an austerity policy framework, but a policy reforming one.

Eventually, it is for the Greek people to decide on the broader challenge of adopting and staying with the European growth and social inclusion policy paradigm or, alternatively, follow other “socially sensitive” (supposed to be progressive) agendas.


Dr Nikitas Kastis, MENON Network

June 2015

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