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BBC 28 January 2015

Greece will not default - PM Tsipras

New Greek PM Alexis Tsipras says his country will not default on its debts. Addressing his first cabinet
meeting since Sunday's victory, Mr Tsipras said he would negotiate with creditors over the 240bn (179bn;
$270bn) bailout. "We won't get into a mutually destructive clash, but we will not continue a policy of
subjection," said the left-wing Syriza party leader.
The EU has warned his government to stick to its commitments. A default could force Greece out of the
euro. As the newly elected leader of the radical left party made his inaugural cabinet speech, Greek
government bond yields rose to near record levels - reflecting investors' concerns about short-term risks of
a debt restructuring over the coming months. The Greek stock market fell 6.4%.
Greece has endured tough budget cuts in return for its 2010 bailout, negotiated with the so-called troika the European Union, International Monetary Fund (IMF) and European Central Bank (ECB). The economy
has shrunk drastically since the 2008 global financial crisis, and increasing unemployment has thrown
many Greeks into poverty.
Alexis Tsipras sought to strike a balance - defiant about negotiating debt relief from the eurozone, while
reassuring his European partners. Across the eurozone, governments oppose a debt write-off for Greece.
The Netherlands has added its voice to that of Germany and France in insisting that Greece stick to its
previous commitments. The Dutch finance minister, who heads the group of those in the eurozone, will be
in Athens later this week for discussions. Both sides will try to stick to their positions - and it may come
down to which will blink first.
Mr Tsipras's speech is, perhaps, an olive branch extended from Athens after hardline pre-election rhetoric,
but there is no sign that the new government will back down on its opposition to austerity. Vowing to defend
Greek dignity, Mr Tsipras said a renegotiation of the Greek debts would be in search of "a viable, fair,
mutually beneficial solution". He did not give any details. Mr Tsipras promised "realistic proposals" for an
economic recovery and vowed to fight corruption and tax evasion. His recovery plan was aimed at
preventing deficits in the future.
Mr Tsipras's new coalition government - with the right-wing Greek Independents - was sworn into office on
Tuesday, after sweeping to power on the pledge of ending years of austerity. The Greek government's chief
economics spokesman, Euclid Tsakalotos, has argued that it is unrealistic to expect Greece to repay its
huge debt in full.
The current bailout programme of loans to Greece ends on 28 February. There are still 1.8bn euros of loans
that could be disbursed to Greece if it meets the conditions imposed by the troika. Economists estimate that
Greece needs to raise about 4.3bn euros in the first quarter of 2015 to help pay its way, with Athens
possibly having to ask the IMF and eurozone countries. The new government, however, has announced
that it is putting on hold major privatisation projects, including the port of Piraeus and the main power
company, the Public Power Corporation of Greece.
Greek economy in numbers

Average wage is 600 (450: $690) a month

Unemployment is at 25%, with youth unemployment almost 50%
Economy has shrunk by 25% since the start of the eurozone crisis
Country's debt is 175% of GDP
Borrowed 240bn (188bn) from the EU, the ECB and the IMF

BBC - 28 January 2015

Greece election: Germany counts cost as Syriza take power

"Greece elects a euro monster!" exclaimed tabloid newspaper Bild. "How many billions is this going to cost
us?" And that pretty much sums up the mood here in Germany. The government in Berlin must wait to hear
what kind of concessions the new Greek government might seek but already its position is clear.
"It is important for the new government to take action to foster Greece's continued economic recovery," said
Angela Merkel's spokesman. "That also means Greece sticking to its previous commitments."
And, one by one, politicians from both sides of the governing coalition went on record to emphasise the
same point: there's not much more Germany can offer in the way of concessions to Greece. "We have
already restructured the debt," one MP said to me. "We have very, very low interest rates. We have very
long maturity."
There is a sense of frustration here. Just a few days ago the European Central Bank announced its
programme of quantitative easing. A measure that Germany has fiercely opposed. The Bundesbank was
unequivocal: structural reform is the answer.
Its president is still making the same argument. The answer for Greece, says Jens Weidmann, lies in
reforming its finances, its economy. A debt "haircut" is not a long-term solution.
'Let them go'
The Greek election result has raised two questions here.
First: what happens if Greece fails to get the concessions it wants and heads for the door of the eurozone?
"Let them go," says Michael Fuchs, a senior member of Chancellor Merkel's Christian Democrats.
Blackmail, he added, does not work.
And commentators point out that the eurozone in 2015 is very different to the eurozone of a few years ago
when the prospect of a "Grexit" had economists in a tailspin. Now, it is argued, there is a stability
mechanism in place and other countries are doing better. Greece leaving the euro would be undesirable but
And second: how seriously to take the success of populist parties like Syriza which seem to suggest that
citizens are tiring of the eurozone? Germany has one of its own. Angela Merkel's conservatives are losing
votes to Alternative for Germany (AfD).
The party is not yet represented at federal level but it has done well at regional level. AfD is populist, antieuro and gives a voice to those fed up with bailing out countries such as Greece.
On Tuesday, Mrs Merkel sent Alexis Tsipras a congratulatory message (in German). "You are taking office
at a difficult time in which you face a great responsibility," she wrote, adding that she wished him "much
strength and success".
A carefully worded message. Because, despite speculation to the contrary, the German chancellor wants
Greece to stay "part of our story". As one commentator put it: "She doesn't want to go down in history as
the German chancellor who broke up the eurozone."

BBC 27 January 2015

Tsipras challenges
As he climbed on an elevated stage in central Athens to give his victory speech on Sunday night, Alexis
Tsipras looked more ................... a rock star than Greece's newly-elected prime minister.
"Our people too have a right to joy and celebration. For five years, they had taken both away from us," he
told thousands of ecstatic supporters gathered to ..................... a historic victory for the left.
The magnitude of the challenges Mr Tsipras and his Syriza party face are daunting, however, and
sustaining this enthusiasm inside Greece may prove even more difficult than convincing Europe to end
austerity and forgive part of the nation's debt.
Exit poll analysis ................... that Syriza not only triumphed among unemployed and working Greeks, but
even penetrated the core of conservative voters, with one-in-three housewives and pensioners turning to
the party.
Debt-cancellation promises
Syriza officials insist Alexis Tsipras is no Harry Potter-like magician and that the Greek people are realistic
about what he can achieve. And indeed, people in Athens say they do not expect Syriza to ................ all
their promises completely and immediately, as long as they carry out the policies that are most relevant to
The unemployed may not care too much about a hated property tax known as "Enfia", which Syriza has
pledged to .................., but they are expecting to find a job or, in the very least, have their benefits
Talk to the propertied classes in Athens's leafy, rich, northern suburbs who voted for Syriza, ................. they
will tell you that the promise of the abolition of the tax was one of the main reasons they voted for the left
for the first time in their lives. And all Greeks are expecting Syriza to deliver on their promise and demand
debt-cancellation and growth policies from the EU.
Fulfilling those promises will take nothing short of Harry Potter-like powers, some analysts warn. Mr
Tsipras, the youngest political leader in modern Greek history, was instrumental in transforming Syriza from
an also-ran to a potential ruling party. His background is starkly different to that of his predecessors, all of
them members of political dynasties.
Alexis Tsipras and the 700-euro generation
Alexis Tsipras was not schooled at the usual private schools that most politicians in Greece with a pedigree
prefer, but .................... from a state school in Ampelokipoi, a middle-class area in central Athens.
It was at school that he met Peristera "Betty" Baziana, who was to become his wife. They were both active
in the Communist Party of Greece's youth wing and ................. the same world view. Although they went to
university in different cities, their relationship flourished. They chose a civil wedding ...................... of a
traditional religious ceremony.
The couple now live in the middle-class Athens neighbourhood of Kypseli, and have two sons - Pavlos, 7,
and 5-year-old Orpheas Ernesto (................. Ernesto "Che" Guevara). Ms Baziana has rarely appeared in
public and the couple have a very low-key social life, avoiding the paparazzi.

Mr Tsipras cut his professional teeth while working as a civil engineer and was one of the "700-euro
generation", a term .................. in 2007 to describe young people who struggled to advance beyond the
average Greek salary.
In 2008, his political career took a significant step forward when he took on the leadership of Syriza,
founded in 2004 as a coalition of groups and parties ................... from Maoists to Greens. He was elected
to parliament the following year and by 2011 had transformed the party from a marginal alliance into a
major political force.
Known for his rhetorical skills, his dislike of neckties and his youthful looks, Mr Tsipras's colleagues see him
as quite unlike any of Greece's traditional political grandees. "He is just different. He is just like you and
me," a member of Mr Tsipras's entourage at Syriza's headquarters told the BBC.
"The economic crisis and the collapse of traditional parties certainly helped Syriza grow its influence, but it
was Alexis Tsipras who catapulted the party," says Christoforos Vernardakis, professor of political science
at Aristotle University of Thessaloniki and founder of the public opinion survey company VPRC. "This
happened because Tsipras is young and knows .................. fear. He took a defensive left and turned it into
a credible choice for government."
Some of his first actions as Greek leader appear designed to show he aims to maintain a careful balance.
He was Greece's first prime minister to take a .................. rather than a religious oath, and yet his first visit
after he was elected was to the head of the Church of Greece.
Although he told the German government he was not looking for a fight, his first act after being sworn in
was to ................. his respects to a monument honouring the communists executed by Nazi occupation
forces in 1944.
He has also shown an unemotional pragmatism that may alienate ideological purists in his party but will
prove valuable in his dealings with creditors. Lacking an .................... majority in parliament, he chose to
form a coalition with a right-wing populist party, the Independent Greeks.
Some Syriza voters and party members are already disillusioned by the choice. But others see it as proof of
the ................... of age of both Syriza and Mr Tsipras.
His choice of finance minister is also telling. Economics professor Yanis Varoufakis has been arguing for
years in his classes and opinion pieces about the non-viability of austerity and the unsustainability of
Greece's debt burden. But he believes he can win the argument by reasoning with creditors.
In an interview shortly before the election, he told the BBC that far from being destructive, Syriza's political
proposals offered a reasonable way out of austerity and a chance to replace existing bailout laws with
new .................. .
"The first priority is renegotiating with creditors," he said. "Syriza needs to speak the language of truth
about the continuing triple bankruptcy of the country - public debt, banks, private sector - something no
Greek government has done so far."
Then, he pointed out, the party had to put ................... proposals that would be reasonable to the average


Greek PM Tsipras pushes on with radical change, markets tumble

Prime Minister Alexis Tsipras promised "radical" change on Wednesday as his new government swiftly
moved to roll back key parts of Greece's international bailout, prompting a third day of losses on financial
markets. A swift series of announcements signaled the newly installed government would not back down
from its anti-austerity pledges, setting it on course for a clash with European partners, led by Germany,
which has said it will not renegotiate the aid package needed to help Greece pay its debts.
Even before the first meeting of the new cabinet, ministers had hit the airwaves to reassure voters they
would honor campaign pledges to roll back the tough economic policies imposed under Greece's 240billion-euro bailout program. The planned sale of a 30 percent stake in Public Power Corporation of Greece
(PPC), the country's biggest utility, was halted while ministers pledged to raise pensions for those on low
incomes and reinstate some fired public sector workers. "We are coming in to radically change the way that
policies and administration are conducted in this country," Tsipras told ministers at their first cabinet
Financial markets have looked on nervously, with Greek 10-year bond yields up 50 basis points at 10.30
percent, the main Athens stock index down 4 percent and bank stocks down 12.6 percent to extend losses
into a third day. Saying that the mood towards Greece was changing since his leftwing party's sweeping
election victory on Sunday, Tsipras said he would avoid antagonism with European Union and International
Monetary Fund creditors. "Our priority is also a new negotiation with our partners, seeking to reach a fair,
viable and mutually beneficial solution so that the country exits the vicious circle of excessive debt and
recession," he said.
He said the government would pursue balanced budgets but would not seek to build up "unrealistic
surpluses" to service Greece's massive public debt of more than 175 percent of gross domestic product. He
added that he expected a "productive" meeting on Friday with Jeroen Dijsselbloem, head of the euro zone
finance ministers' group. Priorities would be helping the weakest sections of society, with policies to attack
endemic clientelism and corruption in the economy, reduce waste and cut Greece's record unemployment.
After announcing a halt to the privatization of the port of Piraeus on Tuesday, for which China's Cosco
Group and four other suitors had been shortlisted, the government said it would block the sale of a stake in
the Public Power Corporation of Greece (PPC). PPC, which is 51 percent owned by the state, controls
almost all of Greece's retail electricity market and accounts for about two thirds of the nation's power utility.
Shares in the utility were down nearly 13 percent, while shares in Piraeus Port were down nearly 8 percent.
"We will halt immediately any privatization of PPC," Energy Minister Panagiotis Lafazanis told Greek
television a few hours before officially taking over his portfolio. "There will be a new PPC which will help
considerably the restoration of the country's productive activities," he said. The previous government of
former Prime Minister Antonis Samaras had passed legislation last year to spinoff part of PPC to liberalise
the energy market as part of a privatization plan agreed under the EU/IMF bailout.
In a sign of the potential sensitivity of the move to cancel the privatizations, Tsipras met China's
ambassador to Athens, Zou Xiaoli on Tuesday to stress the importance of good relations with Beijing. As
well as announcing a halt to selling state assets, ministers have promised to reinstate laid-off public sector
workers whose dismissal was ruled unconstitutional and restore cuts to pensions.
"What we have said during the election campaign will be our guide, starting with measures that do not have
large spending impact," Deputy Social Security Minister Dimitris Stratoulis told Antenna TV. [Reuters] - Wednesday Jan 28, 2015

A turn toward responsibility

By Alexis Papachelas
Whatever is meant to happen with regard to the new governments negotiations with the countrys partners
and creditors will happen swiftly as political correctness and established diplomatic courtesy is currently
running out on both sides. No one should nurture any illusions. Anyone who does so will not differ from
politicians meeting with Andreas Papandreou in the 1980s, when the PASOK founder managed to appease
them with his well-known mantra I can understand exactly what youre saying, before firing them as soon
as they were out of the door.
Acting as messengers now will be the usual suspects: French President Francois Hollande and European
Parliament President Martin Schulz, among others, based on the logic that a socialist can use softer
language when talking to a newly elected Greek prime minister. Nevertheless, the message from the
command center is bound to sound the same: Conclude the evaluation, honor the agreements and then
we can talk about the rest.
Those in the know believe that a deal could be reached if the evaluation hurdle can be overcome. Alexis
Tsipras could implement certain reforms with which he disagrees entirely, the troika could accept a portion
of SYRIZAs so-called Thessaloniki program, a few substantial steps could be taken with regard to battling
tax evasion and corruption, while a formula for the relaxation of targets regarding the surpluses and debt
could also be found. It may sound sensible and easy, but it will be very difficult to realize in practical terms.
Tsipras could take a deep breath, finish the evaluation and then benefit from the rest. All of this should take
place within a month. The real economy would grind into action, markets would declare the new Greek
premier as a type of Lula as opposed to a Chavez, and things would go back to normal. Of course that
would presuppose that no cabinet minister would do something colorful and entirely unilateral that would
render the other side furious.
Certain moves, including the abolition of some reforms or a change of staff in key positions, would shock
Tsipras will get his chance to take a turn toward responsibility. A worsening of the real economy and the risk
of a bank crisis could provide him with a good argument. The responsible parties now in the opposition,
along with any reasonable person, would have to support this turn. Everyone, locally and abroad, would
have to assist him in order for a fresh disaster to be averted.
The other road would involve Greece breaking its ties with Europes powerful nations, a move which could
extend to geopolitical issues as well. That could prove a rough road, one for which the Greek people are
totally unprepared, considering that this is one issue that was not touched upon during the pre-election

BBC - 29 January 2015

Greek government will seek 'common ground' EU's Schulz

European Parliament President Martin Schulz has said the new
Greek government will seek "common ground" with its European
partners as it tries to renegotiate its financial bailout. Speaking
after meeting Greek PM Alexis Tsipras, Mr Schulz said he expected
"robust" discussions on the issue.
It comes amid concerns over steps by Mr Tsipras to halt austerity
measures following Syriza's election victory. European leaders
have insisted Greece must ................... its debt obligations.
Mr Tsipras has said he wants to renegotiate the terms - but
insisted there will be no Greek default, which is feared to push
Greece out of the eurozone.
Greece has endured tough budget cuts in .................... for its
240bn (179bn; $270bn) bailout, negotiated in 2010 with the
"troika" - the EU, International Monetary Fund (IMF) and European
Central Bank (ECB).
Its economy has shrunk drastically since the 2008 global financial
crisis, and high unemployment has thrown many Greeks ...............
poverty. Greek bank stocks edged up on Thursday a day after
dipping sharply as the government shelved privatisation schemes
required under bailout ................. .
After talks with the Greek PM, the European Parliament president
said he expected any discussions to be difficult but that Greece
would work with others in Europe.
"I found out that the government of Alexis Tsipras doesn't think
about acting alone," he said. "It is thinking about making
proposals and expects that these proposals will be discussed in a
fair and co-operative process to find a solution. I think this is a
very good message. I am quite sure that these discussions will be
very robust." Earlier he told Germany's Bild newspaper he would
encourage the Syriza leader to clamp down on tax .................. in

Meanwhile Germany's vice-chancellor again stressed the need for

Greece to ................... the terms of its bailout on Thursday.
Speaking in the German parliament, Economy Minister Sigmar
Gabriel said the new Greek government could not expect the rest
of Europe to carry what he called their "burden".
"People must respect the democratic decision of voters and a
newly-elected government's right to decide its course but the rest
of Europe's citizens should not have to expect changes in Greek
politics to burden them," he said.
Jeroen Dijsselbloem, the president of the Eurogroup club of
eurozone finance ministers, will visit Athens on Friday.
Ahead of the dignitaries' trips, the president of the European
Commission also reiterated his view that cancelling Greece's huge
debt was not an .................... . "Greece must comply with
Europe," Jean-Claude Juncker said in an interview with French
newspaper Le Figaro on Thursday, stressing that "there is no
question of cancelling the debt". "Arrangements are possible, but
they will not fundamentally alter what is in place."
'No question'
In his first cabinet meeting since Sunday's election victory, Prime
Minister Alexis Tsipras insisted that his country would not default
on its debts and vowed to negotiate with creditors over the
The Athens Stock Exchange fell by 9% in response to Mr Tsipras's
remarks on Wednesday as it emerged that his Syriza-led
government was putting on hold major privatisation
projects, ................... the port of Piraeus and the main power
company, the Public Power Corporation of Greece. China, which
has a major investment in the port of Piraeus, said it was "highly
concerned" by the moves, according to AFP news agency.
Greek stocks rebounded on Thursday, with the Athens stock
market up 3.2%.
The .................. bailout programme of loans to Greece ends on 28
February. There are still 1.8bn euros of loans that could be
disbursed to Greece if it meets the conditions .................. by the
troika. Economists estimate that Greece needs to raise about

4.3bn euros in the first quarter of 2015, with Athens possibly

having to ask the IMF and eurozone countries.
Greece's new coalition government - with the right-wing but
equally anti-austerity Greek Independents - was sworn into office
on Tuesday. Its chief economics spokesman, Euclid Tsakalotos, has
argued that it is unrealistic to expect Greece to repay its huge
debt in ................ .
Greek economy in numbers
Average wage is 600 (450: $690) a month
Unemployment is at 25%, with youth unemployment
almost 50%
Economy has shrunk by 25% since the start of the
eurozone crisis
Country's debt is 175% of GDP
Borrowed 240bn (188bn) from the EU, the ECB and
the IMF

The Guardian - Tuesday 27 January 2015

Yanis Varoufakis: maverick economist with Greeces fate in his hands

Confrontational Greek Australian MP assumes governments most sensitive post ready for a
fight with Europe over austerity
Yanis Varoufakis, Greeces new finance minister, has been described variously as maverick, brilliant,
visionary and self-obsessed. The 53-year-old economist, who has flourished on the back of .....................
(INTENSE) commentary on Europes financial crisis delivered through blogs, tweets, lectures and books
is no stranger to controversy.
Of all the economists who have united around Alexis Tsipras, the countrys new far left leader, he is by far
the most confrontational. The terms attached to the bailout programmes propping up the Greek economy
are tantamount to fiscal waterboarding he says. But he has Tsiprass ear.
Varoufakis may well have been appointed to the new Greek governments most sensitive post precisely
because he relishes a fight. In the ................... (SHAVE)-headed fitness addict, European finance ministers
have got an opponent who will not recede easily. And one who, furthermore, appears to have the stamina
of a long distance runner to go the whole way.
Even within Syriza, the radical left party which the Greek Australian now represents as an MP, there are
grumbles that his views are .................... (ORTHODOX). Some point out that everything about him, starting
with his name contrary to Greek tradition he insists on dropping the second n in Yanis is different. But

Varoufakis, who has taught in Britain, Australia and Greece and gave up a post at the University of Texas,
in Austin, to return to Athens at Tsiprass calling, is also a star.
Although barely in the country for the past three years, he won a record 135,638 votes as a candidate in
Athenss second ....................... (ELECT) district by far the toughest area to contest. No other Syriza MP
came close and unlike any of them Varoufakis had been in politics for only three weeks.
Such popularity has been attributed to his agility and ability to ...................... (POPULAR) the economy for
ordinary Greeks. And the plain, if tough, talk with which difficult concepts are deconstructed.
We Greeks, he recently wrote, tend to make a big mistake. We think that our bad partner in the EU is
Germany and our good, if weak, partner is France. That is wrong.
Varoufakis, who has described himself as an ....................... (ACCIDENT) economist, is the first to say he
is not hidebound by ideology. Greek voters may have chosen to stop going gently into the night by
electing the anti-.......................... (ESTABLISH) Syriza, but no one, he says, should grow too fond of power.
The spectre of overseeing negotiations with Greeces partners is an extremely scary project and prospect.
But, he adds, the politics of austerity have to end.
...................... (BIBLE) economics, an eye for an eye, a tooth for a tooth, leave everybody blind and
toothless. He has no idea where he will be in two, three, five, 10 years. But what he does know is that
Greece has to stand again and he is the man who is going to try and do it.

The Economist - Jan 31st 2015

Go ahead, Angela, make my day

Syrizas win could lead to Grexit, but it should lead to a better future for the
IT WAS in Greece that the infernal euro crisis began just over five years ago. So it is
classically fitting that Greece should now be where the denouement may be played out
thanks .............. the big election win on January 25th for the far-left populist Syriza
party led by Alexis Tsipras. By demanding a big cut ............. Greeces debt and
promising a public-spending spree, Mr Tsipras has thrown down the greatest challenge
so far to Europes single currencyand thus to Angela Merkel, Germanys chancellor,
who has set the austere path for the continent.
The stakes are high. Although everybody, including Mr Tsipras, insists they want Greece
to stay in the euro, there is now a clear threat of Grexit. In 2011-12 Mrs Merkel wavered,
but then decided to support the Greeks to keep them in the single currency. She did not
want Germany to be blamed .............. another European disaster, and both northern
creditors and southern debtors were nervous ............... the consequences of a chaotic
Greek exit for Europes banks and their economies.
This time the odds have changed. Grexit would look more like the Greeks fault,
Europes economy is stronger and 80% of Greeces debt is .............. the hands of other

governments or official bodies. Above all the politics are different. The Finns and the
Dutch, like the Germans, want Greece to stick ............. promises it made when they
twice bailed it out. And in southern Europe centrist governments fear that a successful
Greek blackmail would push voters ............... their own populist opposition parties, like
Spains Podemos.
A good answer ............... a bad question
It could all get very messy. But there are broadly three possible outcomes: the good, the
disastrous, and a compromise to kick the can down the road. The history of the euro
has always been to defer the pain, but now the battle is about politics not economics
and compromise may be much harder.
Tantalisingly, there is a good solution to be grabbed for both Greece and Europe. Mr
Tsipras has got two big things right, and one completely wrong. He is right that Europes
austerity has been excessive. Mrs Merkels policies have been throttling the continents
economy and have ushered in deflation. The belated launch of quantitative easing (QE)
by the European Central Bank admits as much. Mr Tsipras is also right that Greeces
debt, which has risen from 109% to a colossal 175% of GDP ............... the past six
years despite tax rises and spending cuts, is unpayable. Greece should be put into a
forgiveness programme just like a bankrupt African country. But Mr Tsipras is wrong to
abandon reform at home. His plans to rehire 12,000 public-sector workers, abandon
privatisation and introduce a big rise ............... the minimum wage would all undo
Greeces hard-won gains in competitiveness.
Hence this newspapers solution: get Mr Tsipras to junk his crazy socialism and to
stick ................. structural reforms in exchange .............. debt forgivenesseither by
pushing the maturity of Greek debt out even further or, better still, by reducing its face
value. Mr Tspiras could vent his leftist urges by breaking up Greeces cosy protected
oligopolies and tackling corruption. The combination of macroeconomic easing with
microeconomic structural reform might even provide a model for other countries, like
Italy and even France.
A very logical dreamuntil you wake .............. and remember that Mr Tsipras probably
is a crazy leftwinger and Mrs Merkel can barely accept the existing plans for QE. Hence
the second, disastrous outcome: Grexit. Optimists are right that it would now be less
painful than in 2012, but it would still hurt.
In Greece it would lead to bust banks, onerous capital controls, more loss of income,
unemployment even higher than todays 25% rateand the countrys likely exit from the
European Union. The knock-on effects of Grexit ............... the rest of Europe would also
be tough. It would immediately trigger doubts over whether Portugal, Spain and even
Italy should or could stay in the euro. The euros new protections, the banking union and
a bail-out fund, are, to put it mildly, untested.
So the most likely answer is a temporary fudgebut it is one that is unlikely to last long.
If Mr Tsipras gets no debt relief, then he will lose all credibility with Greek voters. But
even if he wins only marginal improvements in Greeces position, other countries are
bound to resist. Any changes in the bail-out terms will have to be voted on in some
national parliaments, including Finlands. If they passed, voters in countries like Spain
and Portugal would demand an end .............. their own austerity. Worse still, populists

from the right and left in France and Italy, who are not just against austerity but against
their countries membership of the euro, would be strengthened.
And there are technical problems with any fudge. The ECB is adamant that it cannot
provide emergency liquidity to Greeces banks or buy up its bonds unless Mr Tsiprass
government is in an agreed programme with creditors, so any impasse is likely to trigger
a run on Greek banks. By stretching out maturities, some of this could be avoidedbut
that may be too little for Mr Tsipras and too much for Mrs Merkel.
Hello to Berlin
So in the end, Greece will probably force Europe to make some hard choices. ..............
luck, it will be towards the good outcome outlined above. Greek voters may be living in
a fools paradise if they think Mr Tsipras can deliver what he says, but the Germans too
have to look .............. the consequences .............. their obstinacy. Five years after the
onset of the euro crisis, southern euro-zone countries remain stuck with near-zero
growth and blisteringly high unemployment. Deflation is setting in, so debt burdens rise
despite fiscal austerity. When policies are delivering such bad outcomes, a revolt by
Greek voters was both predictable and understandable.
If Mrs Merkel continues to oppose all efforts to kick-start growth and banish deflation in
the euro zone, she will condemn Europe ............ a lost decade even more debilitating
than Japans in the 1990s. That would surely trigger a bigger populist backlash than
Greeces, right across Europe. It is hard to see how the single currency could survive in
such circumstances. And the biggest loser if it did not would be Germany itself.

BBC - Monday 2 February 2015

Greece debt standoff: George Osborne urges Athens and

Brussels to strike deal
UK chancellor says debt talks are greatest threat to world economy during meeting with
Greek finance chief Yanis Varoufakis
The British chancellor, George Osborne, has warned that the standoff between Greece
and the eurozone over the countrys debt is the greatest risk to the global economy
after meeting the new Greek finance minister.
The chancellor hosted a meeting at 11 Downing Street with his Greek counterpart, Yanis
Varoufakis, who is on a whistlestop tour of Europe just a week after being elected to win
support for renegotiating Greeces 240bn (181bn) bailout.
We had a constructive discussion, and it is clear that the standoff between Greece and
the eurozone is the greatest risk to the global economy, Osborne said. I urge the
Greek finance minister to act responsibly but its also important that the eurozone has a
better plan for jobs and growth.
It is a rising threat to the British economy. And we have got to make sure that in
Europe, as in Britain, we choose competence over chaos.

Varoufakis, fresh from talks in France on Sunday, was in London before meetings the
Italian prime minister, Matteo Renzi, and with the head of the European commission,
Jean-Claude Juncker.
Varoufakis expressed optimism a deal could be done within days. There will be a deal
within a very short space of time that is going to make it perfectly clear to everyone that
Greece can play within the rules and in a way that puts the Greek crisis away, once and
for all, he told Channel 4 News.
The economist, who was appointed finance minister last week after anti-austerity party
Syriza swept to power, has offered to produce proposals for a reworked debt deal within
a month. He has appointed Lazard, the US investment bank, to advise on Greeces
negotiations about its debt, which amounts to more than 175% of GDP.
Syriza insists it will make good on its promises to halve Greeces debt obligations and
scrap a range of swingeing budget measures that were imposed in exchange for the
loans. It has already started to step back from some of the measures attached to the
bailout by freezing the sell-off of public companies and raising the minimum wage.
In an interview with the Financial Times, Varoufakis said he would create new growthlinked bonds to swap for outstanding debt, run a permanent budget surplus and target
wealthy tax evaders.
What Ill say to our partners is that we are putting together a combination of a primary
budget surplus and a reform agenda, he said. Ill say, Help us to reform our country
and give us some fiscal space to do this, otherwise we shall continue to suffocate and
become a deformed rather than a reformed Greece.
The current bailout programme officially expires on 28 February but it is widely hoped
the deadline will be extended so the European Central Bank is allowed to continue
providing funding for Greek banks. The new government in Athens wants a bridging
deal to allow time for a new, more manageable debt agreement to be negotiated.
But Varoufakis and his party face opposition from Germany, where leader Angela Merkel
has ruled out further debt cuts from its creditor nations.
A Greek government official lashed out at Britains Economist magazine on Monday for
suggesting Greece was threatening Germany with a front cover featuring the Venus de
Milo statue brandishing a gun and the caption Go ahead, Angela, make my day.
Its completely obnoxious and ridiculous to suggest we could blackmail Europe, the
official said.
Greeces new prime minister, Alexis Tsipras, is also touring European capitals. On his
first stop in Cyprus, We are in substantial negotiations with our partners in Europe and
those that have lent to us. We have obligations towards them, Tsipras said at a news
He ruled out seeking aid from Russia, which had suggested it would be open to calls for
help from Athens.

His party Syriza won the election on a promise to ditch the strict austerity cuts tied to
Greeces bailout from the troika of lenders the European Union, European Central
Bank and International Monetary Fund.
But some commentators have warned he will not be able to align his anti-austerity vow
to voters with an ambition to stay in the eurozone. They warn that Brussels officials will
be loth to set any precedents by forgiving Greek debt.
Tsipras really is between a rock and a hard place. He has two basic choices. Either he
effectively breaks his election promises and accepts the troikas conditions for continued
financial support or Greece leaves the euro, said Ruth Lea, economic adviser to the
Arbuthnot Banking Group.
There is still enormous political will within the commission, France and Germany for
keeping Greece within the eurozone. But not at any price and certainly not at the price
of tearing up the rule book for euro membership.
Germany has been adamant that eurozone creditor nations must hold the line on
Greeces debt. Merkel has said Tsipras would be a welcome guest in Berlin. The two
leaders will meet at a European summit on 12 February if not before.The US president,
Barack Obama, added to the debate in a CNN interview, saying: You cannot keep on
squeezing countries that are in the midst of depression. At some point, there has to be a
growth strategy in order to pay off their debts and eliminate some of their deficits.
His comments brought relief to Greek stockmarkets where the main ATG index gained
more than 4%. Yields on Greek government bonds came off their highs as signs of a
more conciliatory approach from the new government eased fears in debt markets over
the chances of a default or restructuring.

BBC - 2 February 2015

Greece bailout 'troika' may go - European Commission

The European Commission says the controversial EU-IMF troika supervising Greek
finances could be replaced.
The troika is a group of auditors representing the Commission, the European Central
Bank and IMF.
They carry out regular checks to see if Greece is sticking to its commitments under the
EU-IMF bailout agreement.
Greece's new left-wing government does not accept the troika's agenda. Instead it aims
to renegotiate the bailout, to get a huge reduction in Greece's debt.
At a news conference on Monday, the Commission chief spokesman, Margaritis
Schinas, quoted a pledge by Commission President Jean-Claude Juncker to replace the
"In the future, we should be able to replace the 'troika' with a more democratically
legitimate and more accountable structure, based around European institutions with

enhanced parliamentary control both at European and at national level," Mr Juncker

said in his mission statement last year.
Mr Schinas did not expand on Mr Juncker's proposal, stressing that "first we need clear
understanding" of the Greek position.
Mountain of debt
Greek Prime Minister Alexis Tsipras will hold talks with Mr Juncker in Brussels on
Mr Tsipras, leader of the radical left Syriza party, won the Greek election on 25 January
on a platform rejecting the troika and vowing to pull Greece out of the austerity imposed
by international lenders.
Syriza says the EU-IMF bailout conditions have impoverished Greece, fuelling
unemployment and failing to reduce the massive debt pile.
Greece still has a debt of 315bn (237bn; $357bn) - about 175% of gross domestic
product - despite some creditors writing down debts in a renegotiation in 2012.
Mr Schinas called the existing bailout deal for Greece a "contract" and stressed that any
revision of its terms would require "the unanimous agreement of all 19 members of the
Greece's current programme of loans ends on 28 February. There is no agreement yet
on disbursement of the final bailout tranche of 7.2bn - and Greek Finance Minister
Yanis Varoufakis has said Athens does not want it.

FT Special Report - February 3, 2015

European Central Bank resists latest Greek bailout plan

The European Central Bank is resisting a key element of the Greek governments new
rescue plan, potentially leaving Athens with no source of outside funding when its
international bailout expires at the end of the month.
Yanis Varoufakis, Greek finance minister, had proposed to European officials that
Athens raise 10bn by issuing short-term Treasury bills as bridge financing to tide the
country over for the next three months while a new bailout is agreed with its eurozone
But the ECB is unwilling to approve the debt sale. It will not raise a 15bn ceiling on tbill issuance to $25bn as requested by Athens, according two officials involved in the
deliberations. The Greek plan relies fully on the ECB, said another eurozone official
briefed on the talks. The ECB will play hardball.
Without T-bill financing, Athens will exit its bailout without access to emergency funding
for the first time since the first Greek bailout began in May 2010.

The ECBs stance raises the stakes in the stand-off between the anti-austerity
government in Athens and its international creditors, which if unresolved, could end with
Greece running out of cash within weeks.
It is also likely to puncture a sense of optimism among investors over Greeces
alternative rescue plan and a softening of its insistence on debt cancellation, which lifted
the Athens stock market 11.3 per cent on Tuesday and pared 10-year borrowing costs
by nearly a full percentage point.
The Greek government has said it could survive without additional cash until June,
when a 3.5bn bond comes due. But many EU officials fear allowing the programme to
lapse could restart market panic and spur a bank run.
Jean-Claude Juncker, the European Commission president, is expected to press Alexis
Tsipras, the new Greek prime minister, to ask for a technical extension of the current
bailout when the two men meet in Brussels on Wednesday.
Eurozone finance ministers are expected to hold emergency talks in Brussels on
February 11 to discuss Mr Varoufakiss plans. The Greek finance minister is due to meet
Mario Draghi, ECB president, in Frankfurt on Wednesday.

Greeks have voted emphatically against austerity but what

is the economic reality behind the headlines?
Despite pressure from several EU leaders, officials who have met Mr Varoufakis say he
has insisted the new government cannot ask for an extension for political reasons, since
it would send a signal they are willing to go along with the current bailout a message
Mr Varoufakis reiterated at meeting on Monday in London with leading bankers.
They realise their leverage is low but they feel they are on a mission, and he gives the
impression that they are prepared to risk a lot, said one banker at the London meeting.
Not renewing the programme is just an illustration. He was very clear that they will not
ask for an extension.
Another potential source of short-term cash being sought by Mr Varoufakis is 1.9bn in
profits the ECB and eurozone central banks earned by holding Greek bonds to maturity.
Under a deal agreed in 2012, that cash was to be returned to Athens, but has not been.
But officials said eurozone ministers are unlikely to allow those funds to be released
without a broader agreement, complete with tough conditions.

That will be a no go one of many for the member states; not without conditions,
said one official involved in the talks.
According to officials who have seen Mr Varoufakis proposals, it backs off original
Greek demands for a large-scale haircut in its sovereign debt, but insists that the budget
surplus targets currently in the bailout programme be lowered from 4 per cent to 1 or 2
per cent. - 02 Feb. 15

FT: Eurozone alarm grows over Greek brinkmanship

EU officials believe that without an extension Greece will run into a wall at the beginning
of June and are increasingly worried about the Greek banking system.
Eurozone officials are increasingly worried that Greece's brinkmanship over its
international bailout will plunge the country into financial chaos after its finance minister
said on Sunday that it would take up to four months to agree a "new contract" with
Yanis Varoufakis, the newly appointed finance minister, said Athens would reject of any
further loans under the rescue, despite Greece's 172bn bailout expiring at the end of
the month. He also said he expected the European Central Bank to prop up the
country's weakened banking system until a longer-term settlement could be reached.

Mr Varoufakis said Greece had been living for the next loan tranche for the past five
years. "We have resembled drug addicts craving the next dose. What this government
is all about is ending the addiction," he said, noting it was time to go "cold turkey".
His comments on Sunday underscored the fears of eurozone officials that the Greek
government was unaware of the precariousness of its financial situation.
"Everybody [in the eurozone] wants a deal," said one senior eurozone official. "But
through their actions and their rhetoric, the new government is making a lot of people
upset. They are putting themselves in an impossible situation."
Mr Varoufakis was speaking in Paris on the first leg of a European tour intended to
garner support for a renegotiation of its debt burden. Greece's anti-austerity government
roiled markets during a tumultuous first week in power with 40 per cent being wiped off
the value of Greek banks following announcements to reverse spending cuts and
Despite a more emollient tone from Alexis Tsipras, Greece's radical leftwing prime
minister, over the weekend, EU officials have been dismayed by Athens' repeated
rejection of a bailout extension - and refusal to co-operate with the troika of international
creditors. German officials were also irritated at its refusal to engage with Berlin,
although Mr Varoufakis said he had now been invited to the German capital.
The finance chief said Athens would make proposals within a month for a "new contract"
with the eurozone, which would be in place by the end of May. "We are not going to ask
for any loans during this period. It is perfectly possible to establish liquidity provisions
with the ECB."
However, it is unclear whether the ECB will agree to support Greek lenders under such
Officials familiar with the conversations between eurozone policy makers and Athens
said they had little idea of the sort of international financial help Greece was seeking or
how it intended to negotiate. Eurozone finance ministers want to discuss Greece's
needs at their next meeting on February 16 - if not sooner, by telephone.
Michel Sapin, French finance minister, urged Athens to come forward with its plans
"calmly and quickly".
The bailout programme is due to expire on February 28. If it is not renewed, Greece will
for the first time in five years be left without an EU financial backstop. Because the
International Monetary Fund is unlikely to distribute funds without the EU's participation,
Athens could lack access to emergency funding to repay billions of euros in debt due in
the coming months.
EU officials believe the country could eke out 4.3bn in payments owed to the IMF next
month, but will run into a wall at the beginning of June when the first of two bonds worth
more than 3bn must be paid. Without bailout funding, and an ongoing sell-off in the
private bond markets, Athens would be forced to default.
Of more concern to many officials is the Greek banking system, which after massive
outflows of deposits is relying on cheap ECB loans to fund day-to-day operations. ECB

officials over the weekend made it clear that if the programme expires at the end of
February, the central bank would be forced to cut off their liquidity loans.
But they have not clarified whether Greek banks could still access back-up central bank
financing, known as emergency liquidity assistance. Although technically loaned by the
Greek central bank, it must be approved by the ECB, which has been cagey on whether
such lending would be allowed.
Since the outbreak of the eurozone crisis, Greece's banking system has always been
seen as the most likely route to an "accidental" Greek exit from the euro. Without ELA
lending, Athens would probably have to print its own currency to keep its banking
system running.
ECB president Mario Draghi has told colleagues he is planning to drive a hard bargain
on bank liquidity - a similar strategy used with Cyprus in March 2013, which forced
Nicosia to accept onerous bailout terms. But Mr Draghi is also wary of unelected central
bankers taking a decision that would force Greece from the euro.
Source: Financial Times

Bloomberg -- February 3, 2015

Vanoufakis Heads to Germany as Markets Bless Debt

Greek Finance Minister Yanis Varoufakis arrives in Germany with the wind at his back:
the biggest rally in stocks since the days of the drachma and a plunge in the week-old
governments borrowing costs.
All he had to do was drop a demand for a debt writedown, retreating from a central
campaign promise.
Now, following stops in Paris, London and Rome, hell encounter European Central
Bank President Mario Draghi and German Finance Minister Wolfgang Schaeuble, who
hold the keys to whether Greece gets the time and financial support needed to
negotiate the new bailout deal its seeking with fellow European Union leaders. There
may not be a meeting of the minds.

Both sides have to take extreme views because it maximizes their bargaining position,
said Patrick Armstrong, chief investment officer at Plurimi Investment Managers in
London, which oversees about $2 billion. You have to show the end of the world if you
dont agree with me. So were in for a lot of rhetoric and volatility for the next month.
Underscoring the volatility, the benchmark Greek stock index has surged more than 16
percent this week, the biggest two-day rally in 24 years. The gauge plunged 14 percent
last week amid concern Alexis Tsiprass newly elected government might take unilateral
steps that would endanger Greeces euro membership. Ten-year bond yields dropped
143 basis points Tuesday to 9.5 percent; on Monday, they opened above 11 percent.
New Terms
After last weeks convulsions, the premier issued a statement Saturday saying
obligations to the ECB and International Monetary Fund would be paid and that he
expected a deal with the euro area on new bailout terms. And on Monday, Varoufakis
outlined plans to swap some debt owned by the ECB and the European Financial
Stability Facility for securities, some linked to the countrys economic growth.
A six-week bridge agreement starting at the end of the month could be the first step
toward a more comprehensive accord that might be reached in June, Varoufakis told
Italys Ansa newswire on Tuesday.
German officials were not as impressed as the markets.
The Greek government is still working on its position, Chancellor Angela Merkel said.
Thats more than understandable considering the government has been in office for a
few days.
There are new proposals and new reports coming out of Greece all the time and all of
Europe and beyond seems to be holding its breath, said Volker Kauder, caucus leader
for her Christian Democratic-led bloc in the German parliament. The new Greek
government doesnt create any trust this way.

Draghis Power
Varoufakis, who meets Draghi Wednesday morning in Frankfurt and Schaeuble in Berlin
the next day, has declined to offer details on his debt-swap thinking. You will allow me
not to go into details at the moment, the economics professor told reporters in Rome.
This is not the time for financial-engineering lectures.
Earlier, he tweeted: Debt will be rendered sustainable, even if we replace haircut with
euphemisms and swaps.
For now, Draghis ECB has the power of life and death over Greek banks via financing
available because of Greeces compliance with its bailout program. It runs out on Feb.
28. After that, lenders can rely on emergency-liquidity assistance from the national
central bank in Athens, which the ECB has to review every two weeks.
The ECB Governing Council can intervene only to restrict the funding, with the decision
requiring a two-thirds majority of governors. Thats unlikely to come before a meeting of

European finance ministers in Brussels on Feb. 16-17, where Greek demands will be on
the table.
Emergency funding to Greek banks is something where we have very close
interlinkages with political events, Ewald Nowotny, governor of Austrias central bank,
said on Monday. We will follow our rules.
Capital Flight
Its urgent because deposit flight accelerated before Tsipras Jan. 25 election. Greek
banks lost at least 11 billion euros ($12.5 billion) in deposits in January, according to
four bankers who asked not to be identified because the data were preliminary. The
outflow was about 4 billion euros in December. Total deposits were 160.3 billion euros at
the end of 2014.
The new Greek governments priorities are at odds with Germanys austerity-first
conditions for bailout commitments, which total 240 billion euros. Tsipras has promised
to raise wages and pensions, end public-sector firings and stop state asset sales -- all
policies that would breach the conditions on the bailout aid.
Merkels room for immediate maneuver is also limited. She is preparing for state
elections in Hamburg in February and in Bremen in May and fending off challenges from
anti-euro party Alternative for Germany.
Reality is about to bite: Tsipras will realize that the constraints are very tight, Kevin
Featherstone, professor of contemporary Greek studies at the London School of
Economics, said in an e-mail. It seems certain that the euro zone will insist on Greece
committing itself to continued structural reform.

A landmark opportunity
By Alexis Papachelas
Good and bad dreams come in equal portions these days, as deep and frightening
divisions are reawakening in the Greek collective psyche. We see the clash of the
classes every day, the tension between those who are pro-Europe and those who are
not, we see anger and passion. Greeks are, after all, very passionate people. This has
led them to being manipulated by blind nationalism and extreme populism, behavior that
created trouble both domestically and abroad. And when extreme passions are stirred,
the strangest things can happen: the extreme right can shake hands with the left,
politicians become consumed by their passions and the country becomes blind to how
the rest of the world perceives it.
Why this referencing to past troubles? Because I see the need for a national negotiation
with our partners and lenders. We should all support it and if it succeeds, we should all

salute at least those of us placing the country above parties whoever manages to
carry it through. But lets be sure of what were dealing with: Rome, Paris and
Washington are allies in words but when push comes to shove they will either back
down or act like the UN did over the Cyprus issue.
Greece has suffered a lot in the past five years and its politicians have failed to rise to
the occasion. Worst of all they refused to take on the cost of major reforms, transferring
the responsibility onto the nasty foreigners, leaving the average Greek feeling poorer
and humiliated a terrible predicament for a proud nation.
Heres where the tough part begins. In my opinion, Prime Minister Alexis Tsipras faces a
golden opportunity. He could lead the negotiation to the brink, before agreeing to a
historic compromise that would save the country.
Tsipras could do the following: Support those who are suffering most. Destroy vested
interests and corruption. Persuade the truly rich to contribute. Break the barriers to
entrepreneurship. Learn from China and explain to people, and above all to his own
supporters, that privatizations are good for the country. Focus on real scandals and
waste. Restructure the public sector with the help of a young generation of civil
servants. Reform education, but not to the benefit of the free-loaders.
Can he do all this? Yes. He risks losing the support of his hardliners but he will win over
a large majority and our partners respect.
The nightmare scenario is that he will be carried away by the powers preaching hatred,
revenge and conflict with our partners, and find himself in a position from which he
cannot retreat; that fear of the cost of battle with entangled interests will create more
oligarchs; that foreign investors will pack up and go. The nightmare is a geopolitically
isolated Greece using the drachma. It must be avoided and we must help Tsipras do so.

BBC - 11 February 2015

Greece to present bailout plans to EU finance ministers






Greece's left-wing government is to present its first ..................... proposals for an

alternative debt plan at an emergency meeting of eurozone finance ministers in
Brussels later. The government wants to ................... 30% of its bailout obligations,
replacing them with a 10-point plan of reforms. But EU ministers have warned that
Greece must abide by existing terms. The EU-IMF bailout for the debt-................
country expires on 28 February and Greece does not want it extended.

Instead the new Athens government is asking for a "bridge agreement" that will enable it
to stay ................. until it can agree a new four-year reform plan with its EU creditors.
Prime Minister Alexis Tsipras's government won a .................... vote on Tuesday, with
the support of 162 deputies in the 300-seat parliament.
The Athens stock exchange then fell by more than 3% ahead of the emergency
Eurogroup meeting, during which Greece's new leaders will .................... their
controversial debt proposals.
Greece's Syriza-led government says the conditions of the 240bn (182bn) bailout sweeping spending cuts and public sector job losses - have ..................... Greece. It
rejects the "troika" team - the EU, International Monetary Fund (IMF) and European
Central Bank (ECB) - overseeing the bailout's implementation.
High stakes
The government's proposal for overhauling its bailout comes in four parts, according to
a finance ministry source widely ............... in Greek media.
Under the first part, Greece would co-operate on 70% of its bailout conditions but wants
to scrap 30% - replacing it with 10 new reforms to be agreed with the Organisation for
Economic Co-operation and Development (OECD). It is unclear what these would be.
The plan also includes bond swaps to reduce Greece's debt ................... and a proposal
to reduce the primary budget surplus target for this year to 1.49% of GDP, rather than
the 3% demanded by its creditors.
But a swift deal with the EU is unlikely. Most finance ministers, including Germany's
Wolfgang Schaeuble, are insisting that Greece must not ................ on its bailout
The Eurogroup ministers will report to Thursday's EU leaders' summit but a deal is not
expected before the finance ministers meet again next Monday.
Greece's left-wing leaders struck a ................... tone on the eve of the key talks with the
EU. Finance Minister Yanis Varoufakis did not rule out clashing with his eurozone
counterparts, saying: "If you are not willing to even contemplate a ................., then you
are not negotiating."
The stakes of the talks are high because of fears that a Greek debt default could push it
out of the euro, triggering turmoil in the EU.
The BBC's Chris Morris in Athens has been told that some elements of the
government's proposals will show continuity with the bailout programme. A source, who
declined to be named, said the government was committed to reducing the debt burden,
but it was considering various ways of doing that, "of which debt swaps is just one". It is
also committed to increasing social spending to deal with Greece's ".................... crisis",
the source said.
Greece's debt currently stands at more than 320bn (237bn) - about 174% of its
economic output (GDP).

Last month's election of an anti-austerity government led by left-wing Prime Minister

Alexis Tsipras has raised fears that Greece could leave the euro.
Greece's Foreign Minister Nikolaos Kotzias is to visit Moscow on Wednesday. Syriza's
election has led to suggestions that Greece could ................. closer ties with Russia,
although Greek officials have downplayed the idea.
The Greek Defence Minister, Panos Kammenos, said Greece might ....................
funding from Russia, China or the US if it failed to reach a new debt agreement with the
Key dates in Greek government's diary
11 February - Eurozone finance ministers due to hold emergency talks to discuss
Greek plans
12 February - EU leaders' summit in Brussels
16 February - Eurogroup meeting due to discuss "state of play" in Greece
28 February - Current programme of loans ends
First quarter of 2015 - Greece's funding needs estimated at 4.3bn by end of
19-20 March - EU leaders' summit
20 July - 3.5bn bonds held by the European Central Bank mature
20 August - 3.2bn bonds held by the European Central Bank mature

BBC - 11 February 2015

Cornered Greeks brace for confrontation

Politics ..................... (become) as unpredictable as the winter weather. Snow
flakes .................... (swirl) around the Greek parliament as MPs debated
and .................... (approve) a government programme that sets this country on a
potential collision course with the rest of the eurozone.
"We cannot go back to the era of bailouts," said Prime Minister Alexis Tsipras, as he
closed the debate in defiant mood. "That would mean the end of popular sovereignty."

But the public dispute over the future of austerity and the hated Greek bailout
programme .................... (get) increasingly ugly. The government dominated by the
radical left Syriza ....................... (put) European noses out of joint.
Greece's creditors "can't negotiate about something new", said the German Finance
Minister Wolfgang Schauble at a G20 meeting in Istanbul. And if the new government in
Athens does not want the final payment from the current bailout programme?
"Then," said Mr Schauble, "it's over."
'Room for manoeuvre'
Everyone in Greece .......................... (watch) closely as the rhetoric hardens, because
they all have something at stake. At a union office in a northern suburb of Athens, a
radio programme was going on air. Former employees of the former state broadcaster,
ERT, who were abruptly fired in 2013, ...................... (still / work) without pay,
determined to talk to the nation. Their makeshift studio is just across the road from their
old headquarters, and Syriza ...................... (promise) to rehire them and reopen ERT.
"If we're building a new country," argued radio host Andreas Papastamatiou, "we have
to [give people] the proper information. But we must [also] find a way to live together as
European countries. Not as the emperor and his subjects."
Opinion polls suggest that a growing number of people like the fact that
Greece .................... (try) to stand up for itself, and ................... (take) its argument to
the rest of the Europe. But they know they will not get everything they want.
Now as eurozone finance ministers prepare to meet for what could be a stormy
emergency session, the Greek government is floating proposals it clearly sees as a
"What we ....................... (propose)," the Minister for International Economic Affairs,
Euclid Tsakalotos, told me, "is that we are given some room for manoeuvre.
We ......................... (present) a fair case - you cannot reform when people are
frightened and uncertain. You need a certain amount of stability first."
'Build on our successes'
One version of the government's plan suggests that 30% of the old bailout programme
should be disbanded, but Syriza ..................... (not / argue) for that figure to be set in
stone. It is determined, though, that a series of new reforms should be introduced to
replace unpopular measures that were part of the bailout agreement. The government is
likely to prioritise 10 new reforms to begin with, and it will focus on issues such as
corruption and tax evasion.
At the same time it will also increase social spending to help the poor, and to tackle
what it calls Greece's humanitarian crisis. Another part of Syriza's plan for a new
approach is to reduce the country's debt burden significantly. Its preferred option is to
swap a significant chunk of debt for bonds linked to future economic growth.
"We think we're being very reasonable," Mr Tsakalotos argued. "We have a mandate
that says that the old programme failed, that we should do something different."

But EU officials say Syriza's proposals are unlikely to be acceptable in their current
form, and further compromise ..................... (need). Greece's creditors in the eurozone,
led by Germany, still want to see a commitment to a reform programme supervised by
It would have to incorporate most of the policies accepted by the former Prime Minister
Antonis Samaras, who remains critical of Syriza.
"I can see you want to build on our successes," Mr Samaras said in the parliamentary
debate, "but I'm afraid you're going to destroy what we achieved. We won't oppose you
on everything, but we won't let you steer the country onto the rocks."
'Only way is up'
An hour's drive west of Athens tugboats pull large cargo ships along a narrow channel
between the sheer limestone walls of the Corinth Canal. There is no room for
manoeuvre - a familiar story for the Greek economy.
But it is not hard to find out why Syriza is determined to negotiate some wiggle room. In
a cafe .................... (overlook) the entrance to the canal, locals described the economy
as a disaster, and their own prospects as bleak.
The cafe owner, Vassiliki Kourtaki, said she was well aware of the increasingly bitter
dispute between Greece and some of its Eurozone partners. But the sense of looming
confrontation no longer scared her.
"Scary is what we have now," Vassiliki said. "Nothing is going to go worse, every day is
the worst day. The government has to do something now, because we need a lot of
help. And when you are down, the only way is up."
That is where Syriza believes its mandate comes from. And the tone of the prime
minister's speech suggests that he is willing to take his country right to the brink if
The recent history of the European Union suggests that compromise is still on the
cards. But if there is no deal by the end of the month the money will run out. And there
is a clear and present danger of failure, with consequences impossible to predict. -

Everyone united now! Criticism later

The ....................... (VIABLE) of Alexis Tsipras government depends to a large extend if not
exclusively on the final outcome of the crucial national negotiation with our international lenders. If
the results are positive for the country, the new government coalition will achieve ......................
(LONG). If not, there are chances the scenario of the left parenthesis on which New Democracy
has invested politically without hiding it, will be confirmed.
At any rate, and apart from any party politics and leadership plans, what is at stake in the next few
weeks is not the political balances within the country, but the present and future of the Greek
economy and, therefore, of Greek society. What is at stake, in other words, is whether the country
will turn a page, leaving behind it for good a tough six-year period of recession, unemployment,

business closures and ........................ (IMPOVERISH), or if the risk of bankruptcy will reappear on
our national horizon
Those in the current political system and especially in the parties that rules Greece in the last 40
years think that, if the negotiation fails and the country enters a new period of great difficulties, they
will benefit and will have the opportunity to claim power anew, they got another thing coming! The
first ones to pay for such a negative outcome would be the ones who are responsible for the
countrys political, ethical and .................... (ECONOMY) bankruptcy. In other words, those who
governed from 1974 until today. Syriza and its government coalition partner will be judged with much
more leniency as, even if they fail, they will credited with an honest effort to get the country out of the
.................... (MEMORANDUM) and face the consequences of the humanitarian crisis plaguing
Greek society. Besides, the previous government had the .................. (HISTORY) opportunity to
negotiate in 2012 and it kicked it! It had a clear mandate to do it! And the most important thing is
that back then, Germany and German Chancellor Angela Merkel personally was troubled by the
consequences of a potential Grexit. And she said it ............... (PUBLIC)! But former PM Samaras
and Evangelos Venizelos decided, for reasons only they know, not to use the weapon they had
Today, Tsipras government appears determined to persist in its demands for a brave debt reduction
and an end to austerity. However, so far it seems to be moving without a plan. It asks for a debt relief
but it has yet to present its own complete proposal for ................ (GROW) and reforms, which will
convince our partners for the countrys positive prospects and dispel any concerns. The government
seems unready. Before the elections, we were all asking Syriza and its officials if they have a Plan B
in case Berlin says no to Greek demands. None of us asked on its main plan, Plan A! And of
course, when you enter a tough negotiation knowing your lender is very powerful and your coffers
are almost empty, you ought to be excellently prepared. Will the newly-elected Greek government
manage to plan a new roadmap that will replace the memorandum until the next Eurogroup, or at
least until February 28, when the extension of the current programme expires? Or will it be drawn,
once again, by our lenders?
The good thing is that, despite the .............. (AMATEUR) and the lack of serious preparations, the
excessive formalities, the high tones and the obsession with pointless symbolisms, the negotiation
has started. The other side sat at the table ............... (ESSENCE) for the first time after the events at
Kastelorizo Island and accepts to discuss a different proposal for the next day. Lets prepare it then,
even now, at the last minute, with seriousness and responsibility. And lets lower the tone, so that we
can defuse the war-like atmosphere of the last few days. If, for example, the government asks for a
brief extension of 2-3 months to secure enough time to negotiate, it doesnt mean it is quitting its
political stance and aims. The obsession with this kind of inflexibilities can prove disastrous. Lets
secure .............. (LIQUID) first and the smooth functioning of the state and our economy and then
negotiate with our partners based on specific and calculated proposals. And most importantly, lets
do it ALL TOGETHER! United around the new prime minister and the new government, either we
voted them or not, for the sake of the national cause. The time of battle is not a time for criticism.
This can take place later. And at any rate, those who yesterday considered Syrizas opposition unconstructive
and sterile should not imitate it today, at the most crucial moment for the countrys future