Athens Digest 17.01.2018

• Today’s NY meeting may give fresh impetus to Greece – FYROM negotiations over name dispute

• Work on prior actions to be accelerated after approval of omnibus bill

• Finance Ministry aiming to raise EUR9 billion from bond sales until August

• Keeping ECB’s waiver remains a priority

• Dispute with Fraport sent to arbitration by Ministry of Infrastructure

• Court rules that a Turkish officer’s detention is legal

UN Special Envoy Matthew Nimetz and representatives of Greece and the Former Yugoslav Republic of Macedonia (FYROM) are meeting today in New York, in an attempt to activate a round of intense negotiations between the two countries in order to resolve FYROM’s name dispute. Nimetz will put forward proposals that the two countries will then discuss at the level of foreign ministers. If there is progress in the talks, then the two prime ministers may meet next week at the World Economic Forum in Davos. Meanwhile, Greek defence Minister Panos Kammenos tweeted a 1937 map of Yugoslavia depicting the area of FYROM as ‘Vardarska’, a term that Kammenos has said he would accept for FYROM’s future name.

Despite the approval of the omnibus bill by the parliament there are still crucial prior actions to be implemented for the conclusion of the 3rd review of the Greek ESM programme. Recalibration of pension expenditure remains a key prior action along with others related to tax administration and the energy and health sectors. Since Monday, the Greek side has been in contact with the institutions for the drafting of the Compliance Report, which will be approved by the EWG probably next Monday morning, just ahead of the Eurogroup meeting. Yesterday, the Hellenic Republic Asset Development Fund (HRADF) announced its Asset Development Plan, which was one of the remaining prior actions.

Greek MinFin plans a series of new bonds issues in order to raise EUR9 billion until August, starting in the coming weeks with a 7-year bond sale that will raise approximately EUR2 billion. The country expects to get an additional EUR9 billion from the current ESM programme, to build up the cash buffer that will cover debt repayments in the post bailout period, till the end of 2019. The need for a new supervision model after the conclusion of the programme is starting to sink in among top government officials after clear messages by the European creditors. It should be noted that, lately, government officials as well as the PM himself have been avoiding the use of the term “clean exit”. New Democracy leader Kyriakos Mitsotakis said yesterday that “what the government has agreed for the post-programme period certainly does not look like a clean exit”.

Bundesbank president Jens Weidmann’s meeting on Monday with representatives of Greek banks and businesses revived the scenario of an ESM Greek precautionary line (ECCL or PCCL) after the end of the country’s bailout programme though it is not the most probable one. The creation of a “hybrid program” that would contain reforms tied to limited debt relief, and could also secure the “waiver”, is gaining traction.
At the same time, Bank of Greece governor Yiannis Stournaras stressed once again that the primary surplus target until 2022 should be reduced from 3,5% of the GDP to a figure closer to 2%. Until now, this proposal has been strongly rejected by the country’s creditors.

Greek Ministry of Infrastructure applied for arbitration at the International Court of Arbitration of the International Chamber of Commerce, over its dispute with Fraport. The German group, which owns 14 Greek airports, had claimed that the condition of the airports’ facilities was worse than originally estimated by the concession agreement. A decision by an arbitration body awarded the company a compensation of EUR27.5 million. Commentators claim that the Ministry is trying to buy time and delay paying the company, as no decision is expected before the end of 2018.

An Athens administrative appeals court ruled that the detention by the Greek police authorities of a Turkish military officer, who had been granted asylum, is legal. Suleyman Ozkaynakci is one of the 8 Turkish servicemen who fled to Greece following the failed coup attempt in Turkey. The Greek government appealed against the decision to grant him asylum and his asylum status was temporarily suspended. The officer’s lawyers proposed that he should be held at a private residence under police surveillance, a proposal that was dismissed by the court. According to yesterday’s decision, the status of the officer remains “that of an asylum applicant”.

On our radar: Defence minister Panos Kammenos’ tactic
By insisting on not accepting the inclusion of the term ‘Macedonia’ in FYROM’s name, defence minister and ANEL leader Panos Kammenos could possibly have the chance to improve his party’s performance in the polls. According to the most recent ones, the junior government coalition party of ANEL remains below the threshold of 3% that a party must exceed in order to secure parliamentary representation. In any case, most analysts underline that the Syriza – ANEL government majority is secure.