Athens Digest 25.01.2018

• Greece, FYROM leaders vow to end hostile ties

• Talks with Lagarde test consensus on debt relief

• Greek auctions are a must, says Draghi

• Protesting farmers back on motorways

# Prime Minister Alexis Tsipras vowed to resolve historic disputes with Balkan foe and neighbour, the Former Yugoslav Republic of Macedonia (FYROM), at the first meeting between the leaders of the two countries in over seven years. Alexis Tsipras met with Prime Minister Zoran Zaev for more than two hours in Davos, on the sidelines of the World Economic Forum. He said he aimed to end objections to FYROM’s membership of NATO as soon as the name dispute is revolved between the two Balkan neighbors.The two prime ministers promised to implement a number of confidence-building measures. Zaev promised that his government would rename Alexander the Great international airport in Skopje.
The meeting went ahead despite protests in Greece against a possible compromise.
Conservative opposition leader Kyriakos Mitsotakis told senior members of his New Democracy party yesterday that a compromise should not be fully accepted unless it was part of a constitutional change in FYROM. New Democracy repeated the demand in a statement issued after the meeting, declaring Tsipras “unable to negotiate on the basis of the national interest.”

# Prime Minister Tsipras now moves on to his second major meeting in Switzerland. At talks later today with IMF managing director Christine Lagarde, they will examine the question of how lenders can act to make Greece’s massive national debt more sustainable. Greek officials are hoping that the still-unresolved dispute between the IMF and eurozone lenders on Greek debt relief could be fixed if momentum builds for the French-backed idea to link debt repayment levels to annual growth rates. The “French mechanism” is not the only debt relief tool on the table. Debt relief measures upon conditionality are also being considered.
Lagarde, speaking in Davos yesterday, indicated that Greece still had more reforms ahead to protect its pension system, in remarks that swiftly made headlines in Athens.
“In the case of Greece, the pensions were totally out of line with (incomes),” she said. “What matters is how much of a safety net do you keep and at which threshold do you actually protect pensioners… that was vastly misunderstood, if I may say, when the Greek programmes were put in place. When those changes are not made, the pension mechanisms just go into the wall.”
The Tsipras government would welcome programme participation by the IMF as a boost to its debt relief ambitions and as a strong signal to markets. But it’s also wary of IMF pressure to further lower the Greek tax threshold earlier, in 2019 instead of 2020, and -as already legislated- cut pensions. Both issues will remain on the table until May when a final decision has to be made. The Greek government is seeking for a better deal for pension cuts.

# Greece must speed up its commitment to auctioning properties in the mortgage default to help reduce the huge volume of non-performing loans, European Central Bank President Mario Draghi has written in a letter.
Draghi responded in the letter, made public in Greek translation, to a question from left-wing MEP Nikolaos Chountis on protection for Greeks at risk of losing their homes after years of financial crisis. “An effective auctioning system is an important part of the work towards reducing non-performing exposures,” Draghi wrote. “The progress made by the authorities in recent weeks is welcome. However, further efforts are needed to ensure full geographical coverage of Greece.”

# Protesting farming associations say they will push ahead with plans to step up motorway protests across Greece unless a series of demands are addressed by the government. Thousands of tractors are already lined up along national roads in central and northern Greece, with more being added by the day. Many of the demands are linked to bailout-related tax increases and benefit cuts, imposed over the last eight years. Farmers frequently protest early in the new year, escalating their action to highway blockades as a means of putting pressure on the government.
Protest organisers said they are planning to stage a tractor protest on the streets of central Thessaloniki next Thursday.

On our Radar: “Rules are rules”. Tsipras quotes Schaeuble
Speaking at a panel discussion in Davos, Prime Minister Tsipras quoted former German finance minister Wolfgang Schaeuble to make a point about immigration. Speaking in English, Tsipras said: “When I was in the difficulties of the financial crisis, Mr Schaeuble told to everybody that rules are rules… So this is something that my friend, my very close friend Viktor Orban (the Hungarian prime minister) has to understand. Rules are rules.” The EU, Tsipras said, had to make “brave decisions” and not allow member states to dodge resettlement quotas for migrants are refugees.
Tsipras was joined in the discussion by Italian Prime Minister Paolo Gentiloni, Yemi Osinbajo, the vice president of Nigeria, and William Lacy Swing, head of the International Organization for Migration.