Athens Digest 31.01.2018

• UN envoy says time is right for compromise

• Church endorses Macedonia rally as public opposes deal

• New Democracy maintains strong lead over Syriza

• Bank recovery will be slow, says S&P

• DIW’s Fratzscher sees debt relief in 2018

• Industry group says Greece investors still wary


# Matthew Nimetz, the UN envoy for the Macedonia issue, began meetings in the region with talks in Athens, insisting that the conditions were finally right for a compromise to be reached. “I think we should seize the momentum. Slowing things down doesn’t make any sense,” Nimetz said after meeting Foreign Minister Nikos Kotzias. Talking to the press, Kotzias said that “the sooner we reach an agreement the better”, adding though that there is no time frame.
“The briefing we had unfortunately does not diminish our concerns” said foreign affairs spokesman for the conservative New Democracy party, George Koumoutsakos, after his meeting with the UN envoy.
At the same time, a poll by ‘Pulse’ published last night for the news channel ‘Action 24’ found that 59 percent oppose a so-called composite-name solution for FYROM. Only 35 percent favored the deal.

# Greece’s Orthodox Church leader has officially endorsed Sunday’s rally in opposition to a compromise on the Macedonia name issue. Abandoning an earlier position, church officials announced the decision after Archbishop Ieronymos met with organisers of the rally, which is expected to draw huge crowds.

# The poll by Pulse gave Kyriakos Mitsotakis’ New Democracy a 11-point lead over Prime Minister Alexis Tsipras’ left-wing Syriza Party. The survey said support for the conservatives has slightly increased to 32 percent (from 31.5 three weeks ago), with Syriza at 21.5 (from 21). Movement for Change, an alliance formed by PASOK polled 9 percent (from 8.5), pulling ahead of the extreme right Golden Dawn 8.5 percent (from 7.5).

The ratings agency S&P says Greek banks have started to recover but the effort is still far over. “We expect the Greek banks to continue on this gradual upward path, but in our view, meaningful improvements are still a long way off,” said the agency’s credit analyst Regina Argenio. She said main weakness remain: funding structure imbalances, a weak liquidity profile, poor asset quality, and low profitability prospects.” She added: “About 51.6 percent of banks’ exposures were non-performing as of September 2017, and we think they will struggle to achieve a material reduction in the absence of more supportive conditions.”

Just don’t call it a haircut: The head of the German Institute for Economic Research says Greece is highly likely to be granted a major debt relief deal this year, describing the agreement as equivalent to a haircut on bailout debt.
Marcel Fratzscher made the remarks in a two-hour online interview with the German site ‘finanzen.net’. “The debt will be cut this year. It won’t be called a haircut,” he said. “They will give it a fancy name, something like ‘restructuring.’ Eventually, there will be reduced interest rates, or extended repayment times. That is in fact exactly the same as a haircut, in essence. But it will be called something else.”

The Brussels-based association ‘Business Europe’ has warned that Greece-minded investors remain wary despite the country’s emerging recovery.
Gerhard Koch, head of the group’s Industrial Affairs Committee told a conference in Athens that three key factors were still hurting investment: Steep lending rates for businesses, non-wage costs, and the price of electricity.
The conference was hosted by the Greek Federation of Enterprises which is promoting the idea of a national plan to boost the industrial share of GDP from 8.6 percent in 2016 to 12 percent in 2020. The federation said it was seeking cross-party support for the proposed plan, arguing that a boost in industry and the jobs it creates could sustain a Greek recovery.



On our radar: Tractor protest
Protesting agricultural associations say they will go ahead with plans to take their tractors to Greece’s second largest city Thessaloniki, on Thursday, describing the demonstration as a warning to the government. Protests are also planned in the northern city on Saturday, and farming associations have warned they will launch a campaign of motorway blockades in February. They are seeking changes in taxation related to Greece’s bailout commitments while government highlights that farmers follow much better taxation framework than other tax payers.
Thursday’s protest is planned to coincide with the start of the annual Agrotica farming trade fair. Highlights of this year’s four-day event are expected to include unmanned farming vehicles.