Athens Digest 08.02.2018

• Athens relieved by German coalition deal

• Moscovici seeks post-bailout assurances in Athens

• Tsipras’ rivals call pharma scandal a conspiracy

• Property campaigners defy police, tougher laws

• European Commission approves capacity remuneration mechanisms in Greece

# Germany’s coalition deal provided a pleasant surprise for Greece. With Social Democrat Olaf Scholz lined up to replace Wolfgang Schaeuble at the Finance Ministry, Athens is hoping that it may persuade European lenders to speed up talks on debt relief, with a possible deal by the summer.
The 59-year-old Hamburg mayor is viewed in Athens as a pragmatist who might soften, but not fundamentally change, Germany’s hardline view on fiscal discipline in the eurozone. Chancellor Angela Merkel had to give up key cabinet posts to clinch the grand coalition deal, but conservative Horst Seehofer got the nod for the Interior Ministry, potentially complicating Greek efforts to try and revitalize the European Union’s relocation policy.

# Debt relief and post-bailout surveillance are at the centre of today’s meetings in Athens between government leaders and EU Finance Commissioner Pierre Moscovici. European lenders are seeking assurances that Greece will stick to reforms as it prepares to end eight years of bailouts. Moscovici will be joined in Athens by Declan Costello, the EU Commission mission chief in Greece, and is planning meetings with Prime Minister Alexis Tsipras, Finance Minister Euclid Tsakalotos, opposition party leaders, and industry representatives. He will also address an Economist’s business gala and a committee of the Greek Parliament. Moscovici yesterday announced country-by-country Commission forecasts for growth, with Greece set to expand by 2.5 percent in 2018 and 2019. “I believe that after the end of the programme (Greece) could gradually become a ΄normal country΄ again, with full rights and obligations,” he said.

# EU Home Affairs Commissioner Dimitris Avramopoulos issued a strongly-worded denial of allegations against him regarding the Novartis bribery investigation. The former health minister described the allegations against him and other senior politicians as being part of an “unprecedented conspiracy.”
After reviewing case-files against him that were sent to parliament, Avramopoulos said in a statement: “The false witnesses, their instigators, and their co-perpetrators will answer (in court) for the serious offences they have committed.”
In another day of political drama, leaked portions of the investigations were published in the news media, naming a protected witness and adding details of how the alleged pay-offs were made. Government officials stayed on the attack. Deputy health minister, Pavlos Polakis, posted a mock FBI identity card on Facebook showing him posing as a special agent after it was revealed that the U.S. agency has assisted in the part of the Novartis investigation.

# Conservative opposition leader Kyriakos Mitsotakis accused Prime Minister Tsipras of instigating false allegations. “Mr Tsipras has shown himself to be dangerous, not only for the economy and national issues but also for democratic rule and institutional independence,” he said in a videotaped statement. “The rule of law always prevails over governments operating in the shadows.”

# Demonstrators in Thessaloniki broke through a police cordon yesterday to take their protest against online property foreclosures to the offices of the city’s notary public association. The protesters are trying to disrupt planned online auctions of properties in mortgage default _ in an issue closely watched by Greece’s rescue creditors. The Thessaloniki association has extended a strike, halting online auctions in the country’s second-largest city until March 4. Yesterday’s protest went ahead despite tougher policing to guard the sites where online auctions are managed and defied the threat of tougher penalties recently introduced against the demonstrators.

# The European Commission approved capacity remuneration mechanisms (CRMs) in six EU member states, including Greece, in order to improve security of electricity supply and eliminate distortions of competition in the internal electricity market through cross-border participation. In the case of Greece, the Commission authorized a capacity mechanism promoting demand response, in the context of which customers are paid to reduce electricity consumption in times of supply shortages. In particular, the already existing interruptibility scheme, approved in 2014 for a period of three years, was amended and prolonged for two more years, as it is considered to have proven its value in managing the tight electricity situation during cold spells in December 2016 and January 2017. Under the scheme, whose compatibility with the EU State Aid rules has been already confirmed by the Commission, the Greek network operator, ADMIE, will organize tenders every three months to procure a maximum of 1,600 megawatts of interruptible capacity. Still, capacity mechanisms are believed to be rather problematic, since they facilitate subsidization for gas or coal-fired power plants (most notably in the cases of Poland and Italy), putting their compatibility with EU’s climate goals under question.

On our radar: Taking the high road
Greece has added a surprise ingredient to its recovery formula: cannabis.
The government is seeking swift parliamentary approval to legalize growth medical marijuana, insisting that investors are lining up to to exploit the country’s ideal growing conditions. Ministers involved presented the plan yesterday with a draft bill in parliament set for approval this month. The venture, they said, could draw investment worth EUR1.5 billion over three years, making it a potent source of growth and a badly-needed boost for depressed parts of the country.
Medical cannabis was formally legalized this year but legal measures to allow domestic growth and procession lagged behind. Growers would have to fulfill several criteria including the lack of any prior drug-related convictions.