Athens Digest 13.07.2018

• Island-VAT row holds up EUR 15bn payout

• Tsipras-Erdogan meeting focused on Aegean tension, migration

• Russians expelled to “defend sovereignty”

• OTE bond success seen as good omen for market return

• Opposition renews demand for expat vote


# Athens has been instructed to fill a EUR 28 million shortfall in savings commitments to lenders. During yesterday’s Eurogroup meeting, Germany held up a major tranche payout to Athens. The government created the savings gap by extending a VAT discount to Lesvos and other islands affected by the refugee crisis. The disbursement is now likely in early August. Moreover, ECB Executive Board member Benoit Coeure siad that a waiver allowing Greek banks to have access to cheaper financing will be lifted once the ESM programme expires.
Meanwhile, in its interim forecast, the European Commission stuck to its positive outlook for Greece, forecasting 1.9 percent growth in 2018 and 2.3 percent next year.

# In Brussels, PM Tsipras held a two-hour meeting with Turkish President Recep Tayyip Erdogan and again requested the release of two Greek border guards detained since early March. During their “not easy” meeting, as Tsipras said, the two leaders agreed to renew efforts to reduce tension in the Aegean Sea and cooperate more closely on implementing the 2016 EU-Turkey declaration on preventing the flow of migrants and refugees into the European Union.

# Greek authorities ordered the expulsion of two Russian diplomats after obtaining “hard evidence” of payments made for protests against the Macedonia-name deal. A senior government official told the Associated Press that the evidence prompted Athens’ decision to expel the two diplomats and ban to others from entering the country. The alleged scheme was aimed at blocking the name deal and FYROM’s accession to NATO. U.S. State Department spokeswoman Heather Nauert maintained that Greece had responded to “destabilizing behavior” by the Russian government.

# As Greece mulls its return-to-market timeline, investors roared their approval at a closely-watched corporate bond auction. The Hellenic Telecommunications Organization, OTE, saw its EUR 400 million five times oversubscribed. The four-year bond sold at a rate of 2.375 percent, adding to the good news surrounding the economy.

# MPs from the opposition New Democracy have submitted a private members bill seeking to extend the right to vote to Greeks living abroad. The conservatives have argued that the government is effectively putting the brakes on the idea out of fear of weak overseas support _ a claim the government denies. MPs who signed the draft legislation said they were acting out of a “national obligation” to include citizens living abroad in the election process.



On our Radar: Valletta vs Beneluxa
Greek Health Minister Andreas Xanthos says members of a southern European alliance have made progress in their aim to create a common negotiating bloc to reduce the cost of public expenditure on medicines and boost availability. Members of the Valletta Declaration group met in Athens to discuss common approaches toward joint negotiation. Their ranks were, however, reduced from 10 to nine members after a representative from Ireland said the country was switching to the northern Beneluxa alliance.