Athens Digest 20.08.2018 (weekly brief)

• Grand Finale: Bailout exit lines up ‘difficult’ debate on pensions

• Regling holds line on reforms

• Greece, Germany reach return deal

• Diplomats: Soldiers’ release signals Turkey shift

• Lira slide causes export jitters

• Tourism industry rattled by ferry workers’ strike

# As the Greek bailout era comes to an official end today, the government is promising gradual policy changes, and has conceded that key decisions on pensions will be made in October. Last Friday, Giorgos Tsipras, cousin of the prime minister and director of his office’s department of economic affairs, said the issue of pre-legislated pension cuts in 2019 remains “difficult” and that decisions will have to be made when finalizing the 2019 Budget. Central bank governor Yannis Stournaras, meanwhile, renewed cautionary advice to the government to maintain its reform commitments and orientation or else risk an adverse reaction from markets. We still have “a long way to go,” he told the Athens daily Kathimerini.

# On the occasion of the end of the Greek programme, ESM Managing Director Klaus Regling said: “We want Greece to be another success story, to be prosperous and a country trusted by investors. This can happen, provided Greece builds upon the progress achieved by continuing the reforms launched under the ESM programme.” Moreover, in an interview with daily ‘Ethnos, when asked if pension cuts could be reversed, he answered that all the agreements which were reached before the end of the ESM programme will be implemented. “(Reversing pension cuts) was not raised by the Greek government in the last Eurogroup meeting, so there is no reason to speculate about that” he added. Meanwhile, in a commentary published by the Kathimerini newspaper, the ESM managing director highlighted that the reversal of reforms by the Syriza-led government in the first half of 2015 cost Greece between EUR 86 to 200 bln.

# Greece and Germany have reached agreement on the terms of sending asylum seekers back, as the German government continues to seek deals with southern EU states. Under the agreement with Athens, refugees and migrants who have applied for asylum in Greece but traveled onto Germany will be returned. The arrangement has eased Greek concerns that the country could be faced with large-scale send backs, and comes in the wake of a spat within the German government over migration policy.

# Greek officials say the release by Turkey of two Greek soldiers who strayed over border during a patrol and had remained for 167 days in pre-trial custody could signal a shift in policy by President Recep Tayyip Erdogan towards the European Union. The EU and U.S. State Department welcomed the homecoming of the two soldiers.

# Greek exporters are increasingly concerned the financial crisis battering the Turkish lira could hit bilateral trade worth an annual EUR 2.8 billion. Greece has seen a surge in exports, up 24.8 percent on the year in June. Turkey was Greece’s third most valuable export market last year, behind Italy and Germany. Fourth and fifth-placed Cyprus and Bulgaria are also seen as being sensitive to geopolitical developments in the region, heightening business concerns. So-called third country exports (outside the EU) are seen as a key outlet for recovering Greek companies.

# Tourism industry organisations have urged the government to intervene to head off a dispute with ferry workers, whose powerful union has called a strike for September 3. The Panhellenic Seamen’s Federation, PNO, called the strike and is threatening follows-on action as it seeks to have working rights and pay scales fully reinstated to pre-bailout levels after the end of the rescue programme. The strike signalled a potential broader confrontation between the government and unions over bailout-era curtailments labour rights. The Greek Tourism Confederation, or SETE, said September is a key month for the industry, with more than 3 million visitors expected.

On our radar: Anarchist protest over Austrian labour law
Anarchists from the Athens-based group Rubicon entered the Austrian Embassy building in Athens last Friday to protest plans by the country’s right-wing government to extend daily working hours to up to 12 hours. A video posted by the group online showed four male protesters and one woman entering the building and scattering protest fliers in the lobby.