Athens Digest 24.10.2018

• Former finance minister jailed on corruption allegations

• Fiscal space not enough to completely scrap pension cuts says Regling

• Market return planned after Italy turmoil

• New extension sought for lignite plant bids

# Former finance minister Yannos Papantoniou has been ordered to serve pre-trial detention over corruption allegations that tarnished past Socialists governments. Papantoniou, 69, was taken into custody along with his wife Stavroula Kourakou after an appearance at a prosecutor’s office that lasted more than 15 hours. Papantoniou served as minister of finance and national economy for seven years until 2001 and then moved to the Ministry of Defence and was accused of receiving bribes for a naval order. He is due to stand trial for alleged money laundering, an offense that does not carry a statute of limitation.

# Sobering the mood in Athens, ESM managing director Klaus Regling said Greece is not ready to abandon planned pension cuts completely. At a briefing with reporters in Luxembourg, at the ESM headquarters, Regling made the remarks that contrasted with more optimistic statements made recently by a number of senior European officials. “No decision has been taken…(and) there are different possibilities,” he said. “There will be fiscal space in Greece this year … (but) it’s not big enough to finance completely the scrapping of pension cuts that were agreed earlier.” Greek officials have blamed the IMF for the pre-legislated measures, insisting that European lenders favour a softer line on the measures that would be imposed in an election year.

# Greece is eyeing a return to markets after the crisis in Italy blows over, Finance Minister Euclid Tsakalotos has told a Japanese newspaper. Tsakalotos told The Nikkei in an interview that Greece could hold off on market access for 2-2.5 years thanks to the cash buffer from bailout lenders. “We will wait for the turmoil to recede after what’s been caused in the markets by the situation in Italy and Turkey,” he said. Italy’s ongoing budget standoff with the EU and the ongoing financial crisis in Turkey have halted a decline in Greek bond yields and seen rates edged back up.

# The Public Power Corporation is seeking a fresh extension from EU authorities for final bids on the sale of coal-fired power plants at Meliti and Megalopolis, according to local news reports. An October deadline has already been pushed to early November, and the additional extension would take the date to December 7, the reports said. The extra time would give bidders an opportunity to consider the effects of a new electricity pricing policy for consumers.

On our Radar: Trouble at Sea
Greece and Turkey have exchanged sharply-worded diplomatic statements over revelations that Athens is considering a possible extension of its territorial waters in a roll-out policy that could see the change in limit from six to 12 miles carried out in stages. Turkey’s Foreign Ministry said the Greek Ambassador in Ankara had been summoned to be briefed on the government’s position, and added in a statement: “We cannot tolerate any step that is not based on mutual consent in the Aegean Sea where two countries have opposite coasts.” It went on to make reference to a 1995 Turkish Parliament resolution maintaining that all means necessary could be used against a Greek extension. In Athens, the Greek Foreign Ministry responded: “Extending territorial waters constitutes a legal and inalienable sovereign right of Greece … Arbitrary interpretations of international law and threats of violence on the part of Turkey do not contribute to good neighbourly relations.”