Athens Digest 07.01.2019

Early this morning (04.00 local time), members of the anarchist group Rubicon staged an attack at the US embassy building in Athens, splashing paint on the entrance of the parking area. Eight arrests were reported.

• Prespa agreement vote: “Majority is secure” says government spokesperson

• Kammenos clash rattles government

• Energy deadlines in doubt ahead of surveillance test

• George Pagoulatos: Crucial challenges in election year 2019

# Greek parliament’s ratification of Prespa agreement has drawn subtle international backing, given the split on the issue within the coalition government. German Chancellor Angela Merkel will travel to Athens on Thursday, with officials in Berlin keeping the topic off the official agenda. The government will need a handful of votes from the opposition and independents for the deal to pass. Dimitris Tzanakopoulos, the government spokesman, again insisted that “majority is secure,” adding that the government will also fulfill its pledge to raise the minimum wage early in the new year.

# The government’s survival hinges on a pledge by junior coalition partner Panos Kammenos that he will continue to support PM Tsipras after he quits as defence minister and pulls out of the coalition when the Macedonia deal is submitted for ratification. But that goodwill pact is being severely tested by a flare-up in rivalry between Kammenos and the former foreign minister, Kotzias taunted the defence minister, insisting that he did not have the full backing of his own Independent; so, he has no option than continue supporting Tsipras’ government. Kammenos fired back an angry tweet calling his former cabinet colleague a “sell-out.” He also called two emergency party meetings for Wednesday.

# Those who argued that Greece’s energy-sector privatisation timeline was too ambitious have been proven right. Ahead of a new inspection under the enhanced surveillance programme (Jan. 21-25), three major deals are reportedly facing repeated delays. The latest deadline for binding bids on three coal-fired plants expires today after Athens got the nod from the EU Commission to push the process back. The privatisation process for refiner Hellenic Petroleum and natural gas firm DEPA have also been fraught with difficulties and delays.

On our Radar: Tough Resolutions for 2019
In election year 2019, Greece faces some crucial challenges, respected economist George Pagoulatos told Athens Digest:
“In the short term, it’s imperative to sustain policy continuity and avoid backtracking. The government needs to deliver everything required for a successful Q1 review under the enhanced surveillance framework. That means demonstrating commitment to implementing pending reforms, including privatizations, meritocratic selection of public administration staff, and energy liberalization.

It’s important in the medium term to support export growth and upgrade Greece’s ability to attract FDI. That will be challenging with Europe’s decelerating economy.
Shoring up the banking system to restore its ability to finance the economy is of the highest priority. An asset protection scheme to deal with the banks’ non-performing exposures must be implemented rapidly, along proposals submitted by the government/HFSF and the Bank of Greece.
Another challenging issue that must be addressed is the fiscal impact of Supreme Court decisions reversing pension and public sector wage cuts. These threaten to derail the country’s fiscal path. Though existing liquidity is sufficient, the government in 2019 will have to demonstrate its ability to access the markets. That would also to counter negative speculation which carries the risk of creating negative, self-fulfilling prophecies.”

George Pagoulatos, Professor at the Athens University of Economics & Business and Visiting Professor at the College of Europe, was Director of Strategy and senior adviser of two non-political prime ministers in 2011-12.