Athens Digest 31.07.2019

NOTE: During August, the Athens Digest will be distributed every Monday with breaking updates as required before returning to a daily edition in September. Have a great summer break.

• Economic sentiment sees post-election surge

• Mitsotakis: Drilling row will hurt Turkey

• Hellenikon amendment added to tax bill before vote

• Brakes on reforms? Transport Minister says the taxi drivers’ profession will remain closed

# Economic sentiment in Greece saw a strong rise in July to 105.3 points, from 101.0 the previous month, despite a drop in the euro area. The EU Commission’s monthly survey showed the index for the 19-member euro area at 102.7 points on weak expectations for industry, services, and retail across the shared currency bloc. But the Greek improvement came with a clear general election result and was reflected in all sectors: Industry at 1.7 (from -0.6 in June), services at  22.1 (from 7.9), consumer confidence at  -20.2 (from-27.8), retail trade at 13.7 (from 9.2), and construction at -48.1 (from -55.5).

# The prime minister ended a trip to Cyprus with a renewed warning to Turkey that it would face further isolation from the European Union over its role in the East Mediterranean drilling dispute. “Member states of the EU are on our side and they have sent a clear message that violations of international law and illegal drilling will come at a cost,” Kyriakos Mitsotakis said. In Athens, Foreign Minister Nikos Dendias hosted a meeting with his Egyptian counterpart Sameh Shoukry and accused Turkey of “putting the region’s security at risk” with its actions. Turkey has so far ignored warnings from the EU over its drilling operations west of Cyprus, despite punitive measures agreed this month.

# Cyprus’ government, meanwhile, has granted France’s Total and Italy’s ENI rights for exploratory drilling in block 7 of the island’s exclusive economic zone in an equal partnership. Total was also partnered with ENI in four other blocks but received a smaller stake. Cypriot Energy Minister Yiorgos Lakkotrypis said the decisions were made for financial as well as “geopolitical” reasons.

# The government added a late amendment to a tax bill voted by Parliament last night to clarify terms for construction the Hellenikon coastal redevelopment plan. Adonis Georgiadis, the development minister, told parliament that the amendment was required to avoid pending joint ministerial decisions being unnecessarily exposed to potential legal challenges. The next bills due to be put to the vote in parliament next week are for administrative reforms and plans to scrap a police ban on university campuses.

# Greece’s new government has set an ambitious structural reform agenda, aimed at accelerating economic recovery. But Transport Minister Costas Karamanlis says the taxi drivers’ profession will essentially remain closed. “When you open up a profession that has to occur in response to demand,” Karamalis claimed in an interview with Skai radio. The minister favoured maintaining a monopoly on the service by taxis which _only them_ may collaborate with ride-hailing online platforms.

On our Radar: Crisis over? Stournaras: “Definitely not”
Bank of Greece Governor Yannis Stournaras has told Fortune magazine in an interview that Greece’s economy is still “definitely not” out of danger and still “desperately need(s) foreign direct investment.” Referring to the difficulties left by the crisis, he said: “It is much better. Competitiveness has improved, the banking system is capitalised. Of course, there is the legacy of the crisis, which is still high debt as a percentage of GDP. There is a brain drain and an investment gap. These problems will stay for a number of years. We have managed to solve the flow problems, which is deficits. But the stock problems, the high debts, non-performing loans, they are more difficult to tackle.”