[Indicative templates] Athens Digest 20.03.2023

– Clock runs out on pre-Easter poll, impact of rail disaster unclear

– Minimum wage raised to EUR 780, in third consecutive increase

– Moody’s improves Greece outlook but holds rating at Ba3

– Greece preparing for next round of RRF funding requests, says minister

– U.S. State Department backs sale of amphibious vehicles to Greece

– Intelligence agency reveals spy “Irina S.” operated under deep cover

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Plans for a general election before Easter were definitively shelved this week, with the constitutional time limit no longer possible, as the impact of the rail disaster on Greek voters remains uncertain. A Pulse opinion poll for Skai television gave New Democracy a four-point lead ‒ from seven points in January ‒ over Syriza. The survey results were: New Democracy at 30 percent and Syriza at 26 percent, followed by Pasok at 10 percent, KKE at 6 percent, Hellenic Solution with 4 percent, and Mera25 with 3.5 percent. The level of undecided voters was at 13 percent. With the government losing support to small parties and not to the main opposition, the shift in political sentiment is still unclear. Opinion polls conducted closer to the February 28 rail disaster showed the gap between 2.9 and 7 percent.

Greece has raised the minimum wage to EUR 780 from EUR 713, effective on April 1, in the third consecutive increase introduced by the government. Prime Minister Mitsotakis announced the measure during a televised Cabinet meeting, noting that the increase would also raise unemployment pay and other benefits and help households better cope with the cost-of-living crisis. “I have no illusions: We know that our country still has low wages, which are being squeezed even harder by inflation,” he said. Calculated as an average over 12 months, the new gross minimum monthly pay is going up to EUR 910, and for the first time exceeds the level reached before cuts imposed during the Greek fiscal adjustment programme in 2012.

Moody’s ratings agency has affirmed its Ba3 rating for Greece but changed its outlook to positive from stable, thanks to its recent growth record and reforms in government and the banking sector. “The affirmation of Greece’s Ba3 ratings reflects a balance between the improvements seen in many areas of Greece’s credit profile with persisting challenges: … further reforms in the areas of justice, education, business environment and labour markets would support a higher rating,” Moody’s said. “Moreover, the government debt burden remains very high and supported by official creditors, with future improvements and full return to market-based financing involving the maintenance of large primary surpluses for years to come.” Moody’s rating remains three notches below investment grade, while the other major ratings agencies have categorised Greece at just one notch below.

Theodoros Skylakakis, the alternate finance minister, says Greece is preparing for the next round of funding requests from the Recovery and Resilience Facility, noting that multiple tenders will be finalised in the coming weeks. Regarding RFF loans, the minister said: “Indeed, we have gone faster than expected and now we have close to 12 billion euros of deposited investment projects.” Skylakakis was speaking at the 11th Regional Growth Conference in Patras, on a panel moderated by the Athens Digest’s founder and head, John Papageorgiou. “We are ready … to send the next payment request, as the reform milestones are basically locked in, and many investment milestones are also locked in,” Skylakakis said. Speaking at the same event, Alexis Charitsis from the main opposition party, Syriza, told the panel: “The disbursement of money from Europe to Greece has gone well so far but 93 percent of the loans agreed until now, are going to large business groups.”

The U.S. State Department has approved the possible sale of assault amphibious vehicles, AAVs, and related equipment to Greece for an estimated $268 million. “The proposed sale will improve Greece’s capability to meet current and future threats by providing an effective capability to protect maritime interests and infrastructure in support of its strategic location on NATO’s southern flank,” the U.S. Defence Security Cooperation Agency said. It said Greece is seeking the purchase of 63 AAVs, as well as 13 more similar vehicles, along with heavy barrel machine guns and grenade launchers, plus training and logistical support.

On our Radar: Spy Trail
Greece’s National Intelligence Service says it has uncovered a spying operation based in Athens, where the female agent operated under deep cover and had no contact with the local embassy. The agency said the agent, identified only as Irina S. evaded arrest and left the country, apparently after realising her position had been compromised. According to local news reports, the woman is a 35-year-old Russian national who ran a yarn shop in central Athens. The NIS described the case as an “important discovery that reveals methods of penetration by foreign services in our country,” but gave no further details.