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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

European parliament chief visits Greece; bank shares recover – live updates

Greek Prime Minister Alexis Tsipras (rigt) and European Parliament President Martin Schulz share a joke outside the Greek Premier’s office in Athens today.
Greek Prime Minister Alexis Tsipras and European Parliament President Martin Schulz share a joke outside the Greek Premier’s office in Athens today.

Schulz: Hopes "wonderful" Greece will remain on course

Greek Prime Minister Alexis Tsipras holds a press conference with European Parliament President Martin Schulz at his office on January 29, 2015 in central Athens, Greece.
. Photograph: Milos Bicanski/Getty Images

Martin Schulz ended what will go down as the first visit of an EU official to Greece since the radical leftists stormed to power, saying:

“I hope that your wonderful country will remain on a European course as it always has.”

But the European parliament president made clear that while the two men had agreed “on many issues” there were “other issues and discussions that have to continue.” (Russia, perhaps?....)

He said further discussions with the new government in Athens would be based on the proposals the radical lefists will make (the government will outline its policy programme in parliament next week).

Schulz said he was enthused that the Tsipras government had made the crackdown on tax evasion a priority. The previous government had been very lax in clamping down on big fish tax evaders … partly because of so many of them were friends of those in the governing coalition.

Martin Schulz.
. Photograph: ORESTIS PANAGIOTOU/EPA

Elsewhere....Evangelos Venizelos, deputy prime minister for the nearly three years the coalition held party, admitted this afternoon that the performance of his centre-left Pasok party in the poll was a “heavy defeat for Pasok and for me personally.” (Helena reports)

And that’s probably all from us tonight. Thanks again for reading and commenting. We’ll be back tomorrow... GW

Athens’ Monastiraki square.
Athens’ Monastiraki square today. Photograph: Louisa Gouliamaki/AFP/Getty Images

There must be sighs of relief on the Athens stock market tonight, after shares recovered some - but by no means all - of Wednesday’s huge losses.

The main index jumped by over 3%, having shed 9% in the previous session. Reassuring noises from Athens about working with Greece’s European partners appeared to help restore some confidence.

Bank shares led the risers, on the back of their worst day ever.

Biggest risers on Athens stock market, January 29 2015
Biggest risers on Athens stock market, January 29 2015 Photograph: Thomson Reuters

Updated

Newsflash from Athens:

OECD's Gurria to advise Athens on debt restructuring

Jose Angel Gurria.
.

The Greek finance ministry also announced that Ángel Gurria, general secretary of the OECD, had accepted Alexis Tsipras’ invitation to visit Athens on February 11, says Helena.

Gurria is visiting Athens:

“With the purpose of discussing the government’s proposals for radical reforms with the economic leadership and to offer his good services in this and finally to exchange views on his own experience in the practicalities of renegotiating public debt as finance minister of Mexico when the public debt of his country was substantially reduced.”

“The new government is working hard in collaboration with our European partners and international fora, like the OSCE, for stability, reforms and the prospect of immediately getting over the self-perpetuating crisis.”

Updated

Greek finance ministry: Varoufakis heading to London on Monday

Yanis Varoufakis.
Yanis Varoufakis. Photograph: Petros Giannakouris/AP

The Greek finance ministry has just confirmed that Yanis Varoufakis is going to visit London next Monday.

In a statement, the ministry said that finance minister Varoufakis will meet with chancellor of the exchequer, George Osborne:

...with the aim of close cooperation between the two countries on issues of common European interest. The minister will also meet with the financial sector in the city of London.”

Varoufakis is also aiming to meet French finance minister Michel Sapin, and economy minister Emmanuel Macron, in Paris on Monday afternoon.

Then on Tuesday, he will conduct talks in Rome with his counterpart Pier Carlo Padoan “for an exchange of views on the macro-economic course of the the eurozone.” Busy busy!

But first, the ministry will be hosting eurogroup president Jeroen Dijsselbloem on Friday. That will mark:

the start of negotiations with our partners which will lead us to a viable and comprehensive solution for the reconstruction of our social economy in the framework of a developing Europe.

(via Helena Smith)

Varoufakis is no stranger to the UK. He conducted his post doctorate studies at Essex University and went on to teach at Cambridge before moving to Australia, then Athens and then the US.

Updated

The talks between Alexis Tsipras and Martin Schulz are over.

And the European Parliament president says he’s encouraged by Tsipras’s stance:

Ratings agency Fitch has warned that it could downgrade Greece’s credit rating if there’s no progress with its creditors by May 15 (the next scheduled review).

It also predicted that there could be “negative rating implications” for Greece’s banks too, but reckons the “systemic risk” posed by a Greek exit is lower.

That’s from a conference call with investors taking place now....

Greek fin min to meet Osborne?

Greek finance minister Yanis Varoufakis is reportedly visiting London on Monday, to see chancellor George Osborne and investors in the City.

Have put a call into the Treasury to confirm.....

Updated

New Greek Prime Minister Alexis Tsipras (L) talks with Martin Schulz (R), President of the European Parliament, during their meeting in Athens, Greece, 29 January 2015.
New Greek Prime Minister Alexis Tsipras (L) talks with Martin Schulz (R), President of the European Parliament, during their meeting in Athens, Greece, 29 January 2015. Photograph: Orestis Panagiotou/EPA

Meanwhile in Brussels...Greece’s new foreign minister, Nikos Kotzias, is meeting with his German counterpart Frank-Walter Steinmeier.

They’re both attending a meeting of foreign ministers to discuss the Ukraine crisis.

Kotzias is criticising EU allies for releasing that ‘unanimous’ statement about Russian sanctions on Tuesday without consulting Greece:

  • GREEK FOREIGN MINISTER SAYS SOME EU PARTNERS TRIED TO PRESENT GREECE WITH UNACCEPTABLE FAIT ACCOMPLI WITH UKRAINE STATEMENT
  • GREEK FOREIGN MINISTER SAYS MISTAKE TO BELIEVE GREECE WILL RENOUNCE SOVEREIGNTY IN EUROPE BECAUSE OF DEBT

Updated

Did Tsipras get a dressing down for being too dressed down?

The PM is apparently resisting wearing a tie until he’s managed to negotiate a debt restructuring deal.

German inflation rate hits -0.3%

Just in... Germany’s inflation rate has turned negative.

Prices across Europe’s largest economy fell by 0.3% year-on-year in January, for the first time in over five years.

That suggests the wider eurozone inflation rate has been dragged further into negative territory, raising fears of a protracted period of falling prices, ie...the dreaded deflation.

Updated

Tsipras and Schulz meet

Another photo from Athens. Apparently Tsipras is telling Schulz that:

“You are a close friend of Greece and a close friend of mine”.

It was all smiles (but only one tie), as Schulz and Tsipras met a little while ago.....

French finance minister Michel Sapin has indicated that Paris would support renegotiating the terms of Greece’s debts....but nothing more dramatic.

Sapin told French daily Liberation that Greece’s fiscal position mustn’t be allowed to worsen:

“Cancelling the debt is an aberration, a renegotiation is on the table.”

“Since 2013, spending has been balanced by revenues ... It is out of the question to allow the Greek budget to go out of balance again and spin off into a spiral of deficit,”

Sapin failed to mention, though, that while Greece was achieving a primary surplus its economy was in freefall, shrinking by 25% (!) since the crisis began.

Martin Schulz may see signs of public anger over Greece’s bailout programme during his visit today, judging by these photos taken this morning:

A Greek Orthodox priest and an elderly man pass anti-austerity graffiti in front of Athens Academy.
A Greek Orthodox priest and an elderly man pass anti-austerity graffiti in front of Athens Academy. Photograph: Thanassis Stavrakis/AP
Athens Academy.
Athens Academy. Photograph: Thanassis Stavrakis/AP

The new government giveth, and also taketh away?

Greek savers keep withdrawing their money

Greek bank deposits dropped in December for the third month running, as nervous savers pulled out cash ahead of last Sunday’s election.

The Greek central bank reported that business and household deposits fell by 2.4% in December to €160.3bn, from €164.3bn the previous months.

President of the European Parliament, Martin Schulz.
President of the European Parliament, Martin Schulz. Photograph: OLIVIER HOSLET/EPA

European parliament officials are trying to dampen speculation that Martin Schulz is visiting Athens to act as an intermediary between the government and its lenders.

Correspondent Helena Smith reports

Local media reports have suggested that Schulz, who has spoken openly of his distrust of austerity, is intending to act as a go-to-man between Greece and its creditors.

The German won hearts in Greece in the run-up to Sunday’s election when he criticized Berlin, and mandarins in Brussels, for spreading “unhelpful Grexit scenarios” and making statements that were overly interventionist.

Leonidas Antanokopoulos, who heads the European Parliament office in Athens, said there “is no question” of Schulz acting as an interlocutor. He told me:

“The purpose is to speak openly with the government. Both men in recent years have built up a relationship. Schulz has described Tsipras as a realist”.

It wasn’t always so: in the run-up to Euro elections last May, Tsipras who ran as the European Left party’s candidate for EC president, lambasted the German for acting as if “he is the chosen one of Merkel in Europe.”

Schulz has been a loud proponent of the need for consensus. He told Greece’s leading weekly Protothema:

“I do not think that this is the moment for politicians to be speculating on what each side should consider as their red lines and what they should be ready to concede on,”

Adding:

“More important neither is it time for any side to be making any headline grabbing statements. Rather all political forces, both in Europe and in Greece, would do well to take good note of the result in Greece and work to create the most serene environment within which talks can take place.”

“A solution for Greece will be found through a compromise,” he said, insisting he was “acting on nobody’s behalf.”

One blog reader, James Wilkins of Thessaloniki, isn’t impressed that Martin Schulz will meet with four opposition leaders as well as prime minister Tsipras today:

The decision of Schulz to meet leaders of political parties who have just been resoundingly defeated in a democratic election will only inflame the situation. It will make many Greeks angry.

I fear that the EU, and the Eurozone in particular, is incapable of responding to events that do not fit in with its narrative.

Bank stocks bounce back

Greek banks stocks are on something of a tear this morning, as the Athens market recovers.

Shares in Eurobank have surged by 18%, recovering most (but not all) of yesterday’s huge losses.

Greek stock market, risers, January 29 2015
Greek stock market, risers, January 29 2015 Photograph: Thomson Reuters

So why the rally? A couple of possibilities.

1) Daniele Nouy, who chairs the ECB’s Supervisory Board, declared that Greek banks are strong enough to survive the crisis, and hailed their progress in improving their balance sheets.

2) Deputy PM Giannis Dragasakis told reporters last night that Athens will seek dialogue, not confrontation, with its lenders. He also said that “our concern is the proper functioning of banks”, suggesting the government wouldn’t let them collapse.

Anyone who had the nerve to buy bank shares yesterday afternoon may be feeling pretty smug....

Standard & Poor’s decision to lower Greece’s credit rating outlook to negative last night is driving Greek bond yields steadily higher:

Martin Schulz tweets that he’ll be meeting several Greek political leaders today, not just the winner of Sunday’s election.

Stavros Theodorakis leads the centrist To Potami party, came fourth in Sunday’s election with 17 seats.

Former PM George Papandreou founded a new party, the Movement of Democratic Socialists, which didn’t win any seats.

Updated

The chief of the Eurogroup (eurozone finance ministers) confirms that he will meet with the senior members of the Greek government tomorrow afternoon. Happy news; he and finance minister Varoufakis will give a statement to the press corps.

Updated

Greek government bonds continue to weaken in the financial markets.

That has pushed the yield, or interest rate, on its five-year debt up to 15% -- compared to around 5% when it was sold last April.

The 10-year bond is now trading at a yield of 11%; that’s far too high a rate for Athens to actually sell new debt.

From Athens, Helena Smith reports that Syriza is making much of Barack Obama’s backing last night.

The US, generally, has taken a much more pragmatic approach to Greece than Europe (perhaps because it doesn’t hold billions of euros of Greek debt?).

Finance minister Yanis Varoufakis co-authored a book with Jamie Galbraith, a close friend with whom he spent much time when he was seconded to the University of Texas at Austin, entitled: A modest proposal for resolving the euro zone crisis.

The Greek radicals have been emboldened by the praise with which their anti-austerity views/stimulus policies have been embraced by leading economists in the US, Helena explains:

Over the summer I met the economist/political science professor Barry Eichengreen at Berkeley University, who follows Greece closely, and said despite being nine time zones away from Athens was an avid reader of this blog.

“The Greek crisis has not gone away. It’s no longer acute. Its chronic,” he had said. How his words resonate today!

Updated

A handy reminder of holds Greece’s debt:

China: Tsiparas is the new Phaeton

Phaeton
Alexis Tsipras Phaeton Photograph: British Museum

Greece’s decision to freeze the privatisation of the Piraeus Port has not gone down well in Beijing.

AFP reports:

Chinese media warned Tsipras over halting the privatisation of the Piraeus port, for which China’s COSCO group has bid, saying he was in a similar position to the Greek mythological figure of Phaeton, who was given the reins of the sun only to lose control and nearly destroy the earth.

Makes a change from another Cassandra reference....

Updated

The Athens stock market is calm this morning, after yesterday’s sensational selloff which wiped a third off the value of its banking sector.

The main ATG index has risen by 1.4%, led by financial stocks.

Francesco Papadia, who used to run the ECB’s Open Market operations, reckons a deal is possible.....

Some Greek newspapers appear to have the inside line on the government’s negotiating strategy (see financial portal Euro2day and newspaper Efsyn, which is sympathetic to Syriza)

They say that PM Tsipras and finance minister Varoufakis will argue that Greece’s bond payments should be “frozen” until the country is growing steadily.

They will also promise to run balanced budgets, so Greece would not be adding to its debt pile - but not under pressure to meet the high surpluses demanded before.

Germany’s jobless rate has hit a new record low, underlining the sharp economic differences across Europe.

The number of people unemployed across Germany fell by 9,000 in January. And with December’s figures revised lower, the German unemployment rate is now a record low of 6.5%.

That’s roughly a quarter of Greece’s unemployment rate.

European Parliament President Martin Schulz is expected to arrive in Athens at noon, or 10am GMT.

Apparently Barack Obama also urged Alexis Tsipras to get some rest.

During their telephone call last night, the US president told the new Greek prime minister that:

“I started young as well, and now my hair has turned grey”.

Updated

Germany’s economy minister, Sigmar Gabriel, has warned Greece not to ‘burden’ the rest of Europe with its problems.

He was speaking in the Bundestag (parliament) this morning - here’s the headlines:

  • GERMAN ECONOMY MINISTER GABRIEL SAYS PEOPLE IN GREECE HAVE UNDERGONE AN ENORMOUS AMOUNT OF SUFFERING, COUNTRY HAS MADE PROGRESS IN REFORMS
  • GERMAN ECONOMY MINISTER GABRIEL SAYS WRONG TO SEE TROIKA AS RESPONSIBLE FOR GREECE’S PROBLEMS, GREECE STILL HAS UNFAIR DISTRIBUTION OF WEALTH
  • GERMAN ECONOMY MINISTER GABRIEL SAYS WE WANT TO KEEP GREECE IN EURO ZONE BUT NEW GOVERNMENT MUST MEET ITS COMMITMENTS
  • GERMANY’S GABRIEL SAYS CHANGES IN GREEK POLITICS MUST NOT BURDEN CITIZENS OF REST OF EUROPE

Updated

Greek bonds continue to weaken

The selloff in Greek government debt is continuing this morning, as investors continues to ditch its bond.

This is pushing up the yields (or interest rates) on the bonds further into dangerous levels. The three-year Greek bond is how yielding 17%(!), showing that traders see it as particularly risky.

Updated

ECB: We won't extend Greek debt maturities

A senior European Central bank policymaker has ruled out giving Greece any relief on the debt held by the ECB.

Benoît Cœuré, ECB executive board member, told Italy’s Corriere della Sera newspaper that it was impossible to give Greece more time to repay its loans.

Cœuré said:

Greece’s debt is made up of various components. As regards the government bonds purchased by the ECB as part of the Securities Markets Programme launched in 2010, we cannot grant even an extension of maturities: it would be like granting a loan to the country and that is prohibited by the treaties.

As regards loans given to Athens by European countries, that’s not for us to decide.

He also urged Greece to keep reforming its economy, but conceded that Alexis Tsipras will probably introduce “different reforms from the ones expected”.

There’s a(nother) row brewing over whether Greece officially opposes sanctions on Russia.

Yesterday, energy minister Panagiotis Lafazanis veered off his brief, to declare that:

“We are against the embargo that has been imposed against Russia. Greece has no interest in imposing sanctions on Russia.

We have no differences with Russia and the Russian people.”

And this morning, new finance minister Yanis Varoufakis has also broached out into international affairs. In his blog, he denied that Greece wanted to veto Russian sanctions -- it just wanted to be consulted.

Our Foreign Minister, Nikos Kotzias, briefed us that on his first day at the job he heard in the news bulletins that the EU had approved new sanctions on Russia unanimously.

The problem was that he, and the new Greek government, were never asked! So, clearly, the issue was not whether our new government agrees or not with fresh sanctions on Russia. The issue is whether our view can be taken for granted without even being told of what it is!

Now personally, I’m all for titbits from around the cabinet table...but perhaps Greece’s new ministers shouldn’t be quite so open?....

The new Greek government’s relationship with Russia are also causing a stir in Europe this week.

The Financial Times reports this morning that EU leaders are fuming behind closes doors:

European and Nato intelligence officials are now poring over links between the Kremlin and senior figures from Syriza and its coalition partner, the Independent Greeks party.

The fact that the first foreign official Mr Tsipras invited to the Maximos Mansion in Athens on Monday was Andrey Maslov, Russia’s ambassador, speaks to their concerns.

Mr Tsipras’ previous comments on the Ukrainian crisis are also clear enough: in a trip to Moscow in May, the Syriza chief accused Kiev of harbouring “neo-Nazi” elements and denounced sanctions against Russia.

Full story: Alarm bells ring over Syriza’s Russian links

.
.

Overnight, US president Barack Obama phoned Alexis Tsipras to congratulate him on his victory.

According to the White House....

“The president noted that the United States, as a longstanding friend and ally, looks forward to working closely with the new Greek government to help Greece return to a path of long-term prosperity,”.

“The two leaders also reviewed close cooperation between Greece and the United States on issues of European security and counterterrorism.”

Updated

European Parliament chief heads to Athens.

President of the European Parliament Martin Schulz.
President of the European Parliament, Martin Schulz. Photograph: PATRICK SEEGER/EPA

Good morning, and welcome to our rolling coverage of the Greek election, and other key developments across the financial markets, the world economy, the rest of the eurozone, and business.

The head of the European Parliament is heading to Athens today for talks with the new Greek government.

Martin Schulz is the first senior member of the European establishment to meet with Alexis Tsipras since he won power in Sunday’s election.

The visit follows several dramatic days, in which Tsipras’s government has begun rolling back Greece’s austerity programme, at pace, to the alarm of many eurozone members.

Schulz may urge the left-wing leader to rein his government back, having already frozen several privatisation deals agreed with the Troika.

If so, Tsipras might care to point Schulz towards the speech given by the Bank of England governor last night.

In a hard-hitting address, Mark Carney called for more fiscal flexibility (government tax&spending) in Europe to drag it out of its debt trap. A clear signal to Germany.

Bank of England governor attacks eurozone austerity

Another senior European figure, Commission president Jean-Claude Juncker, has called on Tsipras not to consider defaulting on Greece’s debts.

Juncker told Le Figaro that

“Greece must comply with Europe......there is no question of cancelling the debt”.

“We respect the popular vote in Greece, but Greece must also respect others, public opinion and parliamentarians from the rest of Europe.”

“Arrangements are possible, but they will not fundamentally alter what is in place.”

But with Greece’s new government promising fundamental change, it’s going to be another lively day....

Updated

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