•
The
background for the Roundtable, as former Italian prime minister Enrico Letta
pointed out, was an improving euro-zone economy with a trio of favourable
factors: quantitative easing (QE) from the European Central Bank (ECB), cheaper
oil and a cheaper euro.
•
However, the uncertainty over Greece is a big cloud on the European
horizon, with a palpable risk of the country falling out of the euro zone - a
40% chance, reckons Joan Hoey of the Economist Intelligence Unit (EIU). Greece
is back in recession, and growth for ecast for 2015 has been taken down to 0.5%
by the European Commission and to zero by the EIU.
•
Precisely because all eyes are on Greece there was very high interest in the
Roundtable, with more than 600 people attending the session with finance
minister Yanis Varoufakis and at the closing dinner with prime minister Alexis
Tsipras.
•
Mr
Tsipras said his government came with “a new perception of how society and the
economy can be organised”, and he gave an assessment of its first 100 days.
Among the achievements he listed were first steps to “relieve the humanitarian
crisis”, anti-tax-evasion measures, jobs restored to cleaning ladies at the
finance ministry, a law to reopen public TV, moves towards raising the minimum
wage and bringing the issue of wartime reparations from Germany into the
limelight.
•
As
for the crucial matter of the negotiations, the prime minister said he was
devoting much of his time to them personally. The partners should not imagine
that “our red lines will fade”. Four key points for an agreement were: 1. Low
primary surpluses as targets, especially for the first two years; 2. No
obligation for new cuts on pensions and salaries; 3. A restructuring of public
debt; 4. Solid packages of public investment. Common ground seems to have been
identified, and Mr Tsipras expressed optimism that a deal was very
close.
•
Mr
Varoufakis stressed that Greece would not do the sort of deal with its creditors
that resulted in only a temporary fix; emphasising the need to be more realistic
about the targets set, he said he would “never sign a deal that is not
dynamically consistent”. Minister of state Nikos Pappas echoed this notion,
saying that Greece wants to reach a deal that will lead to “solutions”, not just
any kind of deal.
•
According to Mr Varoufakis, Greek debt has to be “redesigned” (since “haircut”
is a taboo word). Payments to the ECB should be deferred to the future and
Greece integrated into the QE mechanism. There should be no change in VAT before
the end of the summer.
•
Both
Mr Letta and Mr Varoufakis stressed that Grexit would be a disaster (Mr Letta
called it a “catastrophe”, Mr Varoufakis said it would a “recipe for going back
to the Neolithic age”, even if he might have preferred that Greece had stuck
with the drachma rather than joining the euro in the first place). On the
positive side, the finance minister believed that as soon as a deal is struck
there would be a “torrent of investment” in Greece: “Greece is going to have a
bonanza.”
•
For
the opposition New Democracy, former deputy finance minister Christos
Staikouras, speaking at the opening dinner, said that in its four months in
charge the Tsipras government had “lost time, confidence and allies”. By all
sorts of measures (such as the primary budget surplus, payment arrears,
non-performing loans, the investment climate, privatisation, education reforms),
he said, Greece had started to go backwards rather than making progress.
•
When
it comes to reforms, based on the experience of other countries Alvaro Pereira
of the OECD’s Economics Department stressed the need not just for passing laws
but to have the ability to put them into practice: “implementation,
implementation, implementation”. For a new government, front-loading of reforms
is vital, and cross-party support helpful – Mexico provided a good example.
•
The
bankers were naturally concerned about the shortage of liquidity, but believed
that much of the problem stemmed from the uncertainty over whether Greece would
reach a deal with the institutions. As uncertainty comes down, liquidity would
come back.
•
Energy was a key theme of the conference, with much discussion of pipelines and
the politics surrounding them. Greece’s energy minister, Panagiotis Lafazanis,
set out a vision of Greece as “pluralistic energy hub” and a “pioneer in energy
interconnections”: diversity of energy links would make the country truly
independent in the energy sphere.
•
Government ministers did not dispel entirelyconcerns that tourists to Greek
islands would have to pay an 18% tax on hotel and restaurant bills--saying it
would not happen this summer, but not ruling out the proposal
altogether.
•
For
all the concerns over Greece, a bigger worry is the tension between Russia and
the West: the possibility of nuclear war, said Laza Kekic, setting the scene for
the session on security challenges for Europe, is greater than at any time since
the Cuban missile crisis. Greece’s defence minister and leader of the
Independent Greeks, Panos Kammenos, stressed that Greece’s role was to be a
“pillar of stability” in a region of instability.
He criticised the treatment of
Greece by Germany (which wants to “impose its rule throughout Europe”) and
expressed his displeasure with the West’s sanctions on Russia. Minister Kammenos
revealed that he was going to the US soon and would propose the creation of a
new NATO base on an Aegean island.