Europe Puts Pressure on Greece to Meet Budget Targets

Log in to manage your products and services from The New York Times and the International New York Times.

Don't have an account yet?
Create an account »

Subscribed through iTunes and need an NYTimes.com account?
Learn more »

In Greece, Elites Are Starting to Feel the Pain

Log in to manage your products and services from The New York Times and the International New York Times.

Don't have an account yet?
Create an account »

Subscribed through iTunes and need an NYTimes.com account?
Learn more »

Greece on Track for More Aid, German Official Says

BERLIN — With Greece’s debt crisis an issue ahead of Germany’s election next month, the highest-ranking German in the European Central Bank said on Monday that Athens could be eligible for additional aid and debt relief next year if it continued to fulfill promises for its current assistance.

“The Eurogroup will support Greece for the lifetime of the current program, and beyond,” said Jörg Asmussen, a member of the central bank’s policy-making executive board, referring to the group of euro zone finance ministers.

Mr. Asmussen took care to note in an interview here that he was not signaling a new attitude toward Greece by its euro-zone benefactors. “There is no change of policy,” he said, explaining that euro-zone leaders already decided in November that they would re-examine Greece’s needs early in 2014.

But his comments fed into a debate set off last week when Mr. Asmussen’s former boss, Wolfgang Schäuble, the German finance minister, put Greece back on the public agenda, saying that more aid was certain, rather than merely very likely. Mr. Asmussen was a top aide to Mr. Schäuble before joining the European Central Bank in 2011.

Mr. Asmussen declined to comment on whether Mr. Schäuble had discussed his remarks ahead of time with Chancellor Angela Merkel. Her party, the Christian Democratic Union, has made what many Germans see as her deft management of the euro crisis a focus of her push for re-election.

Hermann Gröhe, general secretary of the party and a main architect of Ms. Merkel’s campaign, tried to suggest at a meeting with foreign reporters on Monday that the chancellor and her finance minister, who have a reasonably close if sometimes contrary partnership, had discussed the issue before Mr. Schäuble spoke out. Mr. Gröhe indicated that the purpose was to acknowledge that Greece might need more money, but to make clear that investors holding Greek debt would not be asked to take losses as a way to ease the burden carried by Athens.

“It was necessary to show a clear ‘No’ to a haircut,” Mr. Gröhe told reporters, referring to a partial write-off of Greek debt.

Political commentators have asserted that Mr. Schäuble, who is 70 and the longest-serving political stalwart in Ms. Merkel’s cabinet, acted on his own last week — partly to avoid exposing the party to accusations after the elections that it had somehow deceived voters about the need for more aid for Greece.

Polls show Ms. Merkel with high popularity ratings, and the Christian Democrats as likely to win most parliamentary seats. But Ms. Merkel and Mr. Gröhe are stressing that it will be a tight race.

Mr. Asmussen’s comments on Monday referred to a decision taken last November by the Eurogroup. The ministers agreed that Greece would be eligible for a fresh look at its needs as soon as it was able to finance current government spending, improve the economy and fulfill other promises to its lenders — the European Central Bank, the International Monetary Fund and the European Commission.

If “the debt is still considered to be too high, the Eurogroup will consider to take additional measures,” Mr. Asmussen said. “That is the point of time when we will look at the debt question again. This is already decided and made public in November last year.”

The monetary fund has estimated that Greece will have a financing shortage around 10.9 billion euros, or $14.6 billion, for 2014 and 2015. Greek Finance Ministry officials have suggested that the shortage will be smaller than the fund’s estimate, but they have been exploring ways to plug the gap. In an interview over the weekend with the Greek newspaper Proto Thema, Greece’s finance minister, Yannis Stournaras, cited a figure of 10 billion euros for the likely shortage.

Mr. Asmussen, who met in Athens last week with Prime Minister Antonis Samaras, said there were signs of stabilization in Greece, which has suffered from soaring unemployment and plummeting economic output. Referring to recent economic data, Mr. Asmussen said, “For the first time in years there were no negative surprises.”

Niki Kitsantonis contributed reporting from Athens.

Greece Shuts Down State Broadcaster ERT

Orestis Panagiotou/European Pressphoto AgencyEmployees of the state broadcaster ERT protested at the company's headquarters north of Athens.

ATHENS — In a surprise move, Greece’s conservative-led coalition government shut down the state broadcaster on Tuesday as part of a cost-cutting drive imposed by the country’s foreign creditors, prompting protests from labor unions and the government’s increasingly alienated junior partners, which said they had not been consulted.

Employees of ERT, some of them in tears, sat on the steps of the company's headquarters in Agia Paraskevi on Tuesday.

The government cut the signal of the Hellenic Broadcasting Corporation, known as ERT, just after 11 p.m., about an hour earlier than it had said it would. Earlier in the day, a government spokesman, Simos Kedikoglou, described ERT as a “modern-day scandal” and “a unique case of lack of transparency and waste,” and said it would reopen soon as a “modern state organization” with a fraction of its 2,900 employees.

ERT has not been implicated in corruption scandals any more than any other state organization, and Mr. Kedikoglou’s strong language was broadly seen as the government’s attempt to show creditors that it was boldly and decisively moving to cut waste in the public sector.

Following the broadcast of the spokesman’s remarks on Net, one of ERT’s television channels, the station’s anchors and commentators engaged in a furious live discussion lamenting their fate.

Net’s midday news anchor, Antonis Alafogiorgos, lashed out at the government for accusing the state broadcaster of corruption. “This hypocrisy has to stop,” he said before playing a video from last month showing Mr. Kedikoglou insisting that the state would protect ERT from cutbacks. “None of us want the government to fall,” Mr. Alafogiorgos said, “but these methods are unacceptable.” Echoing other journalists in the live debate, the anchor said his concern was not for his job but for ERT to remain operational. “Mr. Kedikoglou can take my compensation and do what he wants with it,” he said.

Reacting to the news, unions representing the workers crowded outside the broadcaster’s headquarters, north of Athens, and told reporters that they would stage sit-ins to protest the closing of ERT’s five state television channels — three broadcast, one satellite and one cable — and 29 radio stations. (ERT has 2,650 full-time employees and about 250 people on short-term contracts.)

Standing with the protesters, a spokesman for the main leftist opposition party, Syriza, accused the government of “extreme despotism” in closing ERT.

Earlier in the day, the government submitted an emergency bill to Greece’s Parliament — a type of decree that does not require lawmakers’ approval — enabling the merging and abolition of state companies and paving the way for ERT’s closure. The move prompted an angry response by the junior partners in the coalition government — the Socialist Party, known as Pasok, and the more moderate Democratic Left — which accused the dominant conservatives of failing to consult them, an increasingly common complaint.

“The public broadcaster cannot close,” Pasok said in a statement. “A three-party government cannot make decisions without the participation of all party leaders.”

The surprise announcement came a day after representatives of Greece’s troika of foreign lenders — the European Commission, the European Central Bank and the International Monetary Fund — returned to Athens for fresh talks on the progress of the country’s economic reform program. A focus of the talks is a Greek pledge to lay off 4,000 civil servants this year, including 2,000 over the summer. Speculation has been rife in recent weeks that the bloated state broadcaster could be a target for the first round of layoffs demanded by the troika.

This article has been revised to reflect the following correction:

Correction: June 11, 2013

An earlier version of this article, as well as the summary and caption, misstated the broadcaster’s name. It is the Hellenic Broadcasting Corporation, known as ERT, not Net. (Net is the name of one of its television channels.)

Greece Agrees to Sell Stake in State-Owned Betting Firm

ATHENS — In Greece’s first major privatization deal since the country’s debt crisis erupted three years ago, the government on Wednesday agreed to sell a controlling stake in the state gambling company OPAP to Emma Delta, a Greek-Czech investment fund, Finance Minister Yannis Stournaras said.

“The first major privatization in our country has been completed successfully,” Mr. Stournaras said.

Emma Delta is buying a 33 percent stake in OPAP, making it the company’s largest shareholder. Greece’s state privatization fund said the purchase price was €652 million, or $860.5 million, with Greece also retaining €60 million in dividends.

The government last month rejected a €622 million offer from Emma Delta, which was the sole bidder for the stake.

Mr. Stournaras did not comment on what the deal might mean for OPAP’s 1,000 employees.

OPAP was Greece’s most profitable company last year, with net profit of €505.5 million. About two-thirds of that came from lottery games, with the rest from sports betting.

Mr. Stournaras said the deal would have “multiple” benefits for Greece as it “demonstrates the trust of investors in the Greek economy.”

He added that Greece’s privatization drive, which has failed to take off over the past three years, would contribute to “accelerating the country’s exit from the crisis.”

DealBook: Concerns Mount That Investors Might Balk at Debt Buyback in Greece

John Kolesidis/ReutersThe offices of Greece’s finance and development ministries in Athens.

LONDON — The hedge funds holding Greek bonds may have become too greedy for their own good.

It’s just two days before the books close on a plan to reduce Greece’s debt load by having the country purchase its deeply discounted bonds from banks and investors. But bankers close to the transaction are voicing concerns that hedge funds might “blow up the deal” by holding out for a higher price.

If the buyback fails, they say, the consequences would be severe. Not only could the International Monetary Fund refuse to lend more money to Greece, but wealthy European countries, already skeptical about extending yet another round of loans to Greece, could withdraw their support. In that case, the 40 billion euro-plus lifeline that the country needs to remain solvent would be in jeopardy.

“People have fallen in love with their profits, and they have lost touch with the downside,” said Petros Christodoulou, a top executive at the National Bank of Greece who presided over the 100 billion euro private sector debt restructuring earlier this year as head of Greece’s debt management agency. “If this thing fails, there is total collapse, and the price goes to 20 cents.”

On Monday, Greece surprised the market by offering, in effect, to repurchase as much as 30 billion euros worth of bonds at an average price of 32 to 34 cents on the euro. That represents a roughly 5 percent premium to where the bonds were trading at the end of the previous week.

Having borrowed 10 billion euros, the net debt relief would be around 20 billion euros. European officials feel that would be enough to satisfy the I.M.F.’s demand that Greece try to bring its debt level below 110 percent of its gross domestic product by 2022.

But numerous hedge funds — many of which scooped up Greek bonds in the mid-teens this summer and are now sitting on fat profits — are telling Greece that they may not participate in the buyback. Instead, they are betting that the participation of Greek banks and short-term investors looking for a quick profit will be enough to get the deal done. In theory, the strategy would allow the hedge funds to cash out at prices of 40 cents and beyond when bonds rally in the aftermath.

Buying Greek bonds on the cheap has become one of the more popular trades of late in Europe. Hedge funds like Third Point, Brevan Howard, Greylock and others have accumulated significant amounts of the debt.

With the voluntary buyback deal in question, bankers are contemplating the use of sophisticated legal stratagems that could force investors to sell out at much lower prices.

One possibility would be for the government to buy back as much debt as it can at current prices. Then Greece would come back with another lower offer; as long as two thirds of investors agree to the deal, collective action clauses would kick in, forcing reluctant investors to accept the government’s terms. Reaching that percentage would be easier, bankers say, as this time more of the bonds would be in friendly hands and would vote accept the offer.

Legal experts have also pointed out potential loopholes in the contracts of the restructured bonds that would — if push came to shove — allow Greece to keep current on its bond payments to European governments while forcing private sector creditors to take a loss.

In a further reminder of Greece’s tenuous financial position, Standard and Poor’s lowered its rating for Greek debt to selective default in a response to the buyback action. The rating agency said that when the buyback is finished, Greece’s rating would return to its higher CCC level. Any move, however, by the country to deploy more forceful measures l would most likely result in Greek bonds keeping a selective default rating.

“I am shocked that hedge funds are taking this so lightly,” said a person with knowledge of the buyback discussions who spoke on condition of anonymity. “There is an 80 percent chance that the I.M.F. will walk if this deal does not work — these guys have become their own worst enemy.”

In a deal this sensitive and crucial, there is always a fair amount of chest puffing as opposite sides push for the best possible outcome. The threat by hedge funds to not participate may well be a bluff to force Greece to up its price. Greece, on the other hand, has little to gain by forcing a bad deal on foreign investors at a time when it is relying on them to drive the privatization process.

But, as in all games of chicken, the risk of collision — or, in this case, a botched deal that results in Greece not getting its desperately needed money — is never all that far away.

Deal on Aid to Greece Is Within Reach, Germans Say

Chancellor Angela Merkel of Germany said she thought that an agreement on a solution could be reached next week.

“One doesn’t know for sure, but there are chances to get a solution on Monday,” when the next meeting of euro zone ministers is scheduled, Ms. Merkel said in the German Parliament.

Ms. Merkel added, “We want Greece to remain in Europe.”

Wolfgang Schäuble, the German finance minister, said he was confident that an agreement could be reached once “technical questions” had been clarified.

Euro zone finance ministers and international officials ended their latest meeting on Greece early Wednesday after failing to reach a breakthrough on Greek aid despite nearly 12 hours of intensive closed-door talks.

It was the second consecutive week they reached such an impasse, highlighting deep divisions on how to find the money to keep the Greek economy afloat and prevent contagion in the euro zone even as the country’s debt prospects worsen.

Greece is seeking to unlock a 31.5 billion euro, or $40.4 billion, installment of loans from an international bailout program.

If ministers do reach a deal, Greece is likely to get a larger amount of about 44 billion euros because two additional installments are due by the end of the year under the program. The current program, worth 130 billion euros, has been frozen since June, when creditors determined that Greece was failing to meet the conditions of the bailout.

While there is little immediate threat that creditors will deny further aid to Athens, finding a formula to turn the spigot back on has proved incredibly difficult, particularly for Germany, where Ms. Merkel is seeking to avoid announcing losses on German loans or big new financing commitments to Greece ahead of her re-election campaign next year.

That has left the euro zone’s leadership and officials from the International Monetary Fund attending a seemingly endless series of late-night meetings.

“The fund knows they can’t push the big creditor nations like Germany to cough up enough money for a systemic fix for Greece given the German election cycle and because such a fix also would meet strong opposition from powerful parliamentary committees in countries like Finland,” said Mujtaba Rahman, a Europe analyst at the Eurasia Group. “So instead, the fund is pushing creditor nations like Germany as far as possible on everything else. The fund wants to be as aggressive as it can be without actually demanding creditor nations take haircuts on their loans.”

On Tuesday night, ministers examined options, including lowering interest rates on Greek debt, lengthening the deadlines for repayments and allowing Greece to buy back its bonds at a steep discount.

Once lenders agree on a solution for Greece, the measure will still have to be debated and passed by German lawmakers. Mr. Schäuble said on Monday that the German Parliament could put the issue to a vote by the end of next week if an agreement was reached Monday.

But the holdup immediately prompted the Greek prime minister, Antonis Samaras, to insist that Athens had already carried out promised reforms and should receive its bailout money.

“Greece did what it had to do and what it had pledged to do,” Mr. Samaras said. “Our partners, and the I.M.F., must now assume their responsibilities.”

“Whatever the technical difficulties involved in finding a solution, they do not justify any negligence or delay,” said Mr. Samaras.

The holdup also prompted renewed criticism of Mr. Samaras and of Greece’s foreign bailout by Alexis Tsipras, the leader of the leftist opposition party Syriza, which is leading in opinion polls.

“Samaras has become an integral part of the pre-election campaign of Ms. Merkel, who does not want to admit to the German people before German elections that she has made serious mistakes, that she is to blame for the oncoming recession and that a haircut is necessary for Greece’s debt,” Mr. Tsipras said in a statement.

The meeting broke up on Wednesday morning with Greece’s biggest creditors like Germany at loggerheads with the I.M.F. over how much extra financing to provide in the next four years, and over whether Greece’s towering debt must be reduced to 120 percent of gross domestic product by the end of the decade.

Christine Lagarde, the I.M.F.’s managing director, had insisted that financing Greece to 2016 would help it make its debt manageable by the end of the decade.

But a number of member states resisted that suggestion, insisting on limiting questions to how to finance Greece through 2014. Using a target date of 2014 would cost less, or about 15 billion euros, but that would leave questions unresolved about the country’s financing.

Melissa Eddy contributed reporting from Berlin and Niki Kitsantonis from Athens.

Greece Seeks Taxes From Investors in London Property

Real estate agents recall sifting the listings for some of the most prestigious, and expensive, properties in South Kensington, a favored area for London’s international set.

But the house hunter, Lavrentis Lavrentiadis, never made a purchase in the spring of 2011, agents say. Within months his failing institution, a small lender known as Proton Bank, was seized. The Greek government, suspecting that Mr. Lavrentiadis may have moved money out of the country, is now investigating his activities to determine whether he engaged in fraud and money laundering.

Greece, heavily in debt and desperate to track down money wherever it can, is leaving no stone unturned.

Mr. Lavrentiadis has denied the accusations, and his lawyer did not respond to questions about any interest his client might have had in London properties. But the Greek banker’s rumored flirtation with this city’s prime real estate market, and the frenzy it stirred among sales agents, is telling.

At the request of the Athens government, the British financial authorities recently handed over a detailed list of about 400 Greek individuals who have bought and sold London properties since 2009.

The list, closely guarded, has not been publicly disclosed. But Greek officials are examining it to determine whether the people named — who they say include prominent businessmen, bankers, shipping tycoons and professional athletes — have deceived the tax authorities by understating their wealth.

“These people have money and they are known — but it is not clear yet if they have violated any laws,” said Haris Theoharis, an official in the Greek Finance Ministry. Tax investigators have been examining the list to see whether there is any overlap between those who bought London properties and those already identified as being tax cheats.

The Greek government, under pressure from its international lenders to raise 13.5 billion euros ($17.4 billion) through tax increases and spending cuts, is intent on making the well-heeled share the burden. Studies have shown that the country may be forgoing as much as 30 billion euros a year in uncollected taxes, with a significant portion of that amount having been shipped out of the country as the affluent seek shelter from Greece’s financial storm.

This week, the government of Prime Minister Antonis Samaras opened an investigation into the bank accounts of more than 30 Greek politicians to determine whether they should be charged with tax evasion and the illegal accumulation of wealth.

The politicians on the list included the president of the Greek Parliament, Evangelos Meimarakis, creating an embarrassing distraction for Mr. Samaras’s coalition government. Mr. Meimarakis is a former defense minister who has also been implicated in accusations concerning a money-laundering network said to involve two other former ministers.

London, long a magnet for foreign real estate investors, has become a special focus for Greek officials trying to track down money taken from the country.

Bankers say that accounts in Singapore and even in the country of Georgia have become favorite destinations for fleeing funds, more so than the traditional haven of Switzerland, because the looser rules and regulations of those countries about accepting large sums of foreign money. But while Singapore and Switzerland have been reluctant to divulge information about its Greek clientele, the British government has been more cooperative in sharing its real estate records.

There is an air of desperation to this Athens fund-raising drive, which includes leasing out empty Greek islands and even putting up for sale the former residence of the Greek consul general in the tony London neighborhood of Holland Park. But with Greece’s membership in the euro at stake, every conceivable revenue-raising strategy is being pursued, even if it remains unclear how successful it will be.