TIME Greece

The Athens Stock Exchange Dropped by Almost a Quarter Upon Reopening

After Three Weeks Of Forced Closure Greek Banks Reopen Ahead Of Tax Rises
Milos Bicanski—Getty Images People queue to get money from ATMs as Greek banks reopened on Monday morning after three weeks of closure on July 20, 2015 in Athens, Greece

Analysts blame Greek bank shares for the plunge

The Athens Stock Exchange reopened Monday morning to a huge loss, with the Athex dropping by 22.8% to 615.16 points — a total loss of 182.36 points — within minutes.

According to the BBC, Greek bank shares are to blame for the plunge. Piraeus Bank, National Bank, Alpha Bank, and Eurobank, who represent the country’s largest lenders, all saw a 30% fall in their share values.

The exchange was closed for the past five weeks as Greece was renegotiating its debt load with international creditors. The BBC says traders had predicted a drop in share value upon the exchange’s reopening.

According to the European Commission, Greece is expected to enter into a recession this year.

[BBC]

TIME world affairs

Don’t Blame Germany for Greece’s Debt Crisis

German Chancellor Angela Merkel at a press conference after meeting with Albanian Prime Minister Edi Rama in Tirana on July 8, 2015.
Gent Shkullaku—AFP/Getty Images German Chancellor Angela Merkel at a press conference after meeting with Albanian Prime Minister Edi Rama in Tirana on July 8, 2015.

Zocalo Public Square is a not-for-profit Ideas Exchange that blends live events and humanities journalism.

No country has done more to democratize and raise Europe's living standards

Germany knows a thing or two about being punished for bad deeds, but in recent weeks the country has been the poster child for the old adage that no good deed goes unpunished.

There is no other way to describe the reputational black eye Germans received as a result of the drawn-out Greek bailout negotiations that culminated last week in the approval of a deal struck with other eurozone countries.

No country has done more than Germany in recent times to raise living standards and democratic norms across Europe, which is one reason the country that once bedeviled the continent emerged as the world’s most admired nation in a 2013 BBC poll conducted in 25 countries. But over this summer, it’s been stunning to see how easily we can be lured back into embracing darker stereotypes of those bullying, inflexible Germans.

The prevailing narrative of the Greek crisis in U.S. media, and on social media, was that the poor Greek people and their idealistic young Prime Minister Alexis Tsipras were being driven to the brink by heartless creditors, led by Germany’s Chancellor Angela Merkel and her Finance Minister, Wolfgang Schäuble. The Germans, and their “troika” of servants – the European Central Bank, the European Commission and the International Monetary Fund – had saddled too much debt on the Greeks, imposed counterproductive austerity policies on its government and demanded humiliating reforms that violated Greek sovereignty.

It’s hard not to empathize with the people of Greece; The country’s GDP shrank by a staggering 25 percent in just five years. But the prevailing narrative of a morally tidy showdown between stingy, stubborn Germanic creditors and their victimized Greek debtors overlooked a number of inconvenient truths.

For starters, the Greek debt crisis was triggered in no small part by the 2009 revelation that the Greek government had falsified its economic data to make the country appear a member in good standing of the eurozone. A second fact often overlooked: This is actually the third bailout in the last five years, and in 2012, the Greeks did benefit from a $117 billion write-off of debt owed to private banks. Third, much of the roughly $380 billion in remaining debt is owed to sovereign nations, meaning that the true creditors in the story are German, Dutch, French, and other European taxpayers, not greedy banks or faceless international bureaucracies. Fourth, while Greece did adopt painful fiscal austerity in recent years, it has been slow to carry out many of the needed structural reforms (such as privatizing state-owned enterprises) it agreed to under the previous bailouts. This would be akin to a U.S. company gaining protection from creditors in a bankruptcy proceeding, without engaging in a difficult reorganization to make it a more viable enterprise going forward. The bloated and inefficient Greek state accounted for a stunning 59 percent of the nation’s GDP in 2013.

Furthermore, the issue of whether to provide more aid to Greece this summer was never solely a bilateral German-Greek issue. The countries most adamant about being tough on the Greek were not the Germans, but poorer eastern European Union member nations. But the only “real people” in too much of the coverage of the drama were Greeks, at the expense of people elsewhere in Europe who are understandably frustrated at bailing out a nation where many express their European solidarity by not paying their own taxes.

Among pundits eager to portray Berlin as the villain of the saga, a favorite charge (pushed by Thomas Piketty, among others) has been that the Germans are ungrateful hypocrites. Their own national debt, after all, was substantially reduced by international creditors in 1953. The extent to which this analogy has been repeated without any curiosity as to the underlying facts, or context, is a distressing case study in uncritical groupthink. A good portion of the debt at issue in 1953 dated back to the vanquished Nazi regime and its predecessors; after World War II, the Federal Republic had assumed responsibility for it (at old exchange rates favorable to creditors) as an act of good faith, as part of Germans’ larger sense of atonement. Germany literally lay in ruins, and was divided, and there was no doubt about whether the German people were doing their part to dig out of the rubble and make amends. That debt hadn’t been accumulated in just a few years while the country was simultaneously violating the terms of its obligations, as in the case of Greece.

It’s especially galling to hear Americans chide the Germans for their supposed lack of generosity, when you consider how differently Germany and the U.S. have reacted to the distress of less fortunate regional economic partners. German taxpayers invested for decades in the development of peripheral European Union members, spent trillions to develop Eastern Germany, and will now pay a good chunk of a third Greek bailout that will be somewhere in the neighborhood of $100 billion.

In contrast, the United States has refused to incorporate into the North American Free Trade Agreement the type of regional development funding that Europeans deemed essential to a functioning common market. And when Mexico faced an existential debt crisis in the 1980s that was far more severe than the one Greece is experiencing, Mexicans could only have wished that Washington had reacted to their plight as Berlin has reacted to the plight of Greeks.

After walking up to the cliff and contemplating a break-up of their currency union, the leaders of Greece and their European counterparts in Berlin, Paris, and Brussels all blinked, and worked out a deal to keep Greece in the eurozone, at a painful cost to both sides (more money coming out of the pockets of other European citizens, more painful austerity for Greeks). This was a case of political and historical imperatives trumping economics, at least for now.

The European Union is a monument to Germany’s atonement for its past sins. From its very inception in the 1950s, when it was born as a coal- and steel-producing union, what eventually came to be known as the European Union was considered by its French architects as a means to subvert German nationalism, and to make its repentant people pay more than their fair share for a common project largely directed by the French.

When Germany suddenly had the opportunity to end its postwar partition a quarter century ago with the fall of the Soviet Union, French and other European leaders pressed the Germans to abandon their cherished currency and symbol of hard-won stability, the deutsche mark, in favor of a shared European currency. The more intensely Germany was bound to a broader European Union, the theory went, the less likely a reawakening of a troublesome German nationalism. And so, Germany agreed to the euro once Europeans went along with German reunification.

I remember visiting Germany’s Foreign Minister Joschka Fischer in 2000, in the immediate aftermath of this transition. I asked Fischer if Germany could ever become a normal country again, fully off probation, fully atoned, fully entitled to wave its own flag, at least alongside that of the EU. Not really, he said, and then he talked passionately about Germany’s need to always act within the Atlantic and European communities.

But the ensuing years have proven bullish ones for German nationalism. Berlin surprisingly refused to go along with the United States in its showdown with Saddam Hussein. World Cup successes (as a host and contender) emboldened Germans to pull out their flags and cheer on their country as if it were no longer on probation.

But maybe the most shocking development has been the degree to which the European Union has come to be perceived as a project inspired by Germany, as opposed to one imposed on it. Henry Kissinger once said that Germany was to be pitied because it was too big for Europe but too small for the world. So it was perhaps inevitable that the EU would come to be seen as a projection of German influence. The euro, which initially Germans were so reluctant to adopt, proved a competitive boon to German exports, by raising costs in the rest of Europe.

This monetary straightjacket of 19 very different economies sharing the same currency has had its economic pluses and minuses, but the initial impetus to take this plunge into the economic unknown in the 1990s was all political – the goal of reinforcing a broader European identity across the continent. And whatever its economic merits, the political endeavor is backfiring: The shared currency has only strengthened nationalist sentiments. Try sharing a credit card, and thus your credit rating, with a very diverse group of friends, and sooner or later you’ll also find that it’s not easy to cheerily embrace the “we’re all in this together” plan.

Europe’s integration over time, and Germany’s role in it, is a nuanced, complicated tale, and Americans have a vested interest in its success. Lazy caricatures of Germany that harken back to World War stereotypes may make a dry economic tale more entertaining, and seduce us into thinking we’re rooting for the supposed underdog. But it is a disservice to the truth and our national interest. The Germany of Angela Markel, not a socialist Greece, is our indispensable ally, the democracy that shares our values and can still teach us a thing or two about improving the lives of people beyond its borders.

Andrés Martinez is the editorial director of Zócalo Public Square, for which he writes the Trade Winds column, and a professor at the Walter Cronkite School of Journalism at Arizona State University.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Greece

Greece Launches Bailout Talks as Plan to Leave Euro Remains in Discussion

The People Of Greece Vote In A Referendum Over Debt Bailout Terms
Milos Bicanski—Getty Images Greek Finance Minister Yanis Varoufakis speaks to the press after placing his vote in the austerity referendum at a local school in the suburbs of Athens on July 5, 2015

A recording of former Greek Finance Minister Yanis Varoufakis discussing a parallel currency plan was made public

(ATHENS, Greece) —Greece’s government on Monday launched complex bailout negotiations with creditors, but faced rebuke following revelations that former finance minister, Yanis Varoufakis, formed a secret committee to plan for the possible conversion of euros into drachmas “at a drop of a hat.”

Finance Minister Euclid Tsakalotos said late Monday that meetings in Athens had begun between Greek officials and negotiating teams representing creditors, with talks to intensify Tuesday, paving the way for higher level discussions possibly by the end of the week.

Before the talks started in Athens, a recording of Varoufakis discussing a parallel currency plan was made public.

Opposition parties have criticized Varoufakis and have urged Prime Minister Alexis Tsipras to explain to lawmakers what he knew of his former finance minister’s actions.

In the recording of a telephone briefing for investors on July 16 in the wake of his resignation days earlier, Varoufakis claimed he and a childhood friend who was a computer expert hacked into his ministry’s computer systems as a first step to creating “a parallel banking system” in the event Greek banks were shuttered.

The Greek banks were closed on June 29 to avoid a bank run amid fears that Greece was heading for a euro exit. In theory, a parallel system formed from the effective cloning of tax accounts would have allowed the finance ministry to continue payments in the form of so-called IOUs.

Varoufakis said he had been authorized by Tsipras to undertake the planning prior to the general election in January when the radical left Syriza party swept to power. And he insisted that his actions were legal, in the public interest and aimed at keeping the country in the 19-country eurozone.

In essence, the plan, which Tsipras ultimately blocked, would have created a “functioning parallel system” to give the government “some breathing space.”

“It would be euro-denominated but at the drop of a hat it could be developed to a new drachma,” Varoufakis said.

Varoufakis confirmed the authenticity of the recording, which was released by the briefing organizers, London-based Official Monetary and Financial Institutions Forum.

The revelation that Varoufakis was working on a Plan B over Greece’s future was one of many in a wide-ranging discussion on the Greek crisis. He also said that German Finance Minister Wolfgang Schaeuble wanted Greece to leave the euro but that his boss, Chancellor Angela Merkel, was against so-called Grexit.

The recording prompted an outcry among opposition parties.

The main conservative opposition, New Democracy, accused Varoufakis of “dark methods that threaten democracy” and summoned Tsipras to brief parliament.

Tsipras, who is already facing a revolt within his radical left Syriza over a raft of austerity measures required by creditors for the talks to actually begin, is under pressure to call early elections once the bailout discussions are completed.

The technical discussions on a wide array of issues such as pensions and labor market reforms are designed to clear the path for high-level discussions between Greek ministers and senior European Union and International Monetary Fund officials later this week.

After passing a series of reforms demanded by creditors, such as steep sales tax hikes, the Greek government is hoping negotiations will be completed by Aug. 20 when the country has a big debt repayment of around 3.2 billion euros ($3.5 billion) to make to the European Central Bank.

Without the money from the expected three-year bailout totaling around 85 billion euros, Greece would be unable to make that payment — a development that would likely trigger fresh fears over the country’s future in the euro.

But the reforms have come at a price for Tsipras. One in four of his lawmakers refused to back them in two votes in parliament, arguing that they flew in the face of Syriza’s anti-austerity platform in January’s election.

The laws were passed with solid backing from pro-European opposition parties, but left Tsipras without an effective parliamentary majority. That has stoked talk of early elections, just six months into Tsipras’ four-year mandate.

“We must seal the (bailout) agreement and immediately afterwards launch an electoral process,” said senior Syriza official Dimitris Vitsas, who is the deputy defense minister. “After that (there will be) a new government with a fresh mandate.

Mina Andreeva, a spokeswoman at the European Commission, said teams from the institutions are “now already on the ground in Athens and work is starting immediately.”

She added that, while Athens has already delivered “in a timely and overall satisfactory manner” the reforms demanded for the talks to start, more will be required to secure a swift rescue loan disbursement.

“And this is also what is being discussed right now.”

Greece has relied on bailout funds for a little more than five years after being locked out of international bond markets. In return for around 240 billion euros worth of rescue money, successive Greek governments have had to enact a series of income cuts, tax hikes and economic reforms.

Though the measures drastically contained budget overspending, they hit economic activity hard and drove unemployment to record peacetime highs. And because the Greek economy is around 25 percent smaller than it was, the country’s debt burden has increased to around 170 percent of Greece’s annual GDP.

Some sort of debt relief for Greece is up for negotiation though a direct cut in the amount owed is off the agenda. The IMF has said Greece needs big relief and has advocated delaying Greek debt repayments to European creditors for many years.

ECB executive board member Benoit Coeure said in an interview published Monday that Greek debt relief “is no longer a matter of debate” but must come alongside measures to turn the Greek economy around.

“In truth, the question is not whether Greek debt should be restructured, but how to do it so it really benefits the country’s economy,” he told French daily Le Monde.

___

Derek Gatopoulos in Athens, Raf Casert in Brussels and Geir Moulson in Berlin contributed.

TIME Greece

Greek Lawmakers Approve New Reforms Needed for Bailout

Greek Prime Minister Alexis Tsipras addresses a session at the Greek parliament prior the vote in Athens early on July 23, 2015.
Louisa Gouliamaki—AFP/Getty Images Greek Prime Minister Alexis Tsipras addresses a session at the Greek parliament prior the vote in Athens early on July 23, 2015

"We are summoned today to legislate under a state of emergency"

(ATHENS, Greece)— Greece’s radical left-led government emerged bloodied but alive early Thursday from a key vote in parliament, which overwhelmingly approved new creditor-demanded reforms despite a revolt among hardliners in the main coalition partner.

The reforms to the judiciary and banking systems were the final hurdle the financially-battered country was obliged to clear before it can start talks with its creditors on a third bailout worth around 85 billion euros ($93 billion).

Without the money Greece would face financial ruin and forced exit from the euro currency club.

Lawmakers voted 230-63 in favor of the measures, following a whirlwind debate that ended at 4 a.m. (0100 GMT). Another 5 members of the 300-seat house voted present, a kind of abstention.

Prime Minister Alexis Tsipras was unable to forestall a second revolt in a week among his own Syriza party lawmakers, but had no trouble passing the draft legislation with the backing of pro-European opposition parties.

Government spokeswoman Olga Gerovasili conceded that there is a clear rift within Syriza, but would not say whether rebels would be expelled.

“From this point on, party procedures will be followed in order to deal with the problem,” she said after the vote.

The number of disaffected Syriza lawmakers, who see the reforms as a betrayal of the anti-austerity platform that brought their party to power in January, shrunk slightly compared to last week’s similar vote — from 38 to 36. But that is still roughly a quarter of all party lawmakers.

Addressing parliament before the vote, Tsipras said the reforms were a necessary price to pay to keep Greece alive after stormy talks with its creditors nearly collapsed earlier this month.

“We have chosen a compromise that forces us to implement a program in which we do not believe, and we will implement it because the alternatives are tough,” he told lawmakers. “We are summoned today to legislate under a state of emergency.”

Tsipras also ruled out resigning.

“The presence of the left in this government isn’t about the pursuit of office, it’s a bastion from which to fight for our people’s interests,” he said. “And as far as I’m concerned, I won’t abandon this bastion, at least of my own free will.”

Tsipras said approval would give Greece breathing room to quash speculation that the country will be forced to abandon the euro, and help it regain market confidence and eventually tap bond markets again.

Before the debate got underway, about 10,000 people demonstrated outside parliament, protesting the latest measures to overhaul Greece’s judicial and banking sectors. Minor violence marred the end of the protest when a few teenagers threw petrol bombs at riot police, but no injuries or arrests were reported.

Negotiations with creditors are now expected to start soon.

“From this point on, the government will focus all its attention on negotiating efforts in order that the agreement is concluded,” Gerovasili said. She also pledged action to tackle corruption and tax evasion, address the “humanitarian crisis” in a country where more than a quarter of the workforce is jobless and poverty has soared, and restart the recession-mauled economy.

The Syriza-led coalition government hopes the new bailout talks can conclude before Aug. 20, when Greece must repay a debt worth more than 3 billion euros ($3.3 billion) to the European Central Bank.

On Wednesday, the ECB provided a new vital cash injection to Greece’s battered banks. A European banking official told The Associated Press the ECB decided to increase emergency liquidity to Greek banks by 900 million euros ($980 million) — the second such cash injection in just under a week.

Fearing a run by depositors flocking to take their savings out of Greek banks, the government imposed capital controls more than three weeks ago, restricting daily withdrawals to 60 euros ($65) per account holder. Extra ECB liquidity means that Greek banks will still be able to hand out cash.

Greece has relied on bailout loans totaling 240 billion euros since 2010 after it was locked out of international money markets. It nearly crashed out of the eurozone this month, after relations between Athens and its creditors hit rock-bottom, and was only saved by a last-minute U-turn from Tsipras.

Thursday’s vote was Tsipras’ second crunch test in parliament in a week.

Many in Syriza, including former finance minister Yanis Varoufakis, voted against last week’s austerity measures, which included a big hike to sales taxes that took effect on Monday. But Varoufakis voted in favor of the new reforms Thursday.

An increase in the number of dissenters would have left Tsipras politically hamstrung. Although he would still retain a nominal parliamentary majority — as he has shown no inclination to expel rebels — Tsipras would depend on the support of opposition parties to pass any new reforms.

Syriza rebels in Thursday’s vote included the firebrand parliament speaker, Zoe Konstantopoulou. In a letter to Greece’s president and Tsipras, Konstantopoulou asserted the measures were a “violent attack on democracy,” arguing that lawmakers had been given very little time to study the voluminous bill.

Tsipras has accused party critics of acting irresponsibly.

The reforms approved Thursday are aimed at reducing the country’s court backlog and speeding up revenue-related cases. Greek lawyers’ associations oppose them, arguing that they will have the opposite effect.

Justice Minister Nikos Paraskevopoulos conceded that the government would have preferred changes, but added that Greece is “in a state of emergency” and the alternative to accepting the proposed reforms would be the country’s forced exit from the eurozone.

“Out of two problems, I chose the milder one,” he said.

Lawmakers also approved reforms related to banking union mechanisms, aimed at reducing the risk for European governments from bank crises.

In Brussels, Pierre Moscovici, the European Union’s top economy official, said he hopes the bailout deal can be signed by mid-August, although he acknowledged that means Greece has to meet a “punishing” schedule.

In return for Greece’s bailouts, successive governments have had to enact harsh austerity measures to try to get public finances into shape. Though the annual deficit has been reduced dramatically, the country’s debt burden has risen as the Greek economy has shrunk by around a quarter.

The European Union’s statistics agency announced Wednesday that Greece was making some progress on the debt front at the start of 2015, improvement that was largely erased by the bank closures and other recent events.

Following repayments to European creditors and the International Monetary Fund, Eurostat said Greece’s debt fell to 301 billion euros at the end of the first quarter from 317 billion at the end of 2014. That took the country’s debt burden down to 168.8 percent from 177.1 percent.

Greece’s debt still remains the highest in the 19-country eurozone by a wide margin.

___

Derek Gatopoulos in Athens and Raf Casert in Brussels contributed to this report.

TIME Greece

Thousands of Refugees are Overwhelming Greek Tourist Islands

Lesbos Greece refugees migrants
Louisa Gouliamaki—AFP/Getty Images Syrians disembark on the island of Lesbos, Greece, early on June 18, 2015.

Syrian refugees risk a perilous journey before arrive at the island of Lesbos

Perhaps it’s the stench of human waste, or the puddles of putrid water at the Kara Tepe transit camp which show the extent of the refugee crisis facing Greece. The six toilets at the entrance of the camp of 2,500 people are not properly connected to the water supply and rarely work; when they do, they quickly become blocked.

Lesbos is the third biggest Greek island and has a population of 90,000 yet it has been overwhelmed in recent days by the arrival of more than 5,000 Syrian refugees. “People have taken to defecating in the open”, says Kirk Day of the International Rescue Committee (IRC), which is launching a new water and sanitation program there this week.

The refugees have to travel six miles by sea from the Turkish coast. First they crowd onto boats operated by people smugglers and then crowd into inflatable dinghies for the final stretch. “It is a death trip; a death trip,” says 26-year-old Fahd Majzoub from Damascus, who paid $1,200 to smugglers and hopes to get to Germany. “If the Turkish police had arrested us along the way, there’s no way I’d try it again – I’d just go back to Syria.”

Upon arrival at Molyvos, the far northern tip of the island, refugees must walk 70 kilometres (44 miles) to Lesbos port to register with port police. For the elderly, sick or families with small children, it can take 2 days to walk to the port in temperatures above 80 degrees. After around 10 days, they should be given documentation of their refugee status by Greek officials which allows them leave for Athens and then, they hope, to more prosperous European countries.

“We walked about 70 kilometres to get here, a night and a day. No-one stopped to take us. Look at my legs and feet – they’re destroyed,” says Abu Ahmed, who left his family in Raqqa in Syria, the capital of the territory held by the Islamic State in Iraq and Greater Syria. He hopes his wife and disabled daughter will follow when he sets up a new home in Germany. “I don’t mean the Greeks are not friendly; they are very nice and they are in a bad economic situation, but we are also human,” he says.

Syrian migrants Lesbos
Tyler JumpJasoun Al Ahmad and her niece from Idlib, Syria, in Lesbos.

Jasoun Al Ahmad from Idlib in Syria says the boats she travelled on was overcrowded. “The boat can carry 20 people but there were 44 of us in it. We had no water for a long time and my niece was very sick.”

The Greek coast guard and port police are completely overwhelmed by the refugee numbers. The coast guards enter the sea to rescue civilians, although unknown numbers still drown. “There are more in the sea than we have ever recorded; there are many more dead,” says Giorgos Tyrikos Ergas, a fisherman and volunteer providing shelter and support for the refugees. “The dead will keep coming from the bottom of the sea and people will keep drowning because there’s no other way for them to escape war and misery.”

Last year, August and September saw the largest numbers of refugees arrive in the Greek islands, according to IRC, which alongside the United Nations High Commission for Refugees is bracing itself for a similar increase this year.

So far, refugees have been treated with remarkable kindness and generosity from local residents and tourists. But as the numbers continue to grow it may not be long before the goodwill dissipates. One or two cars speeding past a cluster of tents outside Kara Tepe beeped loudly and shouted racist slogans. ‘Get out; you’re not welcome’, was the rough translation.

TIME Greece

Greek Parliament Will Vote on More Bailout Conditions

Greek Prime Minister Alexis Tsipras addresses the members of the parliament during a parliamentary session in Athens, on July 15, 2015.
Alexandros Vlachos—EPA Greek Prime Minister Alexis Tsipras addresses the members of the parliament during a parliamentary session in Athens on July 15, 2015

Tsipras has imposed a tough new round of austerity measures

(ATHENS, Greece) — Greece’s parliament has begun an emergency debate on a second round of conditions demanded by international creditors for a new bailout — a vote that could threaten the coalition government.

Lawmakers late Wednesday will vote on judicial and banking reforms set as a requirement by other Eurozone countries for a third Greek rescue package worth 85 billion euros ($93 billion).

Prime Minister Alexis Tsipras is already relying on support from pro-European opposition parties to gain parliamentary approval for bailout conditions, amid growing dissent within his left-wing Syriza party.

Tsipras has imposed a tough new round of austerity measures this month and needs to conclude the bailout negotiations before Aug. 20, when Greece must repay loans worth more than 3 billion euros ($3.3 billion) to the European Central Bank.

TIME Innovation

Releasing Drug Offenders Won’t End Mass Incarceration

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

These are today's best ideas

1. Releasing drug offenders won’t end mass incarceration.

By Oliver Roeder at FiveThirtyEight

2. Here’s the real solution to Greece’s woes. (Hint: It’s not crushing austerity measures.)

By James Surowiecki in the New Yorker

3. The “entrepreneur gene” is a myth.

By Aimee Groth in Quartz

4. To protect the brain health of our children, tackle poverty.

By Joan L. Luby in JAMA Pediatrics

5. Stop obsessing over why people become terrorists.

By Isabel Larroca in the Wilson Quarterly

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Greece

Greek Banks Reopen Amid Restrictions

Greece Facing Uncertain Future After Rejecting EU Proposals
The Asahi Shimbun/Getty Images A man withdraws cash from an ATM in Athens on July 9, 2015

Greece closed its banks beginning June 29 to prevent a bank run

(ATHENS, Greece) — Greeks woke up Monday morning to a new era: banks were finally open after being closed down for three weeks but new taxes meant coffee, tea and even condoms all cost more.

In downtown Athens, people queued up in an orderly fashion as the banks unlocked their doors at 8 a.m., taking a number and reading the paper as they waited for their turn at the till.

Many restrictions on transactions, including cash withdrawals, remained, however.

The Greek government kept the daily cash withdrawal limit at 60 euros ($65) but added a weekly limit of 420 euros ($455) that will be available beginning Sunday. This means depositors who don’t make it to the bank on Monday to withdraw cash could pull out 120 euros ($130) on Tuesday instead, and so on, so Greeks don’t have to feel they need to visit an ATM every day.

Bank customers will still not be able to cash checks, only deposit them into their accounts, and they will not be able to get cash abroad with their credit or cash cards, only make purchases. There are also restrictions on opening new accounts or activating dormant ones.

Many goods and services also just became more expensive as a result of a rise in Value Added Tax approved by Parliament on Thursday, among the first batch of austerity measures demanded by Greece’s creditors. Lawmakers also agreed to deep reforms in Greece’s pension system including a gradual phasing out of all early retirement options.

The VAT rose from 13% to 23%, making some meats, cooking oils other than olive oil, cocoa, vinegar, salt, flowers, firewood, fertilizer, insecticides, sanitary towels and other basics all more expensive.

Services hit by the new VAT increases include restaurants and cafes, funeral parlors, taxis, cramming and tutorial schools — very popular with Greek students seeking to make up for the deficiencies of the school system — language institutes and computer learning centers. Public transport fares are expected to rise early next month.

On the bright side, the government pushed back the deadline for filing income taxes by a month to August 26.

Over the weekend, Greece’s coalition government swore in its new, reshuffled cabinet, replacing five prominent dissidents from the radical left Syriza party, the senior coalition party. Four of them had voted against the agreement with Greece’s creditors and the fifth had resigned before the vote.

The most urgent business for the reshuffled government is to pass another batch of austerity measures by Wednesday or early Thursday.

Greece closed its banks beginning June 29 to prevent a bank run as its second international bailout expired. After the Greek Parliament passed an agreement Thursday to seek a third bailout, the European Central Bank raised its emergency funding to the cash-strapped Greek banks.

Since Greece has a big loan payment due Monday to the ECB, plus arrears owed to the International Monetary Fund, the European Union decided Friday to release a short-term loan of 7.16 billion euros ($7.75 billion) to help Greece make those payments.

TIME Greece

Germany Rules Out ‘Haircut’ for Greek Debt

Germany Merkel Interview
Joerg Carstensen—AP German Chancellor Angela Merkel waits prior to an interview at the TV studios of German public broadcaster ARD in Berlin on July 19, 2015.

This "cannot happen in a currency union"

BERLIN — Chancellor Angela Merkel on Sunday suggested that Germany would show flexibility in negotiating how Greece deals with its massive debt, but again ruled out writing off part of the money.

Speaking on ARD television’s Bericht aus Berlin program, Merkel said that “a classic haircut of 30, 40 percent of debt cannot happen in a currency union.”

But Merkel, who persuaded German lawmakers on Friday to give their overwhelming backing to another financial rescue package, suggested that she was open to discussing ways to lessen the burden on Athens.

She said, for example, Greece previously has been given more favorable interest rates, time extensions and other relief

“We can talk about such things again,” she said, but added such talks could only begin after details of Greece’s bailout program are finalized.

Though the broad outlines of the Greek bailout were agreed last Monday by the eurozone’s 19 leaders, the details are now being negotiated.

The discussions, which are expected to last four weeks, will include economic targets and reforms deemed necessary in return for an anticipated 85 billion euros ($93 billion) over three years.

Merkel pushed for them to move as quickly as possible, saying that it was important that “the country gets back on both feet quickly.”

Asked about Finance Minister Wolfgang Schaeuble’s suggestion last week that Greece could take a five-year “timeout” from the shared euro currency to address its economic problems, Merkel said the idea of a “Grexit” was no longer on the table.

“The option was discussed but we decided on this option, which was quite apparently the right one for all the other” eurozone nations, she said.

Talking to Parliament on Friday, Merkel said the alternative to the new rescue package “would not be a time-out from the euro that would be orderly … but predictable chaos.”

German Vice Chancellor Sigmar Gabriel, who is also economy minister and chairman of Merkel’s junior coalition partner, the Social Democrats, on Sunday criticized Schaeuble for bringing up the idea of a timeout, saying “it wasn’t prudent to make this suggestion as a German suggestion.”

He suggested there was a disconnect between Merkel and Schaeuble, but the finance minister downplayed any differences, saying in a Der Spiegel interview “we’re not always of the same opinion but we’re on the same path.”

Merkel skirted the issue when asked about internal strife, saying only that her coalition and her party would work together going ahead, and that “the finance minister will conduct the negotiations the same way I will.”

TIME Greece

E.U. Approves Short-Term Cash for Greece

E.U. is sending 7.16 billion euros of bridge financing to Greece by Monday

(BERLIN) — The bailout of Greece took two big strides forward Friday as German lawmakers overwhelmingly gave their backing to another financial rescue and the European Union confirmed it would get Athens enough money to avoid an imminent debt default.

The twin developments capped a week in which the proposed bailout agreed by the 19 eurozone leaders Monday has cleared a string of hurdles.

As a result, expectations have risen that Greece will secure a three-year financial bailout which will allow it to get back toward some sort of economic normality following weeks of crisis that’s seen banks shuttered and withdrawals at ATMs limited to a paltry 60 euros a day.

The first big development Friday was the news that German lawmakers, following more than three hours of debate, voted 439-119 in favor of opening detailed discussions on the bailout package, after Chancellor Angela Merkel warned that the cash-strapped country would face chaos without a deal.

That was later followed by confirmation that the EU had worked out the mechanism it would use to get Greece 7.16 billion ($7.7 billion) in short-term cash by Monday, when it has a 4.2 billion-euro payment due to the European Central Bank.

“What we’re witnessing is European solidarity in action,” said Valdis Dombrovskis, the EU Commission’s vice president for the euro, who revealed the news of the short-term bridging loan.

“Politicians across 27 countries have invested their own political capital to speed through national decisions to shoulder Greece at this difficult time for the country,” he added.

Without the so-called bridge financing, which will come from funds remaining in a long-dormant EU program called the European Financial Stabilization Mechanism, Greece would not have been able to make the payment.

Though the broad outlines of the Greek bailout were agreed Monday, specific terms will now be thrashed out between Greece and its European creditors.

The process is expected to last around four weeks and to lead to Greece getting around 85 billion euros ($93 billion) to help it pay off upcoming debts.

Germany has been the largest single contributor to Greece’s bailouts and has taken a hard line, insisting on stringent spending cuts, tax hikes and wide-ranging economic reforms in return.

“The principle … of responsibility and solidarity that has guided us since the beginning of the European debt crisis marks the entire result from Monday,” Merkel told the special session of Parliament.

The alternative to an agreement, she added, “would not be a time-out from the euro that would be orderly … but predictable chaos.”

Merkel will have to return to Parliament to seek approval for the final deal when the negotiations are concluded.

“I know that many have doubts and concerns about whether this road will be successful, about whether Greece will have the strength to take it in the long term, and no one can brush aside these concerns,” she said. “But I am firmly convinced of one thing: we would be grossly negligent, even irresponsible, if we did not at least try this road.”

Merkel’s finance minister, Wolfgang Schaeuble, who has talked particularly tough on Greece, said Germany will do its utmost to “making this last chance a success” — provided Greece does its part.

Bailing out Greece hasn’t been popular in Merkel’s conservative bloc and 60 of its lawmakers failed to back her Friday, with another five abstaining.

In Athens, Greek Prime Minister Alexis Tsipras is widely expected to reshuffle his Cabinet Friday or over the weekend, following a rebellion within his party over a parliamentary vote to approve the measures demanded for the bailout talks to start.

A little more than a quarter of the 149 lawmakers from Tsipras’ radical-left Syriza party either voted against or abstained in Wednesday’s vote. Tsipras still won an overwhelming majority as three opposition pro-European parties backed the proposals.

The legislation, which includes consumer tax increases and pension cuts, was demanded as a precondition to the launch of negotiations on a third bailout. Elements of the bill are being implemented immediately, with changes to consumer tax coming into effect Monday, the finance ministry said.

Also this week, the ECB raised emergency liquidity assistance to Greek banks.

The first visible sign of economic healing in Greece will emerge when the banks open their doors again. On Thursday, the government said they would reopen Monday for limited transactions, for the first time in three weeks after capital controls were imposed June 29 ahead of a referendum Tsipras called on previous creditor proposals.

Tsipras has acknowledged that the package he signed up to went against his election promises to repeal austerity imposed over the last five years in return for Greece’s two international bailouts. But he has insisted he had no other choice, as the alternative would have seen Greece forced out of the euro — a development that would have further crashed the Greek economy as well as roiling financial markets.

In a party meeting Thursday, Tsipras criticized the hardliners who voted against him, arguing that their decision was “in conflict with the principles of comradeship and solidarity and at a crucial time creates an open wound,” according to a government official at the meeting. The official revealed details of the closed-door meeting on condition of anonymity.

The dissenters’ decision, Tsipras said, forced him to continue governing with a minority government until Greece’s bailout deal is concluded.

 

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