Press Watch - The Best from Greece

One day after an EU summit where leaders were supposed to have taken bold steps to save the euro, the Athens press nervously depicted the quiet before the storm that it expects, after the impending write-down of Greek debt.  

 

“The negotiation continues. It continues with Greece present, with Greece having clear targets,” Prime Minister George Papandreou declared in a terse, televised statement the previous night. He spoke of Greece’s “unprecedented national effort and fiscal adjustment”. “We are a proud people and we are entitled to that respect,” he underlined.  

 

But it was hardly clear that Greece’s strongest partners were on the same wave length. At a joint press conference held a bit earlier by German Chancellor Angela Merkel and French President Nicolas Sarkozy, the two leaders were asked to justify their utter incompetence in handling the European debt crisis for nearly two years. Sarkozy took it upon himself to cite Ireland and Portugal as the emerging success stories of EU policy, but he conspicuously left Greece out, suggesting that Athens alone is not doing its share. The thinly veiled insult was widely perceived as a barely diplomatic condemnation of the Greek government’s failure to implement reforms.

 

That failure, of course, may soon be academic, as dailies grimly predicted that Greece will be subjected to a full-fledged EU guardianship, following a debt write-down expected to be around 50 percent is announced at a second summit on October 26. In the interim, banks will be pressured to accept the “voluntary” haircut, which most Greek media and pundits believe will not make the debt viable anyway. The sweeping socio-economic impact of the impending big, fat Greek haircut preoccupied the front pages of daily newspapers.

 

“Blackmail from Merkel on haircut-oversight” trumpeted Ethnos’ banner headline. The paper reported that voluntary bank participation in a major write-down remains a “thorn” and that Merkel is intent upon sending to Greece  permanent EU overseers, who will call the shots at major ministries.

 

That has led much of the press to predict that such a sweeping violation of national sovereignty will leave Papandreou no choice but to hold elections. Clearly, the growing number of ministers and Pasok MPs who demand that the premier take “political inititiatives” are well aware of what is coming. They are convinced that Pasok alone cannot withstand the crushing burden of handing the country over to foreign trustees. And that is something that cannot be made palatable to the public with even the most masterful management of public relations.

 

“Deep haircut and games with fire” read the headline of Ta Nea, which concluded that Merkel’s opposition to measures that will bolster the EFSF bailout fund may lead markets to view upcoming EU decisions as inadequate. The lead story outlined the pros (reduced interest payments, more manageable debt, and greater chance of exiting the crisis in three to five years, if new deficits do not accumulate) and the cons (if the haircut is considered a credit event, Greek banks won’t have liquidity and Greece’s return to the markets is put off indefinitely) of a deep haircut.

The distinct possibility of the nationalisation and sell off of banks as a result of a credit event is not mentioned.

 

“Extras in Brussels” was how Eleftherotypia described Papandreou and his finance minister, Evangelos Venizelos,  at the EU summit, comparing them to silent walk-on characters in a film. “The banks’ keys go the barber” warned the paper, explaining that Greek banks, to make up losses from the haircut, will have to seek aid from the relevant bank bailout fund, leading to their nationalisation.

 

“Return to the drachma the only solution that will save the country” blared tabloid Avriani. “Only by exiting the euro will businesses, banks, insurance funds, salaries, pensions and state assets be saved,” the front-page declared.

It featured a photo of the old one drachma coin, with a solitary boat sailing on the seas, an inadvertent parallel to Greece’s less than splendid isolation after exiting the euro.