Search

Begin New Search Political Geography Greece

231. Cyprus – Should the UN Withdraw?

Author:
Jan Asmussen
Publication Date:
04-2011
Content Type:
Policy Brief
Institution:
European Centre for Minority Issues (ECMI)
Abstract:
Ban Ki Moon’s long awaited progress report on the negotiations in Cyprus did not come up with a final recommendation on how long the United Nations will be committed to engage in Cyprus. However, he warned that the UN would not continue indefinitely to spend efforts and money on a process that does not seem to render any progress. Indeed there is not much to suggest that a negotiated solution is anywhere close to be concluded in the foreseeable future. This appears strange as on the onset the past three years have seen the most intensive and most comprehensive negotiation process ever.
Topic:
Diplomacy, International Cooperation, United Nations, and Negotiation
Political Geography:
Europe, Turkey, Greece, and Cyprus

232. Is Greece heading for default?

Publication Date:
02-2010
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Greece has slid into a serious fiscal crisis over the last few months. A ballooning budget deficit and high levels of government debt have raised questions in the minds of investors about the sustainability of the country's public finances. The level of concern among investors can be seen from developments in Greek borrowing costs relative to those in Germany. At the beginning of 2008, the yield on Greek 10-year bonds was only around 0.3% higher than on equivalent German securities, but this gap has now risen to over 3%. This yield spread is at its widest for more than a decade and is by far the largest within the Eurozone. The root cause of Greece's problems is a long period of fiscal indiscipline. In 2009, after years of heavy spending, the budget deficit rose to almost 13% of GDP and the public debt to GDP ratio is set to reach 125% this year. The deteriorating fiscal position has led to a slew of ratings downgrades, and outside the Eurozone Greece's credit rating would probably be in 'junk' territory. On top of the fiscal problems, Greece also suffers from weak external competitiveness. The real exchange rate has appreciated substantially since Greece joined the Eurozone, contributing to a sharp widening in the current account deficit to around 12% of GDP last year. On some estimates, the real effective exchange rate is now around 20% overvalued. As a result Greece now faces a series of policy choices all of which look unpalatable. Within the Eurozone, the only realistic orthodox option is a combination of massive fiscal retrenchment and 'internal devaluation' – forcing down costs relative to those of Greece's competitors. But fiscal cutbacks and cost deflation on the scale required could plunge the country into a deep and prolonged recession and might prove politically and socially unsustainable. The Greek economy is already showing signs of serious stress, with GDP down 2.6% on the year in 2009Q4. The extreme alternatives are default and/or leaving the Eurozone and enacting devaluation. But the political barriers to such moves are immense, and while default and devaluation could ease budgetary and external imbalance problems, they would also cause massive economic and financial disruption and probably a deeper recession in the near-term. Default and devaluation would also risk huge negative contagion effects on the Eurozone and the wider global economy. With Greece's debt approaching €300 billion a default would be the largest sovereign collapse since WWII, dwarfing those in Russia and Argentina. Eurozone banks could face losses of up to €100 billion on top of the heavy writedowns already suffered, risking a renewed Europe-wide credit squeeze. There could also be collapses in demand for the debt of other weaker Eurozone members such as Spain, Portugal and Ireland. World markets for equities, corporate bonds and emerging market debt would also likely be badly affected. There could also be pressure for the major economies to accelerate their fiscal adjustment efforts, given the impact on investor confidence and the scale of their budget deficits. Our estimation results suggest that a Greek default could be a real threat to the progress of the global recovery, cutting growth in the major economies by around 1% per annum compared to our baseline forecast and world growth by 0.6%. Given the potential massive consequences of a Greek default, the pressure for a bailout has been growing. Although there are questions about the legality of such a move, we believe it is possible if the political will exists. Estimation results using the Oxford Model suggest a bailout would be likely to be less economically damaging than a default, even assuming some negative impact from higher bond yields in the core Eurozone countries. The costs of a bailout could rise rapidly, however, if it extended beyond Greece to other troubled countries. A bailout would create a big risk of moral hazard, perhaps inducing fiscal misbehaviour among other Eurozone members or being used by Greece to sidestep the necessary adjustment. To avoid this, any bailout would have to incorporate strict conditionality, perhaps raising serious questions about fiscal sovereignty within the Eurozone. Over the last two weeks, the other EU countries have taken a relatively hard line with Greece, stopping short of announcing explicit financial support and pushing for strong fiscal adjustment measures. Although a bailout remains the most likely outcome if Greece struggles to refinance its debts, there are some signs that political resistance to such a move is growing. The key risk period could be April-May, when a large volume of Greek debt matures.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
Europe, Greece, and Argentina

233. Adjustment Difficulties in the GIPSY Club

Author:
Daniel Gros
Publication Date:
03-2010
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper describes the key economic variables and mechanisms that will determine the adjustment process in those euro area countries now under financial market pressure. (Greece, Ireland, Portugal, Spain and Italy = GIPSY) The key finding is that the adjustment will be particularly difficult for Greece (and Portugal) because these are two relatively closed economies with low savings rates. Both of these countries are facing a solvency problem because they combine high debt levels with low growth and high interest rates. Fiscal and external adjustment is thus required for sustainability, not just to satisfy the Stability Pact. By contrast, Ireland and Spain face more of a liquidity than a solvency problem. Italy seems to have a much better starting position on all accounts. Fiscal adjustment alone will not be sufficient to ensure sustainability. Without significant reductions in labour costs, these economies will face years of stagnation at best. Especially in the case of Greece, it is imperative that the cuts in public sector wages are transmitted to the entire economy in order to restore competitiveness, and thus ensure that export growth can become a vital safety valve. Without an adjustment of wages in the private sector, the adjustment will become so difficult that failure cannot be excluded.
Topic:
Debt, Economics, Monetary Policy, and Financial Crisis
Political Geography:
Europe, Greece, Spain, Italy, Portugal, and Ireland

234. Crisis in the eurozone and how to deal with it

Author:
Paul De Grauwe
Publication Date:
02-2010
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
The crisis that started in Greece culminated into a crisis of the Eurozone as a whole. How did we get into this mess? To answer this question it is useful to distinguish the three actors that have played a role in the development of the crisis: Greece, the financial markets (including the rating agencies) and the eurozone authorities. Let us analyse the role of these three actors in the drama.
Topic:
Economics and Markets
Political Geography:
Europe and Greece

235. Towards a Euro(pean) Monetary Fund

Author:
Daniel Gros and Thomas Mayer
Publication Date:
02-2010
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Despite cobbling together an impressive $1 trillion rescue package for countries with potential funding problems, the threat of a disorderly default still looms over the eurozone, creating systemic financial instability at the EU and possibly global level. Against this background, Daniel Gros and Thomas Mayer renew their call for the creation of a European Monetary Fund (EMF) in an update to their Policy Brief issued in February.
Topic:
Economics, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Greece

236. A Forgotten Promise: Ending the Isolation of Turkish Cypriots

Author:
Mensur Akgün and Sylvia Tiryaki
Publication Date:
03-2010
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
Despite repeated calls and promises, Turkish Cypriots live in economic, political and humanitarian isolation. This paper tries to address one aspect of it and elaborates on the legal basis of these isolationist practices imposed on one side of the island. It challenges the international legal validity of the de facto sanctions. Furthermore, it claims that lifting economic isolation will also serve as a confidence building tool between Greek and Turkish Cypriots as well as between Turkey and the Republic of Cyprus represented by the Greek Cypriots since such an act will lead to Turkey's reciprocation and the normalization of relations with the Republic of Cyprus. It also argues that neither the UN, nor the EU has ever imposed any sanctions on Turkish Cypriots and the policy of isolation, as such, has only been practiced by the Greek Cypriots and the Greeks. This paper intends to clarify the distinction between sanctions and non-recognition. It also highlights the promises made by the EU to the Turkish Cypriots, in particular, the one made on April 26, 2004, when the Council of the EU proclaimed its commitment to end the isolation of the Turkish Cypriot community.
Topic:
Economics and United Nations
Political Geography:
Turkey, Greece, and Balochistan

237. The Ashgate Research Companion to the Politics of Democratization in Europe

Author:
Yaşar Yakış
Publication Date:
03-2010
Content Type:
Journal Article
Journal:
Insight Turkey
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
This edited volume brings together 23 articles by various authors who examine different aspects of European democratisation under four headings: Concepts, Practices, Changes and Contexts. In the first section, “Concepts,” contributors tackle different definition of democracy, drawing on discussions in classical literature and examining contemporary challenges to democratization in the global age. In the opening article, “Representative Democracy: Rosanvallon on the French Experience,” Frank R. Ankersmit claims that representative democracy has advantages over direct democracy, as the laws governing the former provide foundational bases for a political order. In the following article, “Direct Democracy, Ancient and Modern,” Mogens H. Hansen looks at direct democracy more closely. The author points out that direct democracy existed only in Ancient Greece and that several centuries after the Hellenic era, scholars introduced the concept of representative democracy and institutions but no serious debate took place regarding the democratic character of these institutions. Hansen discusses the prospects of revitalizing the institution of direct democracy through the use of modern tools. In her article, entitled “Neither Ancient nor Modern: Rousseau's Theory of Democracy,” Gabriella Silvestrini discusses Rousseau's perception of democracy and concludes that it had very little relevance to majority rule. In “Representative Government or Republic? Sieyes on Good Government,” Christine Faure focuses on controversial thinker Abbe Sieyesm, and argues that, in his time, he suggested an elected king who would resemble the modern institution of the President of the Republic.
Topic:
Government
Political Geography:
Europe, Greece, and Tripoli

238. What now for the 'peripheral' Eurozone countries?

Publication Date:
05-2010
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Over the weekend the EU put together a large-scale package worth up to €720 billion aimed at stabilising all the 'peripheral' Eurozone countries, in the face of mounting contagion risks. This came on top of an earlier financial support package for Greece worth €110 billion. The latest move has brought some relief to bond markets, but major challenges remain. Investors remain concerned about the capacity of Greece to stick to the immense fiscal adjustment needed in the face of a very deep recess ion and mounting social unrest. With the debt/GDP ratio set to keep rising to almost 150% in the next few years, concerns remain that some kind of debt restructuring or default cannot be avoided. For the other peripherals, too, the outlook remains bleak – while the immediate threat of a collapse in their debt markets has been averted, years of fiscal austerity and slow growth remain ahead.
Topic:
Debt, International Political Economy, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:
Greece

239. EU-India strategic partnership: Taking the stock

Author:
Alok Rashmi Mukhopadhyay
Publication Date:
08-2010
Content Type:
Working Paper
Institution:
Institute of Foreign Policy Studies, University of Calcutta
Abstract:
The prevalent perception of the European Union (EU) in India is predominantly constructed by the British and American media. At the time of a global economic downturn, its ripple effects on the continent especially on the 'PIIGS' (Portugal, Ireland, Italy, Greece and Spain) and an imminent crack in the Eurozone have been the debate of the day. In a recent article in The National Interest, James Joyner, has however examined this genre of 'Europe's obituary'. Making a comparison with EU's transatlantic sibling, he identifies three errors in this type of analyses, 'treating the EU as if it were a nation-state, regarding anything less than utopia as a failure, and projecting short-term trends long into the future'. However Joyner is also right when he describes the EU as 'a confusing array of overlapping treaty commitments'.
Topic:
Foreign Policy, Diplomacy, Economics, International Trade and Finance, and Bilateral Relations
Political Geography:
United Kingdom, America, Europe, India, Greece, Spain, Italy, Portugal, and Ireland

240. US Hamas policy blocks Middle East peace

Author:
Henry Siegman
Publication Date:
09-2010
Content Type:
Working Paper
Institution:
Norwegian Centre for Conflict Resolution
Abstract:
Failed bilateral talks over these past 16 years have shown that a Middle East peace accord can never be reached by the parties themselves. Israeli governments believe they can defy international condemnation of their illegal colonial project in the West Bank because they can count on the US to oppose international sanctions.
Topic:
Peacekeeping
Political Geography:
United States, Middle East, Israel, Greece, Spain, Italy, and Ireland