Four months before Cyprus takes up the EU’s rotating presidency, tensions are increasing on and around the island. While this is partially to do to with a last-ditch attempt by the UN to speed up progress on the peace talks for the reunification of the island, which has ruffled a few feathers, it is far more a consequence of ongoing Greek Cypriot gas exploitation efforts and the linked upgrading of ties with Israel.

Energy reserves in the Levant Basin, which are estimated to be some 122 trillion cubic feet of gas and some 1.7 billion barrels of oil, could make Cyprus energy self-sufficient while transforming Israel into an energy exporter. These developments have annoyed both Turkey and Lebanon, which claim they also have rights to these rich reserves, further destabilizing an already volatile region.

Following the visit of Israeli President Shimon Peres to Cyprus some three months ago, Prime Minister Benjamin Netanyahu visited Cyprus last week, and it was the first time an Israeli prime minister has visited the island. Historically, the Greek Cypriots have had a very cautious approach towards developing closer ties with a country that shared such close military ties with Turkey. However, since Turkey fell out with Israel, Tel Aviv has moved to warm up relations with both Greece and Cyprus, with which it is now building up ties in a number of different sectors. The top priority is energy including the possibility of a joint pipeline to export gas to Europe and Asia, although this has not yet been agreed to by the Greek Cypriots.

Apart from energy, other areas for cooperation include tourism, health and defense. The two signed a military “search and rescue agreement” that allows Israel to use Cypriot airspace and territorial waters in case of accidents or actions against oil or gas rigs in their Exclusive Economic Zone (EEZ). To this end, Israel will apparently create a new division of its armed forces and is planning to purchase new submarines and torpedo boats, seemingly preparing to taking on challengers.

After having to be bailed out of a financial crisis by Russia, there has not surprisingly been a lot of excitement over the expected riches set to flow into Greek Cypriot coffers. Unfortunately, caught up in all the excitement, the Greek Cypriots seem to have forgotten to draw up any sort of energy strategy and seem to be planning from one week to the next. Hence, there has been quite a lot of arguing among the political establishment about who should control the gas. The opposition parties seemingly want to restrict the government’s authority by handing over decision making to technocrats. Furthermore, there is the issue of their Turkish Cypriot brothers, and their rights to share the “gas bounty.”

It has been suggested by former Greek Cypriot Foreign Minister Nicos Rolandis and others that out of the net income from the oil and gas reserves a percentage to be agreed would be deposited in an account for the Turkish Cypriots. This would be payable either upon solution of the Cyprus problem or at a fixed time to be agreed, whichever happens earlier. What is evident, as was again underlined by Rolandis in a series of letters he published, is that by having such a plan a military adventure would probably be avoided. Moreover, it would represent a constructive gesture to the Turkish Cypriots that could prove conducive to the solution of the Cyprus problem. However, while this has been floated around by some Greek Cypriot politicians, unfortunately, nothing has been followed through or made concrete yet.

Turkey continues to express deep dissatisfaction with the Foreign Ministry, stating that it would “take all necessary measures to protect its rights and interests in recently discovered natural gas deposits off the coast of Cyprus,” dismissing any Israeli-Cypriot deal demarking the maritime borders. The Greek Cypriots continuously complain about this threatening behavior, which they have brought to the EU table, calling for the international community to support them. To a certain degree Cyprus has obtained such support, although behind closed doors in Brussels, a somewhat different opinion is often expressed. Many view the timing to push ahead with the energy explorations as totally undermining the peace talks.

Consequently, the number of mock dogfights between Greece and Turkey has increased. According to Greeks and Greek Cypriots, recent military exercises carried out by Turkey have seen Turkish warships and planes enter into the EEZ and airspace of Cyprus.

It is unfortunate that so far the discovery of these energy reserves has only served to create further instability and undermine efforts to bring greater peace. It should be used to create greater regional harmony in a way that is beneficial to all parties, helping them bury the hatchet and build confidence. While one would like to rule out the chance of military confrontation, unfortunately, it would seem some in the region are still prepared to take that route if necessary.

Τέλος ο Χριστόφιας για το ΑΚΕΛ; Δεν θα είναι ξανά υποψήφιος του κομμουνιστικού κόμματος θα το αξίωμα του Προέδρου της Δημοκρατίας;

Αυτό θα φανεί σε λίγους μήνες. Η επιρροή που έχει ο πρώην ΓΓ του κόμματος, είναι ισχυρή και ενισχύθηκε από τις μεθοδεύσεις του να εκλεγεί ο εκλεκτός του, Άντρος Κυπριανού στη θέση του ΓΓ και αρκετοί από την αυλή του ως βουλευτές. Ωστόσο, δεν μπορεί να μη ληφθεί υπόψη, ότι υπάρχουν εσωτερικές δημοσκοπήσεις του κόμματος, που δείχνουν ότι ο Χριστόφιας δεν είναι εκλέξιμος, δηλαδή αν είναι υποψήφος για επανεκλογή δεν έχει πιθανότητες να κερδίσει.

Οι λόγοι βεβαίως είναι προφανείς: Οι τεράστιες πολιτικές και προσωπικές ευθύνες που έχει για την τραγωδία της 11ης Ιουλίου 2011, η παταγώδης αποτυχία της οικονομικής πολιτικής της διακυβέρνησης του και οι βαρύτατες συνέπειες επί των πολιτών, η φασιστική νοοτροπία της διακυβέρνησης, οι διώξεις, το ρουσφέτι και η αναξιοκρατία και φυσικά το ξεπούλημα πάγιων θέσεων αρχών της Ε/κ πλευράς στο κυπριακό. Τα ανώτατα ηγετικά κλιμάκια του ΑΚΕΛ πρέπει σε σύντομο χρονικό διάστημα να αποφασίσουν αν θα προχωρήσουν με υποψήφιο μια προβληματική πολιτικά προσωπικότητα, όπως αυτή του Χριστόφια, με τον κίνδυνο να χάσουν να είναι παραπάνω από ορατός ή αν θα κάνουν άλλες επιλογές. Ένα από τα σενάρια, είναι να εξευρεθεί υποψήφιος μέσα από τις τάξεις του ΑΚΕΛ. Αυτό το σενάριο συγκεντρώνει τις λιγότερες πιθανότητες υλοποίησης, καθώς κόμματα όπως το ΔΗΚΟ και η ΕΔΕΚ δεν θα ξεγελαστούν με ενός τέτοιου είδους υποψηφιότητα και δεν θα τη στηρίξουν. Ακόμα και στελέχη των δύο αυτών κομμάτων, που θεωρούνται φίλα προσκείμενα στο ΑΚΕΛ, δεν θα μπορέσουν επιχειρηματολογήσουν υπέρ μιας τέτοιας υποψηφιότητας, γιατί θα αποκαλυφθούν. Ακριβώς τα ίδια με τα πιο πάνω ισχύουν για το σενάριο να εξευρεθεί υποψήφιος τύπου Βασιλείου, δηλαδή ένας άσχετος με τα πολιτικά και κομματικά τεκταινόμενα. Κόμματα και ψηφοφόροι δεν πρόκειται να ξεγελαστούν εύκολα. Το άλλο σενάριο είναι να «κρυφτεί» το ΑΚΕΛ πίσω από μια άλλη κομματική υποψηφιότητα και αν χάσει ο υποψήφιος να μην θεωρηθεί απευθείας ήττα. Αν κερδίσει, το ΑΚΕΛ θα συμμετέχει και πάλι στη διακυβέρνηση του τόπου. Το πιο πάνω σενάριο μπορεί να υλοποιηθεί μόνο με στήριξη από το ΑΚΕΛ υποψήφιου, είτε από το ΔΗΚΟ, είτε από την ΕΔΕΚ.

ΣΕΝΑΡΙΟ ΤΡΟΜΟΥ ΓΙΑ ΤΗΝ ΕΔΕΚ ΚΑΙ ΤΟΝ ΟΜΗΡΟΥ

Μέχρι στιγμής σχεδόν βέβαιη πρέπει να θεωρείται η υποψηφιότητα του Προέδρου του ΔΗΣΥ, Νίκου Αναστασιάδη. Ο Μάριος Καρογιάν δήλωσε ότι ο ίδιος δεν θα είναι υποψήφιος. Πολύ πιθανό, αυτό να σημαίνει ότι ο Καρογιάν δεν θα δεχθεί να είναι άλλος από το ΔΗΚΟ υποψήφιος. Σημαντικό είναι επίσης το γεγονός ότι πληροφορίες φέρουν τον Πρόεδρο του ΔΗΚΟ να προσανατολίζεται σε καθαρά ρυθμιστικό ρόλο, δηλαδή το ΔΗΚΟ να στηρίξει άλλο υποψήφιο από την πρώτη Κυριακή των εκλογών. Ο Γιαννάκης Ομήρου είναι εν δυνάμει υποψήφιος. Η εκλογή του στην Προεδρία της Βουλής, το συναινετικό του προφίλ, το γεγονός ότι μετά την έκρηξη στο Μαρί, ο Δημήτρης Συλλούρης είχε προτείνει να αναλάβει ο Ομήρου την προεδρία του κράτους αν παραιτείτο ο Χριστόφιας, όλα αυτά έχουν προσδώσει μια δυναμική σε μια πιθανή υποψηφιότητα του Προέδρου της ΕΔΕΚ.

Αν λοιπόν, υποψήφιοι είναι ο Νίκος Αναστασιάδης και Γιαννάκης Ομήρου, τότε μπορούν να γίνουν οι εξής συνδυασμοί:

1. Ο Αναστασιάδης στηρίζεται από τον ΔΗΣΥ και από το ΔΗΚΟ. Ο Ομήρου στηρίζεται από την ΕΔΕΚ, το ΕΥΡΩΠΑΪΚΟ ΚΟΜΜΑ και τους Οικολόγους.

2. Ο Αναστασιάδης στηρίζεται από τον ΔΗΣΥ. Ο Ομήρου στηρίζεται από την ΕΔΕΚ, το ΔΗΚΟ, το ΕΥΡΩΠΑΪΚΟ ΚΟΜΜΑ και τους Οικολόγους. Το ΑΚΕΛ μπορεί και στις δύο περιπτώσεις να κατεβάσει τον Χριστόφια, είτε άλλο δικό του υποψήφιο, να περάσει στο δεύτερο γύρο και το πιθανότερο να χάσει από τον Αναστασιάδη. Ή μπορεί και στις δύο περιπτώσεις να σπεύσει να στηρίξει τον Ομήρου (δεν θα είναι δύσκολο να θυμηθεί ο Άντρος Κυπριανού ότι δήθεν είναι όμορες δυνάμεις και αριστερά κόμματα η ΕΔΕΚ και το ΑΚΕΛ) και να στείλει τον Ομήρου στο Προεδρικό με όλες τις παρεπόμενες, θετικές για το ΑΚΕΛ, συνέπειες. Τι θα κάνει ο Γιαννάκης Ομήρου; Θα αρνηθεί τη στήριξη που θα τον εκλέξει Πρόεδρο της Δημοκρατίας; Αυτό δεν είναι σενάριο τρόμου και για την ΕΔΕΚ και για την Κύπρο; Το σενάριο, ο τρίτος πόλος να ενωθεί με κοινό υποψήφιο, ο οποίος θα έχει πιθανότητες να περάσει στο δεύτερο γύρο των προεδρικών εκλογών, φαντάζει απίθανο, λόγω των προσωπικών και πολιτικών ατζέντων που έχουν οι δυνάμεις του τρίτου πόλου.

In a recent BBC news story, Paul Mason painted a stark picture of a collapsing Greek society and the average Greek’s growing grave doubts about the failed political system. We found this report very much to the point. Our only footnote was that the situation “on the ground” in Greece is actually a lot worse (only the other day, for example, a BBC TV crew was accosted by Greek bystanders when it began video capturing the evacuation from the gutter of a dead homeless man by paramedics, while soup kitchens proliferate and garbage scavengers now wear jackets and ties.)

The continuing assault by the troika upon Greek society at large remains unabated; you only have to witness the latest round of the game of chicken between the German paymasters and the Papademos government, itself resting on unconstitutional grounds. The Greek middle class — or, at least, what Greeks believed was the ‘middle class’ — is moribund. The less fortunate have sunk deeper; their standard of living has been reduced to that of the 1950s in a country with some of the highest prices in 21st century Europe. Their total demise is only a matter of time. All those who have even the slightest opportunity to escape abroad do so without second thought. Others, with better chances of emigrating, are already gone. Soon, Greece will be a cracked shell containing only those desperados who have nowhere to go; those heroic enough to believe they must fight to the end; and the throngs of illegal immigrants trapped inside Greek borders. This is certainly not the human capital that could push the country into revival.

Something that would have been called a “wild fantasy” only five years ago is rapidly becoming an emerging apocalyptic reality: Greece is being reduced by Germany and the lenders into a failed state by means of repeated “bailout” and “rescue” plans designed exclusively to sustain lender interests without the slightest care for averting the destruction of the present and future of the Greek people. Already, the Greece game has turned chaotic.

Greece lacks completely the necessary means to fight for survival. Her political class is riding dead in water. Its members, with extremely few exceptions, are the “leaders” who led Greece straight into her present predicament. Assigning them the mission of salvation is like allowing the Soviet Communist Party to regroup in order to save Russia. Even at this time of hours past midnight, Greek politicians quarrel, struggle, and writhe in an effort to secure political pole position. Their capacity to manage a true bailout is non-existent. This recent post has outlined remarkably the technical impasse that Greece faces — an impasse that demonstrates the Greek crisis is a problem without solution.

By imposing schizophrenic “bailout” via vicious austerity on Greece, Germany has succeeded in making every last Greek, save the usual fifth columnists, into mortal enemies; it has demonstrated beyond a shade of doubt that it is pushing for a pan-European regime of unscrupulously exploiting debt in order to impose German economic (and, eventually, political) control throughout; and it is increasingly convincing even those originally friendly toward Berlin that the German play bears shades of behavior which, only in the recent historical past, has caused global catastrophe. 

We confess that we expect the results of the next election in Greece with great interest. If polls are to be believed, the greater Greek Left has gathered the numbers that could elevate it to power (provided its divided leaders find the way to a coalition.) In such a case, the Greek crisis will definitely cross into ancient Greek tragedy territory courtesy of both Greece’s own criminal, failed and discredited fraudsters and her European “partners” who, in their majority, exist in confusion, division, crypto-chauvinism, and masqueraded revenge politics.

Special Dispatch: In the birthplace of democracy, self-determination has lost out to economic dictats from abroad. And, as ever, it’s the poor who suffer the most.

Greeks expect to agree a deal with the Eurozone leaders tomorrow that will cede much of their country’s independence. Greece will become an economic – and to a large extent a political – colony of Germany and its allies. Berlin will have a say in everything from the choice of prime minister to the types of medicines dispensed by pharmacies.

In return for €230bn, made up of €130bn in fresh loans and €100bn in write-downs on privately held Greek government bonds, Greece is relieved from its immediate debt burden. But the money does not go to the Greek government, still less to the Greek people. It simply leaves them to live off the money they earn.

For all the television pictures of rioting protesters, clouds of tear gas and burning buildings in central Athens over the last week, a striking feature of the political landscape is the lack of resistance to the German terms. The Greek political elite sound and look stunned, grudgingly surrendering to the demands of the Troika (EU, IMF and European Central Bank), but bereft of ideas about what else to do.

The two political parties that have dominated Greek politics for 30 years, the centre-left Pasok and the conservative New Democracy, do not come out well from the crisis. Tasos Telloglou, Greece’s top investigative journalist at Skai TV who has exposed many corruption scandals, describes the members of parliament as “fat and lazy [people who] only worry about how to get back to where they were four years ago before the crisis”. He says both ruling parties, which have alternated in power since the fall of the military junta in 1974, have privately agreed to continue their coalition after the next election, which is expected in 10 weeks’ time.

His view of Greek voters is almost equally contemptuous. They too, he says, yearn for a return of the good times when Greece had the same AAA credit rating as Germany. He says: “We wanted to have a European income without having European productivity, so we just borrowed money.” But lenders will avoid Greece for a long time, so there can be no return to the living standards enjoyed before 2008. Mr Telloglou quotes approvingly the Greek saying: “You can turn an aquarium into fish soup, but you cannot turn fish soup into an aquarium.”

The mood of the political leadership is one of fatalism and despair. Simos Kedikoglou, a New Democracy MP, says of the parliamentary vote on the deal a week ago: “We had to choose between the certainty of disaster and the doubt of salvation. You can’t be independent when you have to borrow €20m a day. We’re in an awful shape. We don’t produce anything, not even the meat we eat.”

But there are clearly other motives behind the radical changes now being imposed on Greece. “It is like undiluted Thatcherism forced on the country in a few years,” said one observer in Athens. For instance, the minimum wage is to be reduced by 22 per cent to €522 a month as part of the latest austerity round. The Troika believes this will increase employment, but Greek economists disagree, saying that Chinese or Bulgarian workers will always be paid less. Greeks will not get jobs for the same reason that the Greek merchant navy employs Filipinos below the level of captain and chief engineer. Cutting the pay of poorly paid state employees will also do little for Greece except reduce consumption and increase misery.

Part of the explanation for these measures is probably that German leaders want to prove to German voters that they are giving the Greeks a rough time and not allowing them to guzzle German subsidies. The punitive nature of the Troika’s reforms also reflects a wish to send a message to heavily indebted Portugal, Spain, Italy, and Ireland not to dare take the Greek option of what is effectively a managed default on its debts. Even the rude things said by German and Dutch politicians about Greece last week served the purpose of showing their domestic audience that they were not being taken to the cleaners by the wily but improvident Greeks.

But on the back of the austerity programme rides a neo-liberal vision of how the Greek economy and society should be run. It sounds and looks very much like what was applied in Russia under Boris Yeltsin after 1992. There will be widespread privatisations; cuts in social security, pensions and state health provision; and wholesale deregulation. Many on the right welcome these reforms. Vagelis Agapitos, a financial consultant in Athens, looks forward to the day when houses, hotels, wind farms and fish farms can be built without any troubling regulations or permits. Archaeological surveys would be dropped. “We don’t need another sculpture from [ancient] Greece,” he says. “We need to break the taboo that public employees work for life.”

One reason for the mess Greece is in lies in its recent history. After a ferocious civil war between Communists and their enemies, beginning in 1946, the victorious right was wholly dominant up to the fall of the colonels in 1974. Ship owners and bankers, often products of the Greek diaspora and detached from the home economy, were gently treated. So too were small shops, professionals and businesses, which paid little tax. Greece never enjoyed the sort of post-war social compromise seen in the rest of Europe, where liberal capitalism was balanced by commitments to workers’ rights, social spending and the welfare state.

In the early 1980s, Greece shifted to the left just as Reaganism and Thatcherism were taking hold in the US and UK. Pasok was in power for most of the next 20 years and built up state spending on social welfare and a system of political patronage. Unsackable employees worked in redundant industries. Pasok never reformed the archaic state it had inherited, so professionals and property owners went on paying few taxes. Some 94 per cent of Greeks claimed to earn less than €30,000 a year. It is only over the last year that the Troika forced banks to disclose the real income of their customers, rather than what they were claiming for tax purposes. A list shows a hairdresser who earned €423,000 but declared just €35,000, and a gynaecologist on €1.3m who declared only €877,000.

This welfare state for the rich and the poor could only be sustained by borrowing. It is now being dismantled. But, as one Greek academic said: “In Greece only the weak and the poor get punished.”

NICOSIA: On the resort island of Cyprus, whose stricken economy is closely linked to Greece, residents and politicians are nervously watching the crisis unfolding in Athens but hoping that a giant offshore gas discovery will save them.

In December, US firm Noble Energy said it had discovered gas reserves of up to eight trillion cubic feet (225 billion cubic metres) beneath the seabed south of Cyprus, which has an estimated value of 100 billion euros ($131 billion).

“And it is just the beginning,” said hydrocarbons expert Pierre Godec.

The reservoir, named Aphrodite after the Greek goddess, born according to legend in Cyprus waters, is situated some 40 kilometres (24 miles) from Israel’s Leviathan and Tamar fields, also discovered by Noble and Israel’s Delek Energy.

On Monday, Cyprus launched a new licensing round for its 12 remaining offshore exploration blocks, which it hopes to award by the end of the year, despite the strong objections of Turkey.

Noble’s announcement was a ray of hope for Cypriots, who experienced their first recession in 30 years in 2009.

The economy, already hit by the euro-zone debt crisis, was sent deeper into turmoil by a deadly munitions blast last July that destroyed the island’s main power plant.

The Greek crisis has aggravated the difficulties facing Cyprus, which, apart from the breakaway Turkish state-let in the north, has strong cultural and economic ties to Greece.

Cypriot banks are heavily exposed to Greek sovereign debt and have already had to write-off two billion euros the country owed them, economists say, a hefty sum for a country with less than 900,000 inhabitants.

The top three rating agencies have all downgraded Cyprus, restricting its access to international debt markets, with Fitch warning that the country would need a Greek-style European bailout.

But in a boost to the eurozone country, and aided by the expectation of future gas earnings, Cyprus managed to secure late last year a 2.5-billion-euro Russian loan to help cover its financial requirements for 2012.

“The situation in Cyprus is not as bad as Greece, far from it,” said economist Costas Apostolides, stressing that Cypriot banks had deposits of around 60 billion euros, and that measures had already been taken to reduce the country’s debt.

As an example, Cypriot public debt, which stands at around 61 percent of GDP, compares with a figure of 160 percent in Greece. And the unemployment rate is only seven percent, in contrast with 20 percent in Greece.

But the International Monetary Fund estimated Cyprus’s public deficit at some 7.0 percent of GDP in 2011, way above the 3.0 percent limit set by the European Union.

So the fund and the European Commission ordered the island nation, which joined the eurozone in 2008, to adopt a debt reduction plan. Cyprus has already raised taxes and frozen public sector salaries in a bid to avoid a bailout.

But few Cypriots are willing to accept the kind of tough austerity measures imposed on Greece, and local newspapers regularly publish articles raising hopes about the potential benefits of the newly found gas reserves.

“The gas will change our quality of life, not straightaway, but over the next ten years we could become like the oil-rich kingdoms in the Gulf, countries where life is good,” said Cleonthios Adamou, a computer teacher.

Economist Apostolides estimated that, with a bit of luck, the government would get one billion euros per year in gas revenues, “which amounts to a third of our budget.”

But others caution against betting on a future hydrocarbons windfall.

“Some are already taking the future revenues into account in their behaviour, and politicians fear that will make the electorate resist any (austerity) efforts, as the gas will not be sold for another eight to ten years,” said Godec, the energy expert.

Economist Zenon Kontolemis agreed, warning of the “strong temptation to spend the money even before it comes in.”

Agence France-Presse

BURAK BEKDİL
burak.bekdil@hurriyet.com.tr

As I sat and wrote these lines with the background music of Rossini’s 1820 opera “Maometto II,” the release of the Turkish film “Fetih 1453” (Conquest 1453) was only a day and a half away, scheduled to premiere in Turkey at 2:53 p.m. (14:53) on Feb. 16. The film’s trailer opens with an (alleged) attribution to the Prophet Muhammad: “Verily you shall conquer Constantinople. What a wonderful leader will he be, and what a wonderful army will that army be!”

The opera’s eponymous subject Sultan Mehmed II (Mehmed the Conqueror), son of Sultan Murad II and Valide Sultan Mara Brankovic, was only 21 years old when he conquered Constantinople on May 29, 1453. (Apparently the film’s producers could not wait a few months more for a more sensational release at 14:53 on May 29.)

Mehmed II was too keen on shariah, and he considered it an Islamic duty to overthrow the Byzantines by conquering Constantinople. Ironically, he had a blood lineage to the Byzantine imperial family – his predecessor, Sultan Orhan I, had married a Byzantine princess, and Mehmed II may have claimed descent from John Tzelepes Komnenos, a grandchild of Byzantine Emperor Alexios I Komnenos.
Even more ironically, the sultan was also known for the religious tolerance with which he treated his subjects, especially among the conquered Christians. His oath “firman” – which he issued to protect Bosnian Franciscans when he conquered that territory in 1463 – is considered the oldest document on religious freedoms.

To some extent, it would be anachronistic to accuse Muslim Turks of occupying other nations’ lands as the darker ages of human race had seen that motive too often regardless of ethnicity or religion.
All the same, it won’t be anachronistic at all to be astonished at the Turkish love affair with the idea of conquest in the 21st century. Instead of shyly (and privately) remembering 1453, the Turks make every cheerful noise to remind the entire world that their country is a too rare commodity in Europe which boasts that its biggest city in fact is a land that once belonged to another nation and was captured by the force of sword.

It is quite hard to think of the British commemorating the conquest of London or the Germans that of Berlin – and noisily thinking this is a virtue: “We are sitting on other nations’ lands! Ah, there is Cyprus too…” Another Turkish producer with a quick eye for $$$$ should soon set off to release a “Conquest 1974,” and another, an “Extinction 1915.”

Sadly, millions of Turks will go to the theaters to feel proud of their ancestors and to visually show their children “our greatness.” We are great not only because “we had the power of the sword” but, even more sadly, because “we still adore the idea.” This is what Prime Minister Recep Tayyip Erdoğan must have meant when he recently said he wanted to “raise devout generations…which should embrace our historic values.”

And it is so amusing that these devout generations get easily offended when someone spelled the original name of the city their ancestors had conquered five and a half centuries ago: Constantinople. They would prefer the “Turkish” name, Istanbul, without knowing that the Turkish name, too, is a variation of one of the city’s Greek names: “stin Poli” – to the City.

Even more amusing is the fact that you can often see these devout generations staging one protest rally after another, fiercely demanding an end to the “Israeli occupation of Jerusalem.” Amusement turns into extreme amusement when, like it happened a couple of years ago, crowds of devout young Turks commemorate the conquest of Istanbul, only to move on to another demonstration, this time to protest the occupation of Jerusalem.

Weird Turkey? Not yet. After the double demonstrations, they would surf the web to find which “traitor” Turk(s) criticized their hooliganism, and flood him/them with extremely creative words of curses and threats.

It is useless to remind them that their ancestors had travelled from the steppes of Asia to capture Constantinople while the Jews are natives of Jerusalem.
February/17/2012

http://www.hurriyetdailynews.com/

The government has described as totally unfounded and contrary to international law Turkey’s claims on Cyprus’ exclusive economic zone, and called on Ankara to end its illegal, provocative and arrogant behavior with regard to the Republic’s exploratory drilling for hydrocarbons.

Nicosia told Ankara to steer clear from issuing threats, pointing out that it is determined to proceed with exploitation of its natural resources and to protect its rights with peaceful means in line with international law.

A Ministry of Foreign Affairs press release issued here on Friday replies to an announcement by the Turkish Ministry of Foreign Affairs, on Wednesday, which warns that should the Republic continue with the second licensing round for the exploration of natural gas within Cyprus’ Exclusive Economic Zone, then Turkey will increase tension in the region.

“The Republic of Cyprus calls on Turkey to end its illegal, provocative and arrogant behavior to steer clear from issuing threats and to adhere to the UN Convention on the Law of the Sea”, the Foreign Ministry states.

It further calls on Turkey to “try to resolve any problems it allegedly has in accordance with international law, which it continues to violate and treat with contempt”.

Creating tension in the region is neither to the benefit of any country, nor to the benefit of peace and prosperity in the region, the Ministry of Foreign Affairs notes.

It is further stated that the Republic of Cyprus, a UN and EU member state, exercises in the same way as any other state of the international community, all its sovereign rights deriving from international law, within its territory and its maritime boundaries, including within its EEZ and its continental shelf, as provided by the UN Convention on the Law of the Sea, which the Republic has ratified in 1988.

“The Republic of Cyprus is determined to proceed with the exploitation of its natural resources, particularly with regard to hydrocarbons, for economic development and prosperity of its entire people without any discrimination”, the Ministry stresses.

Exploitation and use of these reserves may significantly enhance energy security, particularly for the EU, the Ministry adds.

The Ministry recalls that the EU General Affairs Council has reaffirmed in its Conclusions of December 2011, all sovereign rights of member states which include among others the signing of bilateral agreements as well as the exploration and exploitation of their natural resources in accordance with the acquits communautaire and international law, including the UN Convention on the Law of the Sea.

The Ministry further recalls that the EU Council called for refraining from threats or action against any EU member state or moves which could endanger neighborly relations and the peaceful resolution of differences.

“The message sent by the EU to Turkey was clear and strong”, the Ministry points out, adding that “it seems that Turkey chose to completely ignore the EU”.

Referring to Turkey’s allegations that part of Cyprus’ blocks included in the second licensing round belong to Turkey’s continental shelf, the Ministry states that they are “unfounded and contrary to international law”.

According to the Ministry, Turkey’s allegations prove once more that its aim is not the protection of the rights of the Turkish Cypriots, as it claims, since it alleges that a significant part of western, southern and northern areas of Cyprus’ EEZ and continental shelf belong to Ankara, to the detriment of the entire people of Cyprus

Expressing the view that it is obvious that Turkey’s aim is to promote its expansionist designs, the Republic of Cyprus expresses confidence that Turkish demands and threats will be condemned once more by the international community as a serious provocation against international legality.

The Republic, the Ministry states, “is determined to protect its rights using all peaceful means at its disposal, in line with international law”.

Referring to the ongoing UN led negotiations which aim to reunite the island, divided in 1974 when Turkey invaded and occupied its northern third, the Ministry states that the government participates in the talks with good will and is committed to the reunification of Cyprus and its people.

The second licensing round for the exploration of hydrocarbons within the Republic’s EEZ has nothing to do with the ongoing process for the resolution of the Cyprus issue, it is pointed out.

The Ministry of Foreign Affairs recalls that in the context of the talks it has already been agreed that the exploitation of natural resources will fall within the remit of powers exercised by the federal government.

Turkey, whose troops occupy Cyprus’ northern part since they invaded in 1974, does not recognize the Republic of Cyprus.

Recently, Nicosia announced in the Official Journal of the EU a call for an international tender for off-shore hydrocarbon exploration and exploitation within the Republic’s Economic Exclusive Zone, signaling the initiation of a second round of licensing.
On Wednesday, the Turkish Foreign Ministry said Nicosia’s new licensing round in the area could lead to tension in the region.

In response to Cypriot exploration activities, Ankara has deployed in the past warships in the Eastern Mediterranean and has signed an illegal agreement with the Turkish Cypriot regime in occupied Cyprus to delineate what it calls continental shelf.

The government of Cyprus has protested to the UN and the EU Turkey’s moves, saying it has a sovereign right to exploit its natural resources, pointing out that Greek Cypriots and Turkish Cypriots will benefit from any benefits that may come from oil drilling.

Cyprus has signed an agreement to delineate the Exclusive Economic Zone with Egypt and Israel with a view to exploit any possible natural gas and oil reserves in its EEZ. A similar agreement has been signed with Lebanon but the Lebanese Parliament has not yet ratified it.
(source: cna)

Hardly a day passes without more news about the desperate economic situation in Greece. The country has been circling the abyss for some time now and, for many, default from its crushing public debt appears inevitable. Wouldn’t that be the preferred option for everyone involved after all? A Greek default would imply that the country would have to leave the eurozone, and the Greek budget problems would no longer be the eurozone’s problems. Greece would be able to write off its debt and adopt a new currency with a lower value that would make its exports more competitive. Finally, those who invested in Greek debt would be able to cut their losses. A Greek default would mean that the global economy could move on, as it did after the Argentinian default 10 years ago. Sounds like the preferable scenario for everyone. Looking back, analysts and politicians alike agree that Greece should never have entered the eurozone. Hence, many assume that the initial mistake will be corrected if Greece exits.

Not so fast. Unlike Argentina, Greece does not have a sizable export sector that would readily benefit from a weaker currency. The Greek banking system would collapse after a euro exit and any new currency adopted by Greece would likely be heavily devalued, leading to imported goods being unaffordable for most of the population. In addition, it is likely that inflation would creep up and erode the value of the new currency. An underground economy would likely emerge, where the euro or U.S. dollar would dominate important transactions. And what would the European Monetary Union look like after a Greek exit? Speculators would simply concentrate on betting against the next weak link exiting the common currency. After all, if one country has left the eurozone, surely it could happen again. Portugal, Spain and even Italy could be next. And where would it all end? This is the worst-case scenario for Europe. Hence the efforts to avoid setting a precedent by letting Greece default.

Perhaps we can offer Europe some lessons. What keeps the United States’ monetary union strong is not our common language nor the uniformity of economic conditions across member states, but rather our meaningful fiscal union. The transfers across states as part of the federal U.S. budget are far larger than current cross-country transfers in the European Union.

If the European Monetary Union is to survive, Germany will have to dramatically increase its transfers to the periphery countries. At the same time, for these transfers to become fruitful, periphery countries, including Greece, will need to embrace oversight and structural reforms in order to restore competitiveness and accept that many of their national policies will need to be decided centrally.

Unfortunately, so far, Greece has not delivered on its promises toward privatization and major reform and there are signs that its partners are losing patience. Many ordinary Greeks resent that there is very little to show after two years of sacrifice. But reform does not even have a chance unless Greece remains part of the eurozone. A closer federal union might be the only way for Europe to emerge united out of this crisis. The question is whether such a union is politically attainable in the current climate.

Temzelides is a professor of economics at Rice University and a Baker Institute Rice scholar. His research focuses on the intersection of macroeconomics and energy.

Back in 2010 the ECB started buying Greek bondsto try to prop up Greece’s debt markets. It did so in the open market, which meant that it was the highest bidder at the time; reportedly it paid somewhere in the region of 75 cents on the euro for each bond. They’re currently trading at about half that level, so when the bonds get their 50% haircut, it’s going to lose billions of euros, right?

Wrong. For one thing, as John Carney pointed out in January, it didn’t really spend money on those bonds, it just printedmoney. If Greece doesn’t pay the ECB back, the worst thing that happens is that the euro money supply gets expanded a little.

But for another thing, it turns out that the ECB had a little trick up its sleeve all along.

The national central banks in the euro zone are set to exchange their holdings of Greek bonds into new bonds in the run up to a private sector debt deal to avoid taking any forced losses, euro zone sources said on Thursday…

Sources said the process could start over the weekend, with one adding that the move was a technicality and that the new bonds would have the same terms as the original ones.

A technicality?! Ha! What’s happening here is many things, but it’s most definitely not a technicality. The ECB is taking its stock of old Greek bonds, which are worth very little and which are going to suffer a whopping great haircut next month, and swapping them out for shiny new bonds which Greece is going to pay in full.

This is no normal bond exchange: No one else gets this deal, and there are no tag-along rights for private-sector investors who might fancy the opportunity to do something similar. It’s a basic tenet of bond market that all bonds of a given series are equal and fungible, and that what happens to one happens to them all. But not here. You can fight about whether this bond is or should be pari passu with that bond, but it’s a no-brainer that any bond is pari passu with itself. Except in this case, it seems, where the ECB’s stock of Greek bonds have suddenly become senior to everybody else’s stock of the exact same securities.

On a conceptual level, it makes sense that the Troika — of which the ECB is a third — might be granted immunity from haircuts, in return for providing new money to Greece. On a legal and practical level, however, this is ugly — and you can be quite sure that it’s only going to get uglier from here on in.

Which brings me to the blog post of the month, from Daniel Davies, a/k/a dsquared. He’s structured the choices facing the Troika as a choose-your-own-adventure book; needless to say, none of the outcomes are particularly palatable, although some are definitely worse than others.

The point here is that given political realities, there is literally no real solution to the Greece problem. The market attempted some kind of rally on the ECB news today, which on its face is weird — if the ECB takes its bonds out of the restructuring pile, then that just means a bigger haircut for everybody else, if Greece is going to reach debt sustainability. But the rally, if it was related to the news at all, was probably just relief that something is being done — that plan beats no plan. Which is probably overly hopeful. There might be a plan here, but equally there might not: this could be a purely defensive mechanism, protecting the ECB from a chaotic Greek default.

The most notable thing about the news, for me, was the utter lack of eyebrows which were raised when it happened. Everybody’s expecting the unorthodox at this point, to the degree that when it happens, no one seems to care very much. Or maybe it’s just that no one has a clue what’s going on. I was at a very wonky dinner this evening, talking details of CDS determination committee protocols and the like, when it struck me that the politicians making the decisions here are not financial sophisticates; many of them like the idea of the CDS not being triggered just because they think that means Greece won’t have defaulted.

In short, expect things to get weird from here on out. We are entering a zone of probability distributions at this point, where actions stop having foreseeable consequences. No one’s really in charge, which doesn’t help. Greece has sophisticated and professional advisers, but Greece isn’t in control of its own destiny; the Troika is. And the various members of the Troika are no longer singing from the same songbook. The ECB has partially protected itself, with this move; but in increasing the amount of preferred-creditor debt that Greece has, it has also increased Greece’s debt burden and hurt the credit quality of the debt that Greece owes the IMF, which is also a member of the Troika.

Go play Daniel’s game: if anything it’s an oversimplified presentation of the various ways that the Greek crisis might play out in the next few weeks. There’s nothing in there, for instance, about tensions between members of the Troika, or about bondholders holding out with a blocking stake and complicating things that way. Then, once you’re thoroughly confused and depressed, put yourself in the position of a European politician who has to make real-world decisions with real-world consequences. And ask yourself how predictable your actions might be. The endgame is approaching; but the only thing we know for sure about it is that anybody who thinks they know how it’s going to play out is delusional.

http://blogs.reuters.com/felix-salmon/2012/02/17/the-greece-game-turns-chaotic/

By Andreas C Chrysafis

In William Shakespeare’s Hamlet, a famous phrase asks: “To be, or not to be, that is the question!” That question is also valid when it comes to the Cyprus issue: to negotiate, or not to negotiate, that is the question? It is one of the most perplexing questions faced by tiny Cyprus in its effort to maintain its independence and territorial integrity against adversaries.

To negotiate with Turkey – a powerful and aggressive enemy at that – simply means to negotiate under the intimidation of another military attack – in theory Cyprus is still at war! A losing scenario indeed! However, if the existing talks continue, it will certainly indicate that the government is prepared and willing to accept a solution to dissolve the Republic of Cyprus.

That dissolution will be based on some type of partition and will certainly abandon the preservation of the nation’s sovereignty. Under those terms, it will also forsake thousands of refugees’ rights to return back to their homes.

Not to negotiate, poses additional pitfalls: Turkey constantly threatens to put its “Plan B” into action. What that means is the official (illegal by international law) declaration of a new Turkish Cypriot state under the auspices of Turkey. When that happens, some Muslim countries will certainly recognize the new “state” and that would set the beginning of no return.

The other obvious move is that Turkey would declare unilaterally the extension of its own boundaries to include the occupied area as a new province of the mainland. Strategically planned, it will then proceed to import thousands of Anatolian settlers (one million figures have been mentioned) to change the demographic character of the island; the Islamization of Cyprus will then be unstoppable! Legal or not, the winner keeps all –Might then becomes Right!

Negotiating under those terms: one is doomed if one does, and doomed if one doesn’t – a Euthyphro Dilemma!

Faced with such a gloomy predicament, Cyprus, instead of introducing a strong foreign policy armed with a tough political strategy to keep exposing Turkey for what it really is, has chose a passive concessionary course of action. An error of judgment by any accounts!

That bad decision was taken a long time ago and has haunted the nation ever since! In fact it is maintained to this day with no government ever having dared to consider correcting it.

That was: to start negotiating territorial concessions and offering special privileges to an ethnic minority group, such as the Turkish Cypriots living on the island. Yet, those same principles and land concessions did not apply to any other minority group such as the Maronites or the Armenians or any others. Double standards never work, especially when it comes to citizenship!

Today, a Cypriot government shows its willingness to accept a solution based on Bi-Zonal, Bi-Communal Federation (whatever that means – for it does not exist elsewhere in the world) and reward Turkey’s invasion and its ethnic cleansing.

If that happens without the full support of the people, the consequences in future do not look bright. Under those terms, a social conflict could flare up amongst those who may feel betrayed – especially the refugees – and civil unrest could trigger off mayhem for years to come.

There is documented evidence to show that foreign interests caused the entire tragedy in Cyprus – and continue to do so today – by strategically separating the two communities and putting the blame on the victims.

This serves Turkey’s neo-Ottoman policy perfectly well. Its strategy has always been: “create a situation, prolong it long enough and that problem no longer poses to be a problem!”

Hitler, on the 22, 1939 used the example of the Turkish massacre of 2 million Armenians, to justify his own genocide against 6 million Jews. He said: “Who after all speaks today of the annihilation of the Armenians!”

Turkey maintains the same old policies and repeated its ethnic cleansing brutality again in 1974. This time against Cyprus, by forcing 230,000 Greeks Cypriots out of their lands and confiscating their properties.

Going back in history, in November 1918, (not long ago in historical terms) in an Ottoman Parliament Assembly Session, three Ottoman deputies raised the issue of the murdered 550,000 Greeks, the expulsion of 250,000 Greek Christians and the death of 250.000 conscripted into Labour Battalions indicating that one million Greeks had been victims to the Ittihadist policies. Eye-witness accounts claimed that: “rivers of blood flowed in the streets”.

Making matters worse Ban Ki-moon’s special UN envoy, Mr. Downer, has also put a spanner in the works by declaring publicly that the “Greek side” will take over the EU Presidency in July 1, 2012. Newspapers in the UK have also begun to use similar phraseology.

Such statements of spin are not simply pulled out of the hat! They are politically motivated, aimed to spread doubts as to the legitimacy of the Republic of Cyprus.

All considered, Turkey has cleverly and successfully managed to alter its international bad reputation – under the very noses of the Cyprus government – and now stubbornly refuses (the only country in the world) to recognize the legitimacy of the Republic. As a generous paymaster, Turkey spends billions each year sponsoring Think tanks, newspapers, online services, governments and industrial conglomerates to spin the Cyprus issue in favour of its political goals.

Dealing with Turkish intransigence is no easy matter. One may say it’s impossible! In fact, the Turkish side has not offered a single item as a concession on their own part with the exception of claiming that: “we are lucky the Turkish troops did not occupy the entire island”.

Under those conditions, the invader will finally be rewarded and keep its trophy of conquest and ultimately legalize its military occupation!

Foreign Minister Ahmet Davutoglu wrote in 2001: “Even if there was not one single Muslim Turk over there (Cyprus), Turkey would have to maintain a Cyprus question. No country could possibly be indifferent to an island like this, placed in the heart of its (geographical) location”.

This is what Cyprus is faced with; a constant provocation by a well-orchestrated offensive plan backed up by armed troops.

Turkey plans to maintain the occupied area as an extension of its territories and now threatens, provokes and demands a share of the natural gas found within the sovereign rights of Cyprus’ Exclusive Economic Zone.

Turkish threats cannot be ignored but the main question comes down to: Who will stop them?

If Cyprus is to remain a free nation, it needs to make bold decisions and start to act like a nation that will do anything to protect its own interests in line with all other nations instead of worrying as not to offend outsiders. Today, there are too many adversaries nibbling away at its own existence.

However, the discovery of natural gas could provide the leverage it needs; that is, if used wisely!

First and foremost, the negotiations should be set-aside until the present political climate changes. The removal of Turkish troops is paramount in finding any kind of peaceful and lasting solution.

Failing that, all attempts will be in vein! The present route is entering the nation into a dark future with no guarantees of success.

This however can change if radical decisions are taken. It is possible to make new political and defence alliances with other powerful nations; introduce an offensive policy; bring in One-Man-One Vote based on the Rule of Law and establish a Parliamentary Voting System that offers equality and opportunities for all citizens irrespective of ethnicity or social status and certainly without special privileges to minority ethnic groups. Democracy and Meritocracy can be the only right answer!

—————————————————-

Author of:
WHO SHALL GOVERN CYPRUS – Brussels or Nicosia? -Political analysis
ANDARTES – a revolutionary riveting novel
PORPHYRA in PURPLE – a metaphysical spellbinding novel

All books are available from: Bookshops, Barnes & Noble, Amazon.co.uk, Amazon.com, Waterstone’s, Kindle and the Internet. Other published articles can be found on Google under “Vanishing Cyprus” or under “Andreas C Chrysafis”.

Announcement comes as Turkey threatens to block Cyprus from conducting natural gas drilling off its coast.

NICOSIA – With Turkey warning Cyprus Thursday not to explore or develop its offshore gas reserves, Prime Minister Binyamin Netanyahu and Cypriot President Demetris Christofias pledged at a joint press conference to enhance cooperation in the energy field.

Netanyahu, however, danced around the question of whether Israel would provide security for the Cypriot gas field in its exclusive economic zone, which lies close to Israeli natural-gas deposits.

Both Christofias and Netanyahu denied that Israel was asking Cyprus for use of its Paphos air base. “This item was not even on the agenda,” Christofias said.

The countries signed a bilateral search-and-rescue agreement, but Israeli officials denied that it had any military significance, and that the agreement only dealt with assistance the two countries would give one another in a time of crisis.

Cyprus sent a plane and helicopter to help Israel fight the Mount Carmel Forest fire in December 2010, and Israel sent generators to Cyprus after an explosion last year knocked out the country’s main power plant.

One official, denying this was a military agreement in camouflage, said Israel has the same kind of agreement with Turkey.

In addition to meeting Christofias, Netanyahu also met during his one-day trip – the first ever to the island by an Israeli prime minister – with Cyprus Foreign Minister Erato Kozakou-Marcoullis, and opposition head Nicos Anastassiades.

Even though the issue of gas exploration and cooperation was the main item on the agenda, Turkey hovered over the meeting, with Christofias slamming the country’s threats a number of times during the press conference. Netanyahu did not mention Turkey once.

Israel’s relations with Cyprus, as well as with Greece, skyrocketed with the sharp deterioration in Israel’s ties with Turkey, although Israeli officials said the reason for the dramatic change was not only Turkey, but also economic and other mutual interests. Nevertheless, Netanyahu has spoken in the past about a regional alliance that includes Israel, Cyprus, Greece, Romania and Bulgaria.

Netanyahu praised the Cypriot president, Europe’s only Communist head of state, for developing relations with Israel, and said that it took 63 years to make the 45-minute flight from Israel to Cyprus.

“We came here to develop bilateral economic ties in the field of energy, and we are interested in developing them for the benefit of our countries and the region as a whole,” Netanyahu said. “We have no ulterior motives or hidden motives, this is our motive and what we want: peaceful mutual relations for the benefit and prosperity of our people and the region.”

Christofias said that Israeli- Cypriot cooperation should not be seen as a threat to anyone.

This cooperation only serves the “people and progress,” he said. “It is not Cyprus that threatens Turkey, but Turkey that is threatening Cyprus. We will continue to cooperate, and the true troublemaker is Turkey, not the Israel- Cyprus relationship.”

Christofias called on the international community “and especially the European Union to send a strong message to Turkey that it must stop violating and start respecting international law – especially if it looks forward to becoming a member of the European family.”

Christofias was responding to Turkey’s threat not to proceed with a second round of licensing for offshore oil and gas in its exclusive economic zone.

While Israel has made huge gas discoveries in its waters, Cyprus is only beginning to discover fields, something that is infuriating the Turks because they argue that any natural resources found off Cyprus should be split with the northern part of the country, which it has occupied since 1974.

“We’ve had seven drills in Israel, and seven hits, and there are still some 50 other plots,” Netanyahu said of Israel’s gas finds.

“You are now exploring your potential reserves,” he said to the Cypriot president. “Our view is that if we can cooperate, the sum of the parts would be greater than the individual parts.”

Netanyahu said Israel and Cyprus agreed to conduct feasibility studies regarding ways to cooperate, and that the reports should be ready in eight weeks.

Among the issues still to be determined is whether a gas-processing plant would be built in Cyprus for export of gas westward to Europe, or rather in Israel – possibly near Eilat – for export eastward, to Asia.

During his visit, Netanyahu met with Yonatan, a security guard at the embassy with whom he spoke to a number of months ago in Cairo when Yonatan protected the embassy from a mob that ransacked it.

During that incident, Yonatan – who feared that he would not come out alive – asked Netanyahu to speak to his parents directly if anything happened to him.

(Reuters) – Entering the fifth year of recession, Greece is writing its name in the book of unwanted records for one of the deepest economic slumps of modern times.

The Greek economy shrank 6.8 percent in 2011, leaving the level of output an estimated 16 percent below its pre-crisis peak. Unemployment has soared to more than 20 percent from 7.7 percent in 2008.

Argentina suffered a 20 percent peak-to-trough drop in output as it defaulted on its debts in 2001, while Latvia’s economy contracted by 24 percent because of the 2008 global financial crisis.

With more belt-tightening in store in return for a proposed 130 billion euro ($172 billion) international bailout, Athens is on course to join their ranks, and possibly overtake them, said Uri Dadush, an economist with the Carnegie Endowment in Washington, a think tank.

“On the current path – which is not sustainable in my view – we may very well see Greek GDP go down 25-30 percent, which would be historically unprecedented. It’s a disastrous crisis for them,” Dadush, a former senior World Bank official, said.

For ordinary Greeks, the outlook is dire. Some civil servants have seen their salaries cut by half. Retirement before the age of 65 is a fading dream for those still in work. Some drugs are now in short supply. Couples with children are being forced to move back in with their parents to save money. And across Greece, businesses are closing every day.

A LONG NIGHTMARE

World Bank figures show that Russian output dropped 44 percent between 1989 and 1998, dwarfing the 29 percent drop in the United States during the Great Depression.

But since Russia’s economic reversal was compounded by the break-up of the Soviet Union, analysts tend to exclude the episode when examining recent recessions.

Comparing crises is like comparing apples and oranges. Every country is different, economically and politically.

However, Greece stands out in one important respect: its downturn has already lasted twice as long as the average crisis and yet there is no end in sight, according to Mark Weisbrot, co-director of the Center for Economic and Policy Research, a think tank in Washington.

“They’re suffering. It’s nasty,” said Weisbrot, who has studied the lessons to be learned from economic crises in Latvia and Argentina. “If you could say with a reasonable probability that the worst was over, then that would be different. But you can’t say that. They’re in for a long nightmare.”

Athens has repeatedly frustrated the European Union, the International Monetary Fund and the European Central Bank – the troika – by failing to implement the reforms it promised in exchange for its first bailout, for 110 billion euros, in 2010.

Apart from missing targets for reducing its budget deficit, Greece has dragged its feet on laying off workers from its bloated public sector, privatizing state assets and opening up closed trades and professions to competition.

Yet one critical measure, the primary budget balance, which excludes interest payments, shows Athens has made serious adjustments by raising value added taxes and cutting pensions, salaries and public services.

The primary balance was in deficit in 2009 to the tune of 10.4 percent of GDP. This year, it is projected to show a surplus of 0.2 percent.

“Although they’re not given much credit for what they’ve done, there are not many countries that have brought their primary deficit down as quickly as Greece has,” said Andrew Kenningham of Capital Economics, a consultancy in London.

RUNNING FASTER TO STAND STILL

And yet Greece will still have an overall budget deficit of 4.7 percent of GDP this year because of a huge interest bill.

This is estimated at 4.9 percent of GDP, rising to 6.3 percent of GDP in 2013, even assuming that a deal is clinched to write down the bonds owned by Greece’s private-sector creditors by 70 percent.

To reduce the overall deficit, the EU and IMF are prescribing an increase in the primary budget surplus to 5.0 percent of GDP in 2014 and 2015.

“What the troika is effectively working into its plans is an adjustment in Greece that will go on for many years,” Dadush said.

Weisbrot said the planned interest burden was the highest in the world, except for Jamaica: “These guys are going to squeeze them forever. There’s no light at the end of the tunnel.”

Figures compiled by Reuters show that government expenditure and real disposable incomes in Greece have already fallen much further since the onset of the crisis than in fellow euro members Portugal and Ireland, which have also received EU/IMF bailouts.

Private consumption has also declined more steeply than it did in Ireland. Yet the IMF and the EU have built into Greece’s economic program an assumption that consumption will drop by a further 4.7 percent in 2012 and 1.4 percent in 2013.

Unemployment will still be at 18 percent in 2015.

And the risks – acknowledged by the IMF in its December review of Greece’s progress – are on the downside. If austerity crimps growth and squeezes tax revenues, the budget deficit will be forced higher, requiring a fresh round of belt-tightening.

That is what happened in 2011. The 6.8 percent drop in GDP reported on Tuesday exceeded the 6.0 percent fall that the IMF had penciled in as recently as December. Which itself was a revision from an earlier forecast of a 4.5 percent contraction.

TO STAY IN THE EURO OR QUIT?

Countries typically break out of such a vicious circle by devaluing. Output and employment initially fall hard but recover rather quickly, as the examples of Argentina, Russia and the countries hit by the 1997/98 Asian financial crisis showed.

Indonesia’s currency fell by more than three-quarters after it devalued. Swathes of the banking system were wiped out. Millions were plunged into poverty. Yet its peak-to-trough drop in output was milder than Greece’s. Today, the country is thriving and enjoys, unlike Greece, an investment grade rating.

These and other examples are keeping the question alive whether Greece should quit the euro zone and devalue.

Ireland and Latvia, whose currency is pegged to the euro, have shown that devaluation is not the only way out. Competitiveness can also be regained through budget and wage cuts, a so-called ‘internal devaluation’. Portugal, Spain and Italy are ploughing the same furrow.

But Weisbrot believes Greece’s plight is now so serious it should take the risk and abandon the euro.

“My prediction is that if Greece left they would do quite well, just like Argentina. They would have a brief crisis and would come out of it and grow very rapidly,” he said.

Zsolt Darvas, a researcher at Bruegel, an influential think tank in Brussels, acknowledged that Greece could be facing one of the deepest falls in output on record.

But he said the chances of Greece’s quitting the euro were low because of the chaos that would ensue.

Not only would the government go bankrupt as international lenders withdrew aid, but banks and most of the private sector would collapse as a steep devaluation of the ‘new drachma’ would make it impossible to service huge euro-denominated liabilities.

“So from a purely economic perspective, for Greece it is still preferable to say inside the euro even if the suffering continues for another five years or even longer,” Darvas said.

Ultimately, though, he added, the question is one for the Greek people and their politicians. How long will they put up with austerity? Economic comparisons cannot answer the question.

Dadush, reflecting on the running battles between police and rioters on Sunday as flames engulfed downtown Athens, said Greece had stared into the abyss at the weekend.

“A lot of people were ready to jump. They didn’t. But give them another year or two of rising unemployment and so on and the political configuration will move in that direction,” he said.

http://www.reuters.com/article/2012/02/15/us-economy-greece-comparisons-idUSTRE81E09W20120215