Greece arrests Gaza ship captain

3 July 2011 Last updated at 01:42 GMT The Audacity of Hope was prevented from setting sail from the port of Perama on Friday night The Greek authorities have arrested the captain of a boat that was due to carry activists to the Gaza Strip.

John Klusmire, a US citizen, is being held in custody at police headquarters in the port of Piraeus, near Athens.

He faces charges of trying to leave port without permission and of endangering the lives of passengers.

His vessel, the Audacity of Hope, was part of a flotilla planning to take humanitarian aid to Gaza in order to challenge the Israeli blockade.

It was prevented from setting sail from the port of Perama on Friday night by the Greek coastguard, in accordance with a ban announced the same day which the Greek government said was intended to protect activists.

The Audacity of Hope, which is currently moored at a naval base, was carrying 36 passengers, four crew and about 10 members of the media.

A spokeswoman for the boat, Jane Hirschmann, told the Associated Press that the conditions of Mr Klusmire's detention were "terrible".

"There is no bed. He is sitting on a bench," she added.

'Unsustainable conditions'

The Israeli government has meanwhile denied claims it sabotaged two ships docked in Turkey and Greece which were to join the flotilla.

Israeli Foreign Ministry spokesman Yigal Palmor dismissed the accusations as "ridiculous," calling them "sad conspiracy theories".

The Turkish authorities have also said there is no evidence that the Irish vessel docked at the Aegean port of Gocek was sabotaged.

Nine activists on a Turkish aid ship were killed last year in a raid by Israeli commandos as it tried to reach Gaza.

Israel and Egypt have imposed a blockade on the coastal territory since the Islamist militant group, Hamas, seized control of it in 2007.

The Quartet of Middle East peace mediators - the UN, US, EU and Russia - said on Saturday that it remained concerned about the unsustainable conditions facing Palestinian civilians in Gaza, but noted "a marked increase in the range and scope of goods and materials" allowed in.

"The Quartet strongly urges all those wishing to deliver goods to the people of Gaza to do so through established channels so that their cargo can be inspected and transferred via established land crossings."

"The Quartet regrets the injury and deaths caused by the 2010 flotilla, urges restraint and calls on all governments concerned to use their influence to discourage additional flotillas, which risk the safety of their participants and carry the potential for escalation," it added.

View the original article here

Eurozone releases more Greece aid

2 July 2011 Last updated at 20:42 GMT There have been violent protests against the austerity measures in Greece Eurozone finance ministers have approved the latest tranche of emergency help for the Greek economy.

They will release 12bn euros (?10.4bn, $17.4bn) in the next two weeks to help Greece meet spending commitments and avoid defaulting on its huge debts.

Earlier this week, the Greek parliament passed tough austerity measures demanded by the European Union and International Monetary Fund.

MPs backed the measures despite angry protests on the streets of Athens.

The EU and IMF have already agreed to provide Greece with a total of 110bn euros in emergency loans, with eurozone finance ministers discussing the details of a second bail-out designed to help Greece pay its debts until the end of 2014.

Greek Finance Minister Evangelos Venizelos welcomed the eurozone move, saying it "strengthened the country's international credibility".

He added: "What is crucial now is the timely and effective implementation of the decisions taken in parliament, so we can gradually emerge from the crisis in the interest of national economy and the Greek citizens."

'Breathtaking'

Earlier on Saturday, Polish Finance Minister Jacek Rostowski criticised Europe's handling of the Greek debt crisis.

He suggested that too much emphasis had been put on austerity measures and not enough on growth.

And he accused opposition parties in some unnamed eurozone countries of showing "breathtaking short-sightedness" in their opposition to support for Greece.

His comments come after Poland took over the six-month presidency of the European Union (EU) on Friday.

Mr Rostowski will now chair meetings of EU finance ministers, and hopes to join talks among eurozone finance ministers - even though Poland has not adopted the euro as its currency.

View the original article here

Greece vote protests turn violent

28 June 2011 Last updated at 17:05 GMT The BBC's Jon Sopel: "There are moments of calm then the violence flares"

Police have fired tear gas in running battles with stone-throwing youths in Athens, where a 48-hour general strike is being held against a parliamentary vote on tough austerity measures.

Thousands of protesters have gathered outside parliament in the capital where public transport has ground to a halt.

PM George Papandreou has said that only his 28bn-euro (?25bn) austerity plan would get Greece back on its feet.

If the package is not approved, Greece could run out of money within weeks.

Without a new plan in place, the EU and IMF say they will withhold 12bn euros of loans which Greece needs to repay debts due in mid-July.

'Declared war'

More than 5,000 police officers were deployed in the centre of Athens as the protesters marched towards parliament.

The rally started peacefully, but escalated into running skirmishes on the fringes of the main demonstration.

Continue reading the main story BACK {current} of {total} NEXT Hundreds of protesters with faces covered by scarves or gas-masks started throwing stones, debris and bottles at the police in one corner of the central Syntagma Square.

Police fired tear gas and stun grenades to keep them back.

Two communications vans with mobile telecoms transmitters were daubed with graffiti condemning the media and banks before being set alight by protesters who had apparently mistaken them for satellite TV trucks.

Four police officers and four demonstrators were injured in the scuffles, police said, while a number of demonstrators were treated for breathing difficulties.

Some 18 people were detained by police, Reuters reported.

There were also skirmishes as trade unionists tried to persuade anarchists to leave the square, saying their violent protests were only harming the aims of the demonstrations, says the BBC's Jon Sopel in Athens.

The general strike has halted most public services, banks are closed and hospitals are operating on skeleton staff.

Airports are shutting for hours at a time, with air traffic controllers walking out between 0800 and 1200 (0500-0900 GMT) and 1800 and 2200 (1500-1900 GMT).

A number of flights were also cancelled at Athens international airport.

Trains, buses and ferries are also affected.

In Athens, the metro is the only form of public transport which will work "so as to allow Athenians to join the planned protests in the capital", metro drivers said.

Continue reading the main story Malcolm Brabant BBC News, Athens

It was a very Greek riot, complete with an angry, Orthodox cassock-clad priest in among the anarchists.

Impervious to clouds of tear gas and flying chunks of marble, smashed by sledgehammer-wielding youths from the walls of a fountain, the priest went face to face with riot police, telling them to leave the square.

He seemed to be preaching to the converted. Although 5,000 police were supposedly deployed in Athens to protect the city centre, they surrendered Syntagma Square to the anarchists, moving back to form defensive lines around the parliament.

The promises of the Socialist government to never again allow a repeat of the riots of 2008 went up in flames.

Protesters blockaded the port of Piraeus, near Athens, which links most Greek islands with the mainland.

"The situation that the workers are undergoing is tragic and we are near poverty levels," said Spyros Linardopoulos, a protester with the PAME union at the blockade.

"The government has declared war and to this war we will answer back with war."

The unions are angry that the government's austerity programme will impose taxes on those earning the minimum wage, following months of other cuts which have seen unemployment rise to more than 16%.

Polls suggest that between 70% and 80% of Greek people oppose the austerity plan.

"We're opposed to what they're trying to do to us," said bank worker Kali Patouna.

"We know very well that these measures will be our tombstone. They will have extreme consequences for workers and for everyone on all social levels."

'Flawed' plans

The austerity package and implementation law must be passed in separate votes on Wednesday and Thursday.

Continue reading the main story June 29: Greek parliament to vote on a new austerity packageJuly 3: Eurozone deadline. EU will sign off latest bail-out payment to Greece - 12bn euros - if austerity package has passedJuly 15: Default deadline: Without the 12bn euros it needs to make debt repayments, Greece will defaultIf the measures are passed, the next instalment of Greece's 110bn-euro bail-out will be released by the European Union and International Monetary Fund.

European officials will also start to finalise the details of a second bail-out - worth an estimated 120bn euros - designed to help Greece pay its debts until the end of 2014.

EU President Herman Van Rompuy said the impact of the Greek vote would be felt worldwide.

"There are decisive moments and the coming hours will be decisive, crucial for the Greek people, but also for the eurozone and the stability of the world economy," AFP quoted Mr Van Rompuy as telling the European parliament on Tuesday.

The BBC's Chris Morris in Athens says defeat for the government this week would send ripples of anxiety right across the eurozone, with Greece facing the prospect next month of becoming the first member state to default on its debts.

Continue reading the main story

We are handling our country's history right now and nobody can play with that”

End Quote Evangelos Venizelos Greek Finance Minister Mr Papandreou has warned that failure to secure the new loans would mean that national coffers could be empty within days.

The recently-appointed Finance Minister Evangelos Venizelos acknowledged that the cuts were "unfair", but said they were absolutely necessary.

He called on MPs to back the measures, saying both the government and the opposition were "running out of time".

"We are handling our country's history right now and nobody can play with that," he said.

But the main opposition leader, Antonis Samaras of the New Democracy party, said the thinking behind the austerity package was flawed and that tax rates should be lowered rather than raised in order to stimulate the economy.

The outcome of the debate is uncertain. Mr Papandreou faces opposition from within the governing Panhellenic Socialist Movement (Pasok), with two MPs saying they may oppose the bill.

The party has a slim majority, with 155 seats out of 300 in parliament.

Send your pictures and videos to yourpics@bbc.co.uk or text them to 61124 (UK) or +44 7725 100 100 (International). If you have a large file you can upload here.

Read the terms and conditions

View the original article here

European banks 'can help Greece'

28 June 2011 Last updated at 08:39 GMT A 48 hour general strike is underway in Greece The boss of Italy's biggest bank says Europe's banks can work together with European institutions to help Greece.

"I think there is room for strong collaboration," said Corrado Passera, chief executive of Intesa Sanpaolo.

On Monday, French President Nicolas Sarkozy said French banks had agreed to extend their loans to Greece.

Eurozone officials are trying to find a way for banks to support Greece's bail-out without the country being judged to have defaulted on its debt.

Credit ratings agencies have warned that if banks agree to extend their loans to Greece, even voluntarily, they may judge it to be a debt default, which would cause even more problems for Greece.

President Sarkozy's idea was that when banks are repaid money they are owed by Greece, they should keep 30% of it, re-lend 50% of it to Greece for 30 years and put the remaining 20% into a special fund of high-quality bonds, which would insure them against a future Greek debt default.

French banks have the biggest exposure to Greek debt, while Italy has relatively low exposure.

The deal may be unpopular with Germany, because the new bonds would be insured by eurozone bail-out funds.

Continue reading the main story

There all manner of flaws and uncertainties in the scheme, according to bankers to whom I've spoken ”

End Quote Robert Peston Business editor, BBC News The French plan has yet to be agreed either with eurozone leaders or the Greek government.

BBC business editor Robert Peston says the real problem with the proposals is that there has been no attempt to reduce the amount of money that Greece owns, unlike in the Brady bonds for indebted countries such as Mexico, Argentina and Brazil, on which President Sarkozy's plans were based.

Nonetheless, German banks are reported to be very interested in the French model being discussed.

They were discussed by a group of international bankers, who met eurozone officials to discuss the crisis on Monday.

Also, the head of the eurozone's rescue fund, Klaus Regling, is talking to the ratings agencies to explore ways to avoid a second bail-out being considered a default.

European policymakers, notably the European Central Bank, are concerned that the bail-out could force European banks to recognise billions of euros in losses on Greek debts they currently hold, and could also trigger payouts on credit derivative contracts.

Credit derivative contracts are, in this case, bets that Greece will default on its debt. They are used partly as insurance by banks that have bought Greek bonds.

The Greek parliament is discussing a new range of austerity measures, which include introducing income tax on earnings of 8,000 euros (?7,142, $11,600), and is due to vote on the package later in the week.

The ruling party has 155 seats in a 300-seat parliament. Polls suggest the proposals are opposed by three quarters of Greece's 11 million population.

The austerity measures must be agreed before Greece can get its hands on the latest slice of the original 110bn euro support package.

A 48 hour general strike is underway in protest at the measures.

View the original article here

Bank help for Greece 'is default'

21 June 2011 Last updated at 08:23 GMT Mass protests against the government's austerity measures are continuing across Greece The Fitch credit ratings agency has said that if commercial lenders roll over their loans to Greece, it will deem the country to be in "default".

As Greece awaits further bail-out money from the EU and International Monetary Fund, private investors are under pressure to extend their loans.

Last week, France and Germany reached a compromise over whether such investors should assume a greater burden, saying any such move should be "voluntary".

But few think their help is by choice.

Fitch's comments come as the Greek government is due to face a vote of confidence, a crucial first step towards gaining another 12bn-euro ($17bn; ?10bn) loan from the EU and the IMF.

If the government survives the vote, Greece's parliament will be asked to back the latest spending cuts - worth 28bn euros - on 28 June.

'Junk' fears

Fitch Ratings believes that any softening of terms by commercial banks would come only as a result of political pressure and therefore cannot be deemed "voluntary".

Categorising a borrower as "in default" will mean a further lowering of Greece's credit rating.

This is already deemed to be "junk", meaning that lenders are not expected to get back anything like the value of their original loan.

A further downgrade to default would mean a fire-sale of Greek loans, as certain investors would no longer be allowed to hold such risky assets.

Greece is trying to pass austerity measures through parliament in order to qualify for another slice of aid, worth 12bn euros ($17bn, ?12bn) from the EU and IMF. The measures, which have cut benefits, public sector salaries and pensions, have sparked protests across the country.

In any case, that new money will still not be enough to keep Greece afloat long-term, and the institutions are planning to provide another bail-out, which could be worth more than another 100bn euros.

But amid political pressure from certain quarters, particularly the German government, this requires the willing contribution of private lenders.

Any contribution may prove worthless if it is viewed as a technical default.

Another agency, Standard & Poor's, has also warned that any attempt to restructure the country's debt would be considered a default.

The third leading agency, Moody's has a rating on Greece's debt that implies a 50% chance of a reneging on repayment within three to five years.

View the original article here

Greece 'nearing new aid package'

3 June 2011 Last updated at 16:18 GMT Mr Papandreou is to present a further 6.4bn euros in austerity measures International officials have said Greece will receive the next instalment of its bail-out funding following a month-long inspection.

European authorities and the IMF said the next tranche of their 110bn euro ($159bn; ?97bn) bail-out package would be paid, most likely in July.

There had been fears that Greece had not been progressing fast enough with cuts and this would be delayed.

Meanwhile, reports suggest a new bail-out deal is being finalised.

"I expect the Eurogroup to agree to additional finance being provided to Greece under strict conditionality," said Jean-Claude Juncker, who is head of the group of finance ministers.

Speaking after a meeting with Greek Prime Minister George Papandreou, he said that conditionality would include further privatisations.

"On that basis, it's obvious there will not be an exit of Greece from the euro area, there will be no default and Greece will be able to fully honour its obligations," said Mr Juncker.

More aid

Earlier media reports suggested that Greece had agreed in principle a new bail-out package with its European partners.

The reported new three-year plan would in effect supersede Greece's existing 110bn euro EU and International Monetary Fund bail-out, Reuters said.

Greece would target another 6.4bn euros in austerity measures and finally start its 50bn euro privatisation programme.

In return the country would be offered some form of reduction in its debts.

The broad terms of the package were agreed at a meeting of eurozone deputy finance ministers in Vienna that went on until after midnight on Thursday night, the report said.

Although the size of the new package was not revealed, the news agency source said it would cover Greece's borrowing needs for this year and next.

A report in the Greek newspaper Kathimerini said it would provide 85bn euros, of which 30-40bn would come as EU and IMF loans, with the rest coming from privatisation proceeds and from private sector debt relief.

Details of any new plan would still need to be finalised, so that it can be signed off by the Eurogroup of eurozone finance ministers when they meet on 20 June.

The blessing of the IMF and the European Central Bank is also likely to be needed.

Protesters hung a banner from the Greek finance ministry calling for a general strike

The additional spending cuts and tax rises would come at time when the government already faces daily demonstrations by thousands of protesters against its existing plans.

On Friday, protesters from the pro-Communist PAME union blocked access to the finance ministry in Athens, and hung a banner from it calling for a general strike.

The previous night, about 20 protesters hurled stones and yoghurt at government spokesman George Petalotis as he was stepping up to the podium at an event for the ruling PASOK party.

Meanwhile, Mr Papandreou also faces the risk of a backbench revolt over his austerity plans.

A group of 16 PASOK MPs wrote to him calling for a full party debate on the new measures.

The government has a majority of 12 in the Greek parliament.

IMF threat

The original bail-out plan has been overtaken by events, leaving the Greeks desperately short of money again.

The plan had envisaged Greece returning to the financial markets to help fund its deficit from next year.

But with its two-year borrowing cost currently at about 25%-per-year, the market is effectively closed to Athens.

Continue reading the main story

Although he argued the precise opposite, the speech [by ECB head Jean-Claude Trichet] was a tacit admission that neither monetary union as it currently functions, nor the bail-outs that have followed, are working satisfactorily ”

End Quote Gavin Hewitt BBC Europe editor Earlier this week, ratings agency Moody's cut its rating of Greece to one of the worst levels available, on a par with Cuba, and only slightly above recently-defaulted Ecuador.

Moreover, Greece has failed to bring down its deficit as quickly as planned, largely because its economy has remained mired in recession.

'Credit event'

The new bail-out agreement is likely to include a "soft restructuring" or "reprofiling" of Athens' private sector debts, advocated by Mr Juncker as a way of making the nation's debt burden more manageable.

Continue reading the main story

Greece [faces]... restructuring with a haircut, and maybe abandoning the euro”

End Quote Claudio Loser Former IMF director for the western hemisphere Until now the idea has been fiercely resisted by the European Central Bank, which fears that by imposing losses on Greece's lenders - including overstretched European banks - the move could spark a broader eurozone financial crisis.

But it appears that an agreement has now been reached to grant Greece debt relief, so long as it is done in a way that does not trigger a "credit event", according to the Greek government source quoted by Reuters.

This "credit event" could refer to the risk of triggering payments under derivative contracts used by financial markets to hedge or speculate on the risk of a Greek default.

It could also refer to methodologies used by the credit rating agencies and by the banks to determine whether loans are in default.

Many European banks have not yet recorded any losses on most of their lending to Greece, and could find their own solvency is put at risk if they are forced to do so.

It is likely that the restructuring would involve the postponement of debt repayments due in the next two years.

It would also have to be done with the agreement of Greece's private sector creditors.

But according to a former director of the IMF, Greece will eventually have to impose losses, or "haircuts", on its lenders - something that would definitely constitute a default.

Claudio Loser, who negotiated past IMF rescue loans for Argentina and Uruguay, said Greece's only other option was to abandon the euro, although he conceded this would be "more complicated".

View the original article here

Greece default 'would hit others'

24 May 2011 Last updated at 13:56 GMT Greece is seeking political consensus over its latest austerity programme Any Greek debt default would likely hurt the credit rating of other peripheral eurozone countries, the ratings agency Moody's has warned.

In a statement on the impact of a potential default, Moody's said such a default would also hurt Greek banks.

Moody's also became the latest agency to say any kind of restructuring of Greek debt would constitute a default.

Meanwhile, the Greek opposition leader has rejected the government's request to support a four-year austerity plan.

The plan would lay out deficit reduction measures that go two years beyond the next general election.

Greece received a 110bn euro (?96bn; $155bn) bail-out from the European Union and International Monetary Fund last year.

'Wrong recipe'

Greece's European partners had demanded cross-party support for the plan after talks last week on possible further bail-out measures.

Antonis Samaras, leader of the New Democracy party, said he believed the austerity demanded by Brussels would hurt the country's economic recovery.

Continue reading the main story

I didn't come to discuss the looting of Greek society with Mr Papandreou”

End Quote Alexis Tsipras Leader of the Left Coalition opposition party "I am not going to agree to this recipe, which has been proven wrong," said Mr Samaras after meeting Prime Minister George Papandreou.

The right-winger instead wants to cut taxes in order to stimulate an economic recovery.

"The government lacks the courage to restart the economy and is not considering a renegotiation," he added.

"It is repeating the same mistake, and exceeding the limits of the Greek economy and of our people."

The government has a majority in parliament and does not rely on opposition support for its current austerity budgets.

'Looting'

But Mr Papandreou faces even more opposition from the left.

The head of the Communist party, which is influential with trade unions, refused even to meet him, while Alexis Tsipras, leader of the Left Coalition party, called on him to resign.

"I didn't come to discuss the looting of Greek society with Mr Papandreou," said Mr Tsipras. "I came to tell him that he must not... go ahead with this crime against the Greek people."

Meanwhile, Greece's second biggest union Adedy, which represents civil servants, announced plans for a general 24-hour strike in June.

"This policy must stop now," the union said in a statement, referring to budget cuts including public pay cuts, civil service redundancies and an increase in VAT.

"These measures will bring down the living standards of small and medium classes by over 20%."

'Adverse implications'

There has been increasing speculation that Greece could be allowed to restructure its debt.

On Monday, the Luxembourg Prime Minister and head of the eurogroup, Jean-Claude Juncker, said that a restructuring would involve a delay in repayments and a cut in interest payments, but would only be granted if the Greek government met strict targets.

In its statement, Moody's said: "It is apparent that the longer the current state of uncertainty affecting Greece persists, the greater the temptation on the part of both the Greek and the euro area authorities to try to undertake some form of debt restructuring - in other words, to allow Greece to default.

"Moody's believes that a default is likely to have adverse credit rating implications for Greece, possibly some other stressed European sovereigns, and the Greek banks, regardless of the efforts made to achieve an 'orderly' outcome.

"The full impact on Europe's capital markets would be hard to predict and harder still to control. The fallout would have implications for the creditworthiness (and hence the ratings) of issuers across Europe."

Meanwhile, Greece's cost of borrowing in bond markets has continued to rise steadily, as expectations of an eventual default rise.

The yield on its 10-year bonds rose above 17% on Tuesday, up from 15.3% a week ago.

View the original article here