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Nikos Chrysoloras: Awaiting the German Elections. Eurozone: Scheduling for Fall

The caricature that was published in an Italian newspaper, which is currently going around journalistic agencies in Brussels, is rather indicative of the prevailing climate in Europe: a child keeps complaining to his parents that he urgently needs to go to the bathroom. “Shhh, kid, after the German elections!” is the parent’s answer. Therefore, although the fronts of the financial crisis -from banking consolidation to the issue of Greece- remain open, every official activity in the EU has been suspended in light of the election of September 22in Germany.

A few days earlier, on September 13, the hot Autumn ahead of the Eurozone is bound to start with an informal meeting of the Eurogroup, in Vilnius, Lithuania. No substantive decisions are expected to be made -barring the unexpected- apart from the approving of the next tranche of the support mechanism to Cyprus, totalling 1,5 billion Euros.

The technical team of the Troika is bound to arrive in Athens on September 16 (with the heads of the delegation following one week thereafter), for the next assessment of the Greek programme. Provided that everything goes smoothly, the rest of the tranche which was in principle approved in June -amounting to one billion Euros- will be disbursed. However, the thorny issues regarding the future of the Greek industries, namely ELVO (Hellenic Vehicle Industry), EAS (Hellenic Defence Systems) and LARKO (General Mining and Metallurgical Company), as well as OSE (Hellenic Railways Organisation), along with mobility in the public sector and the new lawyers’ code, can potentially give rise to unforeseen complications in the assessment, according to the prevailing estimate in Brussels.

On the following day, September 17, the Greek Prime Minister, Antonis Samaras, is expected to have a series of meetings in Brussels with the Presidents of the Commission, the European Council and the European Parliament, Messrs. Jose Manuel Barroso, Herman van Rompuy and Martin Schultz, respectively. The emphasis of the agenda will be placed on the Greek Presidency of the European Council, which begins on January 1, 2014.

September 22 is the grand day of the German election race, with polls suggesting a walkaway for the Christian Democratic Coalition (CDU/ CSU) of Chancellor Angela Merkel. There still remains the question of the new government’s composition, since the Liberal Democrats appear marginally above the electoral threshold of 5%, while the Social Democrats hit record low. Moreover, polls suggest the potential entry to Parliament of the eurosceptic party Alternative für Deutschland (AfD), which would definitely be a negative development for Greece.

Thereafter, on September 29, follows the federal election in Austria. The formation of the new coalition government there, will definitely affect the discussions that will begin soon afterwards, concerning the management of the financing gap and debt sustainability of Greece.

On October 14, the Eurogroup will officially meet in Luxemburg. There are hopes in Greece not only for the disbursement of the pending sub-tranche, but also for the initiation of a substantive debate on the funding gap in the Greek programme, already since the second semester of 2014, i.e. when the money from the current Programme of Support by the EFSF will run out. The Eurozone plans to conclude the discussion on the funding gap in the meeting of the Eurogroup in Brussels, on November 11. Nevertheless, in order for such planning to be successful, the former assessment of the Troika is an essential prerequisite; although the assessment will have started by September, Greek experience has shown that this process usually lasts for several weeks. The assessment will also determine the actual extent of the funding gap, as well as the most recent projections on the sustainability of the Greek debt.

Shortly before, a summit has been scheduled for October 24 in Brussels, where the European leaders will assess the progress that has been made towards implementing measures to tackle youth unemployment, which were decided on in June. Nevertheless, in case that Greece meets the prerequisites of the assessment, it is possible that political decisions will also be made regarding the future support to our country.

The last meeting of the Eurogroup in 2013 is programmed for December 9. Cyprus is looking forward to the disbursement of the next tranche of the support mechanism, whereas Greece ought to have typically completed the mobility programme of 25,000 civil servants. Any pending actions with regard to the financing gap of the Greek programme are expected to be discussed then as well.

Finally, Brussels will host the last summit for 2013, on December 19, with the issues of banking consolidation and deepening of the EMU monopolising the agenda, provided -of course- that no contingencies will have arisen in the meantime, both with regard to Greece, as well as with potentially destabilising political developments in Italy or Spain – as feared in Brussels.

On January 1, 2014, Greece shall take over the Presidency of the European Council, with the principal aim to complete the legislative work on banking consolidation in the Eurozone. On the same day, Latvia will become the 18th member of the Eurozone.