Sep 23rd, 2015, Think positively…Tsipras’s new government wouldn't be difficult to be better than his first, disatrous one

• Greece’s new government was sworn today, three days after elections.

• There are no changes as regards the team which will deal with critical economic matters, recapitalisation of banks and the implementation of 3^rd MoU. The number of ministries was increased to 14 (from 10 currently). 

• moderate Dragassakis continues as Deputy Prime Minister, Euclid Tsakalotos will continue to lead the Finance team, which consists of Alexiadis who will be handling state revenues and Houliarakis (Deputy Finance Minister) who was Greece’s main negotiator after Varoufakis' departure from the big Picture.

• EU leaders meeting is set set to approve a plan to relocate 120,000 migrants across the continent, despite fierce opposition from Romania, the Czech Republic, Slovakia and Hungary, which voted against the mandatory quota scheme. According to this plan, 50,398 refugees will be relocated from Greece to other EU countries.

• The head of Euroworking Group Thomas Wiezer, stated that a) recapitalization of Greek Banks and b) changes regarding NPL’s handling appear to be prerequisites for the disbursement to Greece of the last 3 bios (out of 26 bios of first chunk of 3rd MoU).

• Three energy consortiums are preparing the ground to increase their participation in Greece’s energy sector, after the liberalization of energy market which will occur in the beginning of 2016. They will be focusing initially on a) big industrial customers and b) 25% of retail customers. According to Kathimerini, Greece’s lenders are worried about the total amount which is required for Banks’ recapitalization.

• The port of Piraeus was named as the fastest growing port in the world during the period 2009-2013, according to data collected by the International Association of Ports and Harbors (IAPH). The period coincides with the presence of Chinese giant Cosco at Greece’s main port, where it continues to operate. As a reminder, Cosco plans to further invest in the port of Piraeus and expand its operation.

• According to the Bank of Greece, the number of tourist arrivals increased by 14.2% during the period Jan-Jul but revenues increased by 6.7% only.

• Kiriakos Mitsotakis announced his candidacy to run for New Democracy's leadership. He is the son of former Greece's Prime minister Constantinos MItsotakis who governed during 1990-3

Risk Assessment.

Firstly, it would be extremely difficult for Tsipras to have appointed a better government, because local electorate is still in transition from previous anti memorandum rhetoric to a more realistic one; and this is reflected to new government. However, the fast formation of the new government appears to be a positive step of immense importance, because Tsipras was elected to implement the 3^rd MoU.

Secondly, Tsipras new government is not the pro markets, pro economy type of government which could help the economy to revive. However, it could be proved as a special purpose government which could implement the requirements of 3^rd MoU.

 

Thirdly, it would be extremely difficult to say that Tsipras could have appointed a worse government, compared to the first SYRIZA government which included Varoufakis and other eurosceptics. It is comparatively positive that Tsakalotos and Houliarakis will continue to run Finance Ministry and negotiations with creditors. Although Tsakalotos is a member of the movement of 53, which appears to be Tsipras internal opposition, he has showed evidence that he is more pragmatic, professional and reliable compared to Varoufakis. In addition, he will be supported by the low profile and hardworking professor of economics Houliarakis who has been Greece’s main negotiator after Varoufakis departure from the picture.

 

Fourthly, the new government includes more members of PASOK origin such as Kouroublis (was promoted to Minister of Interiors & Administration Reconstruction), Tzakri (deputy minister of industry) and Bolaris (alternate minister of agricultural Development and Food). This is due to the recent increase of PASOK (popularity) and its ongoing efforts of PASOK’s leadership to reconstruct the centre left pile of local political system.

 

Last but not least, the reappointment of Dritsas as a minister of Shipping appears difficult to be justified considering Dritsas’ opposition to the ongoing privatization of the port of Piraeus. In addition, the Ministry of Shipping was split from Ministry of Economy as part of a tactic to separate the administration of ports from investments/privatizations.

 

Unless this appointment represents another Tsipras’ trick to appoint a bad cop to this post, keeping for himself the role of good cop, this appointment will cause significant obstacles to the Port of Piraeus project and to overall Greece’s strategy to attract investments.