Shituation in Greece: What We Have Here Is Failure To Communicate

A few things need to be said vis-a-vis the impending Greek clusterfuck. Namely, we’ve been listening for weeks on end how the two sides, that is the heavily indebted Greece on one side and the don’t-call-it-Troika on the other were haggling over the finer points of tax hikes, spending cuts, projected values and sums calculated. But for some time now the one thought that has been bugging pengovsky was that we’ve seen it all before. Not in terms of the current economic and financial omnishambles – although one could argue that nothing has apparently been learned either from the Cypriot example or from previous failures of “saving Greece” – but more generally.

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(source)

While most of the following is, obviously, based on media and other reports which inherently carry their own bias, it would seem that what we’ve got here is a failure to communicate. The shituation in Greece is not unlike the run-up to World War One or The Cuban Missile Crisis. In both cases, the conflicting sides were convinced they understood the position of the other side perfectly and in 1914 it ended in disaster, while in 1962 disaster was only narrowly averted. This is what happens when parties involved expect each other to behave according to their respective plans. When that doesn’t happen, bad things occur. And when bad thing occur, every new move, if not carefully calculated, only adds to the clusterfuck. And it is safe to say that calculated and measured moves were very few and far between, on both sides.

Greek PM Tsipras and his stellar FinMin Varoufakis seem to have expected the EU will simply roll over for the two of them after Syriza won the Greek elections. As if things will automatically start moving in a new and more healthy way just on their say so. Well, they didn’t and had they understood what was it that the Troika was after, they would not have spent months grandstanding and posturing (look ‘ma, no tie!) around Europe, achieving practically nothing. But on the other hand, had the Eurogroup and especially Frau Merkel understood what the Syriza victory in Greece actually meant in terms of legitimacy of austerity policy (rather than trying to prove to Greek voters they voted wrongly), things might have moved forward, despite the initial clumsiness of the Greek Duo. As things stand, there is not an innocent party in this sorry story. All of them have boxed themselves in with their own rules of engagement that could only degenerate into the current shituation.

As pressure bar goes way up into the red, accusations of communists in Athens trying to set Europe alight as well as accusations of fat cats in Brussels trying to make an example of Greece and shift the burden of the bailout squarely on the shoulders of the poorest strata of Greek society. Neither are exactly true, in pengovsky’s opinion.

Yes, this is an ideological fight. Whoever maintains that it is only the Greek government who is flaunting ideology suffers from a massive (self-inflicted) blind spot. Even adhering to pure maths means taking an ideological position. But just as the Greek government is “far left” only in terms of the general European discourse being right-of-centre, the don’t-call-it-Troika is a far cry from a 21st century incarnation of the Sherrif on Nottingham, case in point the latest proposal by the European Commission which, for example, calls for a larger cut in defence spending, a wider base for luxury tax, closing of tax loopholes, et cetera.

Point being there is nothing to be gained from an ideological shouting match. Other than shifting the blame, that is. Which is what the current rush to win the battle for interpretation looks like. Not so much wanting to find a way forward but making sure the other party is to blame when things go all the way south. Thus Varoufakis says Greece has a clear conscience re negotiations. That may be. And I’m sure Merkel, Dijsselbloem and the lot feel the same.

Isn’t that nice. The whole common currency project is about to go tits-up, possibly dragging the Union with it but everyone will have a clear conscience. Here’s a newsflash: you dimwits were not tasked with runing the show to have clear consciences but get shit done.

Conspiracy theories aside, plenty of European press seems to be clamouring for a “12th hour deal”, either counting on Tsipras/Varoufakis to see the light or Merkel, Draghi and even Juncker balking at the idea of going down in history as leaders under whose stewardship the euro (and by extension the EU) started to disintegrate. This line of thought has a big problem: Both “The Institutions” and the Greek government are convinced it is precisely their actions which can save the euro/EU while actions of the opposite side are “uneuropean, inhumane and illogical”. Not necessarily in that particular order. It is, as KAL some time ago so aptly pointed out, a classic case of irresistible force meeting an immovable object. It seems doubly ironic that a renowned expert in game theory should be an active participant in the dismal failure of the entire enterprise. Yes, I’m looking at you, Yanis.

True, both Greece and the don’t-call-it-Troika seem to have gone so far down the chute that a working deal is for all intents and purposes impossible without either of the sides caving in completely. So perhaps what is needed is a non-working deal? Something both sides need to save their respective faces (if not asses), knowing full well that the goals laid out will not be met. Because it is not as if all the previous goals set for Greece were met with flying colours.

So, here we are, with Greek banks closed, capital controls in place and EUR 60 cash withdrawal limit per bank account and/or person. Save a surprising yes vote by the Greeks on the #greferendum (which would, in turn, probably trigger new elections, further complicating events), the country is moving rapidly towards leaving the euro. Just how this plays out no-one knows.

A wise man once said that to jaw-jaw is better than to war-war. The same goes for current omnishambles. The EU and the euro were always perceived as one-way streets. If Greece leaves the euro and possibly the EU as well, the Pandora’s box will have been opened and things thought impossible will suddenly become deceptively easy and many-a-politician’s weapon of last resort. Because if Greece leaves the euro, why not Germany? I’m sure a relevant political party with an anti-euro agenda would appear in no time.

Oh, wait…

 

June 29th, 2015, posted by pengovsky

Tele-kom, Tele-go

The supervisory board of the Slovenian Sovereign Holding (SDH) is expected to finally end the sad saga of the sale of Telekom Slovenije today. The state owned telco was put up for sale as a part of the deal then-PM Alenka Bratušek and her FinMin Uroš Čufer made with Brussels in 2013 to avoid a bailout that would send Slovenia into the special Olympics category together with Greece and Cyprus (as well as Ireland and Spain, to a lesser extent).

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Telekom Slovenije management might get new bosses soon (source: The Firm™)

To cut a long story short, the company was put up for sale soon after the SDH was formed and when it became clear that the new Slovenian government will go ahead with the attempted sale, despite PM Cerar’s vocal reservations during the election campaign, all hell broke loose. Cerar’s government nearly went tits-up with the SD threatening to quit the coalition (but didn’t and wouldn’t, because gravy train), there was a very public and very loud stooshie between the PM and his defence minister Janko Veber of SD, who was then relieved of his duties. And in general, as the days passed, the debate on Telekom was becoming ever more charged.

But in the end Deutsche Telekom, the supposed bogeyman in this story did not even place a bid, leaving Cinven, a British fund to go at it alone. Which was a bit of a #wtf moment, especially for opponents of the sale as it became clear that people are not exactly queuing to snap up the company. And after much wrangling the final offer was around 110 euros per share with additional 20 per share later on if certain conditions are met and benchmarks achieved. Yesterday, Telekom Slovenije (TLSG) traded at 98 euros per share. And in the end it was all about whether the SDH will accept Cinven’s offer. And this is where the fun really starts.

The issue is so charged both politically and emotionally that any politician with at least a half-developed survival instinct would rather walk away from it or find a way to maintain status quo. And every so often even PM Cerar gave the impression that he would rather see the Telekom problem simply go away. But it didn’t and in the end, the SDH management OKd the Cinven deal and kicked the issue upstairs, to the supervisory board. Which after much deliberation OKd the deal as well but kicked it upstairs to the government, acting as SDH’s shareholder assembly. And after even more deliberation (an eight-hour cabinet meeting on Sunday last), the government decided to kick the issue downstairs, to the SHD supervisory board, saying they’re paid to do it and that it’s their job.

Thus an interesting situation was created whereupon the SDH management, its supervisory board and government green-lighted the deal, and now everyone is looking around, waiting for someone to say “sold!”. The Board is apparently scheduled to meet later today as to catch a deadline set by Cinven. The fund is threatening to pack-up and leave should the deal be nixed or final decision somehow delayed yet again.

But on the fate of the deal hinges the internal dynamic of the coalition. Namely, should the deal go south at the very last moment (and that at the moment seems unlikely, despite the massive pressure from anti-privatisation camp), the SD, now barely hanging on would probably score massive points, overtake United left (ZL) at the top spot in the polls and probably start calling the shots within the coalition. Most of them, anyway. Because not only is the SD fighting a politically symbolic battle, the outcome will have massive repercussions for the party in terms of access to resources, influencers, decision makers, and the party’s own political prospects.

Watching very carefully will be Karl Erjavec of DeSUS, who is mostly sitting this one out, but is gearing up for a similar fight over Zavarovalnica Triglav, the largest insurer in Slovenia. If Miro Cerar and his SMC prevail, then Teflon Karl better start preparing a different strategy to keep Triglav in state hands and, by extension within his sphere of influence. If, however, the Telekom is not sold, then Erjavec can simply cash in the support he gave to the SD prior to election, divide the spoils and live happily ever after.

Not that the anti-privatisation camp is throwing in the towel, either. While the SD will probably not leave the coalition over the Telekom (not that it could, with its six votes, anyhow), they are trying everything else. Thus yesterday evening an 11th hour attempt was made at derailing the deal. Mladina weekly ran a story about a due-diligence, commisioned by a potential bidder which supposedly showed Telekom shares are worth as much as 190 euro.

Now, under normal conditions would have been a bombshell. But these are not normal conditions. The pressure brought to bear in this case is beyond anything we’ve seen in recent history. At the very least, this is the first time the wrangling, arm-twisting and threats are done out in the open, at the highest level of politics and public life in general. Therefore, the first question that begs asking is why is it then the British fund is the only bidder? This phantom bidder could have made an offer of say, EUR 150 per share and still make a deal of the decade. But it didn’t. And that’s all that matters.

At any rate, whatever the fuck the SDH supervisory board decides today, will probably mark the end of a period. Not just for Telekom Slovenije, but for Slovenian politics. The fallout will be massive. If the deal falls through, what little credibility Cerar’s administration gained at home and in Brussels, will have disappeared as the PM will be seen as being shoved around easily. If, however, the SDH board does finally OK the sale, Cerar’s problems are far from over. Not only on account of DeSUS holding a baseball bat to fend of privatisation of Zavarovalnica Triglav but also because the anti-privatisation camp nearly succeeded this time around and will be anything but disheartened in the next round.

And while early elections are not in the cards any time soon (not yet, at least), life in the ruling coalition will become increasingly difficult as the SD seem to have found their voice (their only problem being that it is the same voice the ZL is using, only much more effectively). With this in mind, the possibility of a coalition expansion or even reshuffle seems plausible.

 

 

June 10th, 2015, posted by pengovsky

Of Morons and Ministers

After the parliament voted to dismiss defence minister with a 68-11 vote, Janko Veber’s very own Social Democrats predictably decided not to leave the ruling coalition, regardless. And while the debate, most of it held behind closed doors under the pretext of confidential information being used, proved that security issues were indeed secondary and that the real fight was about sale of Telekom Slovenije, the whole political clusterfuck amounted to little more than a storm in a very leaky tea-cup. Namely, the company in question is not as sought for as some wanted and other feared. On Monday, only one binding offer for Telekom was submitted and – adding insult to injury – it wasn’t the Jerrys. It was, in fact, a British investment fund Cinven.

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Telekom Slovenije (TSLG) share in the past year (source: Ljubljana Stock Exchange)

In all honesty, this was in fact more than just a political dust-up as tensions did flare high and the parliament debated Veber’s dismissal. The exact content of the debate is unknown, that being closed session and all, but word on the street has it that Veber and Cerar were ripping each other a new one. Which also explains why the public was excluded. Apparently, there was next to nothing confidential info mentioned in a five-hous-plus long debate but the whole thing was an ugly sight to see and the coalition, especially the SMC wanted to avoid that. But in the end, this was not the coalition-toppling earthquake many have speculated or indeed wanted it to be.

Implosion of Janko Veber

Politically speaking, this was a marginal victory for PM Miro Cerar. Not because he would have done a marvelous job of treading this particular issue, but mostly because Veber fucked up only days before the parliament session. Just as he was gaining some ground on Cerar, he threatened the prime minister with criminal charges on a count of destabilizing country defences, basically telling the PM he should be put on trial for high treason. With that Veber went into self-destruct mode, just revving up the rhetoric and not substantiating it with, well, anything. To put it in Top Fun terms, his ego was writing checks his body couldn’t cash.

Veber’s spectacular implosion overshadowed a just as equally embarrassing event. Namely, just as Veber moved to defenestrate Veber, the newly minted science, sport and education minister Klavdija Markež stepped on a landmine in the form of her masters’ thesis being mostly plagiarized. Which turned out to be true and prompted her immediate resignation, only five days after she had been nominated to the position. A huge embarrassment for Cerar as Markež’s predecessor Setnikar Cankar was dismissed for excessive earnings, tainting the clean image of PM Cerar and his party.

But in the end, it was the SD which blinked. And for good reason. If the party followed the path its VP had set, it would have found itself in opposition together with the United Left (ZL). Which would be bad news for SD as the ZL has the same number of deputies and are much better at being the rabid opposition party than the SD ever was. Not to mention the vast ground-network the SD has to maintain which costs money. Not to mention all the debt the party has incurred over the years and is now struggling to repay. And it’s much harder to do that when you’re in the opposition. Just as the once-mighty LDS. What’s left of it, anyway.

Minister for agriculture and defence

As a result, Slovenia is now in a mildly bizarre situation where it’s government in effect has a minister for agriculture and defence as Dejan Židan, SD’s main honcho temporarily took on defence portfolio as well. Technically, this set-up can last six months at the longest (three months, plus one three-months extension, as per law).

This is not the first time defence department was attached to another sitting minister, however. Years ago, under one of Drnovšek governments, the legendary PM, during one of his defence-minister-voes simply appointed science minister Lojze Marinček. An overall joyous character, the professor-turned-politician took the role in stride and went around official functions (which usually included then-president Milan Kučan) running around asking “has anyone seen my Commander-in-Chief?” and generally making light of the embarrassingly protracted situation.

To their credit, the SD said they will come with a suitable candidate sooner than in six months. although what passes as a “suitable candidate” in this day and age is debatable, to be honest.

Homo homini minister (of defence)

But as if one (former) defence minister making a fool out of himself wasn’t enough, his predecessor (many times removed) had to add his two cents. Or whatever the fuck his measure of monetary value is. Namely, while Veber, or more precisely, his social media manager was doing his best to make his case on Twitter (and failing badly), at some point he responded to a tweet by Janez Janša who accused Veber of lying with regard to secure locations used by the army. Veber replied with some sort of  rebuttal upon which Janša replied with calling Veber a moron. Literally.

While Janša might have actually had a point (at the very least is takes one to know one) the ease with which elected officials, senior political leaders at that, dig new lows in public communication is flabbergasting. Perhaps this is the result of Janša slipping ever more into irrelevance and being unable to do anything about it, but it does explain just why exactly fewer and fewer people want to have anything to do with him. Case in point being the NSi, which stands to reap benefits from what has since been dubbed The Veberkom Affair.

Last week Janša floated the idea of a shadow government, inviting anybody who would join, to well, join. The “everybody” was of course limited to the NSi, the only other opposition party on the political right-wing and the NSi said “thanks, but no thanks”. Janša took the rejection badly (as he always does) and threatened the rejectors will pay a heavy price for it. The truth, however, is that the NSi can in the long run only profit from its newfound spine. Indeed, they will most likely push for some sort of concessions from PM Cerar on issues dear to them. This will probably include but will not be limited to legislation regarding post-war grave-sites, an issue Cerar has already hinted he is willing to meet them at least half way.

And all of a sudden, nobody is in a hurry to sell the Telekom. Even the NSi, disappointed that there was only one offer (more likely: disappointed Deutsche Telekom did not bid), now say it might be prudent to halt the sale. The PM’s office, wisely, is not commenting on the ongoing procedures, but it seems that the political parties at large see the sale of Telekom in terms of short-term income, either for the budget or for party coffers and not in terms of what is best for the company.

For what it’s worth…

In fact, the current political elite is behaving as your average Slovenian small-time entrepreneur, valuing his business by the time and money he invested and not by what other people are willing to pay for it (i.e. it’s market value). As if we learned nothing from the numerous false starts of sale of Mercator retail chain resulting in the final price-tag being only a fraction of what it used to be or from the so-called Brewery Wars, which have led to rise and fall of Boško Šrot of Laško Brewery and, ultimately to the sale of the company for only good 50% more what Laško paid for Union ten years ago to monopolize the beer market in Slovenia.

Thus, the expectations that the value of Telekom Slovenije will rise on its own, are naive at least and the share price reflects that. It has been in a free-fall for the better part of the last two weeks and has rebounded slightly only today. A company which has not released an innovative product of its own for the better part of the decade, has spread itself too thin across the region only so see itself rolling back Balkan operations in the past few years and is being dragged through courts for allegedly abusing its market positions will require much more than just responsible management and ownership to increase its value. Since the state has, unfortunately, repeatedly failed to provide either (with a few notable exceptions far between), there is no compelling reason for the sale not to be realised, pending negotiations.

Unless, of course, the political elite suddenly wants to prove Janko Veber right.

 

 

April 15th, 2015, posted by pengovsky

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