January 14 2013

Alexis Tsipras and Wolfgang Schäuble meet, and disagree. Counter-terrorism operation after shots fired in Athens. Incendiary attacks on political offices and journalists. IMF Managing Director Christine Lagarde says confidence has returned to the euro area…

Powered by Guardian.co.ukThis article titled “Eurozone crisis live: Greece on alert after weekend attacks” was written by Graeme Wearden, for guardian.co.uk on Monday 14th January 2013 15.04 UTC

3.04pm GMT

And here’s Associated Press’s take on the meeting today between Wolfgang Schäuble and Alexis Tsipras (see 2.14pm for full details)

Germany’s finance minister has urged Greece’s leftist opposition leader to back the austerity plan attached to the country’s international bailout loans.

A German government official said Finance Minister Wolfgang Schäuble held a 30-minute meeting with Alexis Tsipras in Berlin on Monday.

He said Schäuble insisted the package of austerity measures and reforms agreed by Greece and its international creditors had to be implemented if the country wants to remain one of the 17 nations using the common euro currency.

2.57pm GMT

Here’s a video clip of David Cameron on morning television today, arguing that Britain is suffering from too much interference from Brussels:

2.14pm GMT

Tsipras and Schäuble disagree in Berlin

Greek left-wing leader Alexis Tsipras and German finance minister Wolfgang Schäuble have disagreed over the eurozone crisis at their meeting in Berlin today.

Perhaps predictably, the two men remained poles apart over the crisis — with Tsipras arguing that Greece must change course, and Schäuble insisting that it must not.

Speaking after the meeting, Tsipras told reporters that he had demanded more action to address Europe’s jobless crisis:

I told him that the austerity programmes have failed all over Europe and especially in Greece.

Now we must deal with their impact: poverty, unemployment.

Our vision is to see Greece exiting the crisis with its people standing on their feet.

The German finance ministry is briefing that Schäuble took a hard line with the Syriza leader, telling Tsipras there was no alternative to austerity and economic reforms for Greece.

A ministry source told Reuters:

Minister Schäuble has told Mr Tsipras unequivocally that there is no alternative to the… implementation of the economic adjustment programme. Minister Schäuble urged Mr Tsipras to back the path embarked upon.

1.37pm GMT

Just in – Silvio Berlusconi has suffered a setback in the courts:

Updated at 1.37pm GMT

1.24pm GMT

I mentioned at 10.42am that the latest eurozone industrial output data was worse than expected and pointed to a continued recession.

Reuters, though, sees signs for optimism:

Factory output, two-thirds of which is generated by Germany, France and Italy, was down almost 4% on an annual basis in the month, highlighting just how few cars, televisions and other goods like fridges Europeans have been buying at a time of record unemployment.
However, production of machinery used to make other goods, an indicator of future business, rose 0.7% in November from October, after two months of losses.
If production of those capital goods continues to increase, that could support business surveys and the view of the ECB that the euro zone will recover from recession in 2013 and that the economy hit bottom in the fourth quarter of last year.

1.00pm GMT

The financial markets aren’t doing anything to disprove Christine Lagarde’s theory that confidence is returning.

The French and German markets are up by 0.4% and 0.5% respectively, while the FTSE 100 remains flat.

In the currency markets, the euro has hit a new nine-and-a-half-month high against sterling. One pound is now worth €1.2028, down half a eurocent.

Otherwise, experienced hands reports that all is calm and quiet:

12.44pm GMT

The latest in Italy

Silvio Berlusconi continues to dominate the political scene in Italy, with around six weeks to go until the Italian general election.

The encouraging news for Berslusconi is that his right-wing coalition has gained ground since his People of Freedom party secured an alliance with the Northern League party, and launched a media charm offensive.

The latest polling by the Tecne research institute found that the PdL/Northern League have 24% of the vote, up from 22.4%.

Mario Monti’s own centrist coalition has fallen back to 14.5%, from 15.8%.

The centre-left alliance led by Pier Luigi Bersani remains the lead, but has also lost some ground — at 37.8 from 38.6%.

Berlusconi must also be watching the courts as well as the polls. The latest development there is that Karima El Mahroug, or “Ruby the Heartstealer”, has made a dramatic return to Italy to give evidence in the former prime minister’s sex abuse trial.

Berlusconi’s lawyer, though, are pushing for the case to be delayed until after February’s elections. More here: Silvio Berlusconi’s lawyers call for sex trial suspension

11.52am GMT

Photos: anti-terrorism police at work

Here are a couple more photos of the security operation at the offices of New Democracy, following the gun attack in the early hours (see 9.15am onwards).

ND officials have said that one bullet shattered a window of an office sometimes used by prime minister Antonis Samaras, ending up on the floor.

As Samaras wasn’t in the office (and wasn’t likely to be either, in the middle of the night), it’s important not to exaggerate the attack*.

One key question will be whether it represents an escalation in public anger over Greece’s austerity programme, or is simply an isolated action by criminal extremists.

* – although as someone else might have been, it’s hard to ignore

Updated at 1.08pm GMT

11.17am GMT

In the UK, the question of Britain’s possible exit from the European Union continues to rumble on.

David Cameron, who is expected to end the suspense and deliver his Big Speech on the issue within days, defended his push for the repatriation of powers on Radio 4′s Today Programme.

The PM insisted that he doesn’t want Britain to leave the EU, and rejected criticism that he’s playing a risky game….

Those that say ‘this is very dangerous, you’re putting at risk the relationship with Europe, you’re putting at risk our position with regard to business’, I don’t agree with that because the fact is this debate is happening anyway.

So we have a choice as politicians: do you get out there, lead that debate, make the changes that would be right for Britain – and I would argue right for Europe – and then give people a choice about that? Or do you kind of stick your head in the sand and just hope the debate is going to go away?

However, Cameron wasn’t quizzed on issues such as Brussels’ reluctance to renegotiate existing treaties (which might scupper the PM’s plan), or reports that an in-out referendum might not be held before 2018 (which would mean years of uncertainty).

My colleague Andrew Sparrow has all the details of what was, and wasn’t, covered on his Politics Live blog.

10.42am GMT

Eurozone industrial output disappoints.

Industrial output in the eurozone has fallen again, in the latest sign that the region’s economy ended 2012 in recession.

Euro area industrial output dropped by 0.3% in November, following a 1% fall in October. On a year-on-year basis the sector was 3.7% smaller than in November 2011.

Economists had only expected a drop of 0.1% in November.

Howard Archer of IHS Global Insight said the data suggested that the eurozone shrank in the final three months of 2012, for the third quarter in a row:

While Eurozone manufacturing activity likely suffered its low point around October, latest survey evidence indicates that the sector is still in recessionary territory and that conditions continue to be tough going into 2013.

Archer added, though, that firms could be encouraged to invest more by the current optimistic mood.

10.26am GMT

Back to the financial sector… and the Greek stock market has hit its highest level in 17 months.

The main Athens index, the ATG, hit 1000 points this morning for the first time since August 2011. That means its doubled since mid-June, when a Greek exit from the eurozone looked likely.

10.06am GMT

Greece’s opposition Syriza party has hit back against the Greek government for claiming that it was linked to the latest wave of violence (see 9.15am).

Syriza spokesman Panos Skourletis said the party clearly condemned the attacks. Skourletis then claimed that the governing New Democracy party was trying to make political capital out of the incidents and creating a “civil war climate.”

Here’s some reaction from Greek citizens:

9.43am GMT

Here’s a photo from Athens of counter-terrorism officers gathering evidence outside the New Democracy (ND) headquarters following this morning’s gunfire.

9.32am GMT

Greek newspaper Kathimerini reports that the gun attack on that Athens HQ of New Democracy (see 9.15am post) took place at 2.30am local time (00.30am GMT). It also flags up that 17 separate firebombing attacks were reported in Greece on Saturday and Sunday:

Several New Democracy and PASOK offices around Athens were also firebombed over the weekend. A total of 17 incendiary attacks, including on a SYRIZA office in Iraklio, Crete, were recorded over the weekend.

9.15am GMT

Greece shaken by weekend attacks and gunfire today

There is alarm in Greece after bullets were fired at the headquarters of the governing New Democracy party this morning.

The attack, reportedly involving a kalashinikov rifke, came after weekend attacks on the homes of several journalists which has left Athens in a state of high anxiety.

From the Greek capital our correspondent, Helena Smith, reports:

Government officials are expressing consternation at the rash of attacks in recent days following confirmation that bullet casings reportedly fired from a kalashinikov were even found in the office used at New Democracy headquarters by prime minister Antonis Samaras.

Police this morning said they were now tracking down a gunman who is believed to have fired the shots from a motorbike at the party’s central building on Sygrou Avenue.

No one was injured in the assault.

“We are leaving no stone unturned, ” said one police source. “These appear to be a coordinated range of attacks very possibly by the same group.”

The government spokesman, Simos Kedigoglou, whose own brother was targeted when assailants attacked his central Athens home with a fire bomb over the weekend, said the coalition government would not be cowed by the violence.

“We have a worrying acceleration in the effort to sow terror in our society. We are seeing unprecedented things … We all have to give our all. To show that democracy will not be terrorized,” he told a local radio station this morning, before slamming the radical left main opposition Syriza party for condoning “the political violence.”

The homes of five prominent Greek journalists, employed with national media, were also targeted Friday by a new group calling itself “lovers of lawlessness.” The group blamed the journalists “sympathetic” coverage of the way the government had handled the country’s financial crisis.

No one has been arrested, said police, who declared a nationwide hunt for the assailants is now underway. Government officials have openly hinted that the attackers derive from “anti-bailout” forces coalesced around the far-left front.

With Greeks ensnared in their hardest winter since the eruption of the debt crisis three years ago, anti-austerity anger is palpable. However, several polls also showed a slight dent in support for Syriza with the left-wingers losing their lead in favor of the governing coalition for the first time since the summer.

Samaras, who has been credited with deftly steering Greece through an autumn of tumultuous negotiations with the country’s troika of creditors at the EU, ECB and IMF, also increased his lead over the leftist leader Alexis Tsipras. SKAI TV, which conducted one of the surveys, attributed the rise to the political stability the coalition appeared to have succeeded in attaining with the release of a whopping €34.4bn in emergency bailout funds last month.

In a bid to boost his party’s standing within the EU, Tsipras will meet the German finance minister Wolfgang Schauble, in Berlin today for what will be his first talks with a senior official in the Merkel administration.

Updated at 9.23am GMT

8.51am GMT

Rumour watch: there’s some chatter in the City this morning that Cyprus is about to be downgraded by a ratings agency.

If so, it will either be Standard & Poor’s or Fitch, given Moody’s cut its rating last Thursday.

The deadlock over Cyprus’s request for financial aid had put its creditworthiness in the spotlight.

Over the weekend, finance minister Vassos Shiarly hit back at claims from Germany that the island is a hotbed of money-laundering. Shiarly told Der Spiegel that:

Nobody has proved so far that we offend against the rules or even support money laundering….

We see our future as a serious financial centre. That’s why we want to be one step ahead of our European partners in financial market regulation in future.

(quotes via Reuters – I’m afraid I can’t find the interview on the Spiegel website yet….)

8.42am GMT

In the markets…

Christine Lagarde’s claim that investor confidence has returned is backed up by new data this morning, showing that the amount of money flowing into global stock markets hit a five-year high last week.

Most European stock markets have opened a little higher this morning too:

FTSE 100: flat at 6120

German DAX: up 9 points at 7724, + 0.12%

French CAC: up 8 points at 3714, + 0.2%

Spanish IBEX: up 20 points at 8684, + 0.23%

Italian FTSE MIB: up 73 points at 17575, +0.4%

Some investors reckon the rally could run until this summer….

Updated at 8.46am GMT

8.20am GMT

Christine Lagarde: Eurozone is recovering

Good morning, and welcome to our rolling coverage of the eurozone financial crisis, and other events in the world economy.

The head of the International Monetary Fund has reinforced the optimistic mood in the eurozone by declaring that the region’s economy is improving.

Christine Lagarde predicted that Europe’s economy will begin to recover in 2013, in an interview with the BBC World Service broadcast this morning.

Lagarde also argued that Greece will show ‘better results’ than planned, but must make more efforts on tax recovery.

She said:

We forecast the eurozone to be delivering growth in 2013, which is better than the recession that it has experienced in 2012.

There is an improvement, and there is the beginning of recovery.

The IMF chief cited regional initiatives to strengthen the single currency, such as the move towards banking union, as well as the measures implemented by individual countries.

It’s clearly the case that investors are returning to the eurozone, and resuming confidence in that market.

While Greece is still expected to suffer another desperately tough year, Lagarde argued that the country might actually outperform over the next 12 months.

What technical analysis and the history of crisis management tells us, is that you’re better of doing it strong and hard at the beginning in order to reap the benefits of the process

Greece has done a huge and massive effort in cutting expenses, in bringing the deficit down, in turning to primary equilibrium if not surplus now — which is the good news.

The country is going to turn out better results than what was even planned – but it has to continue doing a massive effort on collection of revenue and collection of tax.

It’s interesting to hear Lagarde return to the issue of tax evasion in Greece. Last May, her claim that many Greeks were “trying to escape tax’ sparked a major backlash.

You can listen to the full interview here (start at 11.25 minutes in), or watch a video clip here.

Lagarde’s comments echo the upbeat views expressed by ECB president Mario Draghi last Thursday – he also predicted that economic activity should “gradually recover” this year.

Neither Lagarde or Draghi are claiming that the crisis is actually over — but both appear to genuinely believe that the worst is behind us….

It’s hard to see anything disrupting this view today, even though the stumbling progress towards a bailout for Cyprus is a potential roadblock.

Here’s what’s coming up today:

Left-wing Greek opposition leader Alexis Tsipras is meeting German finance minister Wolfgang Schäuble in Berlin

Eurozone industrial production data for November – 10am GMT

As usual, I’ll be tracking the latest developments….

Updated at 8.29am GMT

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