Monday, July 23, 2012

What the EIB makes the ECB unmakes: The latest from the Greek front

“We just showed that good news is possible in Greece”, said a beaming Greek minister the other day when it was announced that the European Investment Bank (EIB) was about to start funding investments in Greece again, after it withdrew toward the end of 2011 (in fear of losing its triple-A rating by associating itself with investments in an economy due to be thrown out of the Eurozone). Surely this is good news. Nonetheless, as is Europe’s wont, what one arm makes the other destroys.
Let’s begin with what the EIB’s ‘reactivation’ in the Greek context means, in terms of euros and cents. Around 600 million euros will be channelled into Greek SMEs (small and medium sized firms) during the remainder of 2012 (if all goes well and the transmission mechanism miraculously, in view of past failures, works). Then, during 2013 another 400 million will be added to the SME-reinforcement program, with a further 400 million to be disbursed over the two year period of 2014-5. Additionally, 500 million worth of guarantees will be offered to infrastructural projects that have ceased up over the past two years, courtesy of the collapse of private investment and bank credits.
Of the above figures, the very first one is the one that matters: the 600 million that was announced for the coming autumn. The reason I am saying this is that the Greek economy is in turbocharged meltdown and autumn will prove particularly trying and cruel. It may very well be the turning point, involving a truly awful ‘turn’. Let us now juxtapose this figure, of 600 million euros to be provided by the EIB, to some other telling numbers.

Read more: http://yanisvaroufakis.eu/2012/07/22/what-the-eib-makes-the-ecb-unmakes-the-latest-from-the-greek-front/

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