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30/09/2016

Eurogroup calls on the Greek parliament to take ‘a wise position’

Euro & Finance

Eurogroup calls on the Greek parliament to take ‘a wise position’

The Hellenic Parliament, Athens.

[European Parliament]

No matter how desperate Greece’s situation appears after its government suspended negotiations, Eurogroup President Jeroen Dijsselbloem left the door open Saturday (27 June) to avoid a Greek default next week.

Greek Finance Minister Yanis Varoufakis walked out of talks with the Eurogroup earlier Saturday (27 June), after creditors rejected his demand to extend the Greek bailout programme, which expires on Tuesday (30 June), to accomodate the referendum his government decided to hold on 5 July.

>> Read: Defiant Greek PM calls referendum to break bailout deadlock

Speaking to the press, both German Minister of Finance Wolfgang Schäuble and his Irish colleague Michael Noonan, said that the Greek and the creditors’ proposals were extremely close at the end of Thursday.

‘Everyone surprised’

An EU official confirmed the Prime Minister Alexis Tsipras took many by surprise after he decided to hold a referendum on bailout creditors’ demands, putting the deal that could determine Greece’s future in Europe to a popular vote in which the government would campaign against the agreement.

An EU official said: “We had agreed on a lot of the wording and numbers, for example the 13% VAT for hotels. So it was so surprising that Tsipras did not indicate he would call for a referendum when he spoke to Hollande and Merkel in a meeting Friday. Juncker only found out about the referendum Saturday morning.”

Leaving the Eurogroup, Varoufakis blamed the creditors for backtracking from previous agreements, and rejecting his government’s proposal to extend the current bailout until the 5 July referendum, or a bit later, should the vote end with a “Yes.”

As he left what is probably his last Eurogroup meeting, Varoufakis insisted that the five-month extension proposed by the creditors didn’t give any hope it could help overcome the crisis.

“Instead, it was punctuated by one review after the other, every few weeks, leading to an end sometime in November-December, without anything inside, that we would be exactly in the same negotiation again with the threat of impasse, deterring investors from what we need, which is to invest,” he said.

Varoufakis seemed confident that on 5 July, the Greeks, asked “to agree or not to agree with the institutions’ proposal”, would vote “Yes.”

“That leaves open the possibility of negotiating, through the night, and the day ahead of us, to improve the institutions’ proposal, in which case our government’s recommendation will change. Instead of recommending to our electors that they should vote against this agreement, we would then change to a yes-vote recommendation,” he said.

EurActiv asked Dijsselbloem if the Eurogroup would accept such an approach.

‘I will always say that the door is open,” Dijsselbloem said, reminding that it was not the institutions, but Varoufakis who left on his own account before the meeting ended.

“It was not us who said the talks have come to an end in a negative way, it was the Greek government which said what’s on the table now deserves a ‘No’.”

“They broke off the talks while there were still going on, while there was still time, and then decided to give a negative advice to their electorate. The only caveat I see is that the Greek parliament has to take a wise position on that, and I hope that may lead to a different political situation. But we will have to see,” he said.

Non-confidence motion?

The Greek parliament is in fact voting at midnight to approve or reject the referendum.

But a high-level source in Athens told EurActiv that “the only way to delay the discussion and the approval of the referendum is the probability that the main opposition leader, Antonis Samaras, would ask for a no-confidence vote towards the government before the discussion on the referendum”.

In the event of a no-confidence vote, the government will collapse. If the confidence vote is not cleared, then the discussion for the referendum will just be delayed for three days, the high-level source said.

In a press conference held after Varoufakis left the meeting, Dijsselbloem raised the question to whom would the creditors speak if on 5 July Greeks vote in favour of the bailout, rejecting the current government stand.

“If there is a yes, the question is who are we trusting, who will we be working with to implement that programme,” Dijsselbloem said.

He also argued that there were “great concerns of credibility” and questioned how the Greek government, which has spoken so negatively about the package, would implement it.

In case of a ‘No’ vote, Dijsselbloem said that the situation in Greece will deteriorate very rapidly.

“How does the Greek government think it would survive in that period? I do not know,” he questioned.

“The Greek parliament has a right to fully understand what options are on the table […] I think that the Greek parliament, which is in a position to take a decision, must consider where we are in the process, whether they have been informed rightly about the substance of the program or the offer, and what is ahead. Only then the parliament can take a wise decision,” Dijsselbloem said.

Meanwhile in Athens, former Prime Minister and leader of the opposition New Democracy Samaras blasted Tsipras for being “fatal, weak and irresponsible.” He blamed his for isolating the country from Europe and dividing the Greek people.

Greek energy minister, Panagiotis Lafazanis, leading member of the so-called far-left group within Syriza party, said that Greece has more “radical” alternatives than the euro currency.

In addition, Greek Minister of Foreign Gffairs, Nikos Kotzias, tweeted that Athens will start using its veto power in EU decision-making process. “Those who celebrate the ‘tricks’ against Greece at the Eurogroup, should not forget that Athens has the veto power in the core of the EU.”

Background

The anti-austerity party Syriza won an overwhelming victory in the Greek elections on January 25, but failed to obtain an absolute parliamentary majority.

The party leader Alexis Tsipras provoked mixed reactions among his EU counterparts, announcing that the "vicious cycle of austerity is over".

Reforms offered by Athens have failed to convince the Eurogroup and the country's creditors, and Greece now finds itself unable to pay its debts and in a more precarious situation than ever.

The proposals were a bid to unlock the final €7.2 billion tranche of its international bailout, which creditors have refused to release unless Greece agrees to more austerity measures. Greek Prime Minister Tsipras was elected promising to end five years of austerity.

Without the bailout cash Greece will be unable to meet a €1.5 billion International Monetary Fund (IMF) payment on Wednesday (30 June), and a default could send Athens crashing out of the single currency and possibly the EU.

>>Read: Live: Grexit? The endgame

Timeline

  • 30 June: Greece's 2nd bailout programme expires.
  • 5 July: Greece to hold referendum on creditors' proposals.