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04/12/2016

Tsipras requests extraordinary EU summit to break debt talks deadlock

Euro & Finance

Tsipras requests extraordinary EU summit to break debt talks deadlock

Tsipras and Merkel on 18 March. [European Council]

Greek Prime Minister Alexis Tsipras yesterday (27 April) sought help from the European Union to break a deadlock in critical debt talks as his spokeswoman accused the IMF of “undermining” the process.

Tsipras’ office said the leftist premier had asked EU President Donald Tusk to call a summit to help facilitate negotiations with the debt-ridden country’s creditors.

The move came after an expected Eurogroup meeting on Thursday was postponed, scuppering Greek hopes of an agreement by Sunday, the Greek Orthodox Easter, to launch talks on debt relief.

No Eurogroup meeting before Greek Orthodox Easter

Eurozone finance ministers will not meet on Thursday and need more time to discuss Greek reforms that would unlock new loans, signaling significant differences remain between Athens and its lenders on bailout targets.

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Tusk said he had urged eurozone finance ministers to meet “within days”, warning that failure to act could bring a repeat of last summer’s drama that nearly saw Greece crash out of the eurozone.

“We have to avoid a situation of renewed uncertainty for Greece,” Tusk said.

Tsipras and Tusk would speak again on Thursday (28 April), a Greek government source said.

Eurogroup chief Jeroen Dijsselbloem for his part on Wednesday (27 April) said the next meeting of eurozone finance ministers could take place “next week or ultimately the week after”.

“I know that there is a sense of urgency we all share,” Dijsselbloem, also the Dutch finance minister, said at a press conference in Paris.

“We need more time to work with the institutions and the Greek government” on legal and political issues as well as the question of debt relief, he added.

Greece is seeking to unlock promised cash from its massive €86-billion rescue package – its third since 2010 – that was agreed last year after months of tortuous talks with the European Union, European Central Bank, the European rescue mechanism and the IMF.

Anger over ‘contingency measures’

Greek government spokeswoman Olga Gerovassili said the International Monetary Fund was “undermining” the latest negotiations with demands that went beyond the bailout deal.

In particular, Greece believes the IMF is behind additional “contingency measures” which the eurozone last week demanded to conclude the current round of talks.

Greece has already pledged to save €5.4 billion by 2018 to meet bailout targets, but the new measures – which the creditors want to be approved by parliament now and applied later if necessary – could amount to another €3.6 billion according to reports.

Gerovassili said the new demands went “beyond the limits of the Greek constitution and the European legal system”.

According to the Greek government source, European Commission President Jean-Claude Juncker has also called the IMF demands “unreasonable”.

European Commission sources told EurActiv Greece yesterday (27 April) that the postponement of Eurogroup’s meeting was “not a catastrophe” as technical teams from both sides needed more time to prepare.

“Although the legislative measures requested by the IMF are problematic, during the last two days great progress has been achieved at the technical level. We prefer the Eurogroup meeting to be held later but better prepared,” the source stressed, predicting that a meeting will be held “relatively soon”.

“It’s the Greek economy that will gain a lot from a successful first evaluation [of its third bailout],” the source said.

EurActiv Greece was further told that the EU executive did not want to have the Greek debt negotiations getting close to the 23 June Brexit referendum.

The latest creditor review, which is needed to release the next tranche of bailout loans for Greece, has been chiefly delayed by disagreements over pension cuts and non-performing bank loans.

Eurozone governments have also promised to discuss easing Greece’s debt, one of the only concessions granted to Tsipras when he secured the bailout last July.

The Greek government faces big repayments to the European Central Bank this July, amounting to about €2.3 billion.

But Gerovassili on Wednesday said there was “no insecurity” regarding Greece’s cash reserves.

A source with knowledge of the issue told AFP that Greece – labouring under a €311-billion debt mountain – could handle payments without major difficulty until the end of May.

The government in recent weeks has gathered some €500 million from the cash reserves of state-run entities, including parliament and social security funds, the source added.

Greece’s debt stood at 177% of gross domestic product (GDP) in 2015 – almost twice Greece’s entire economic output in one year.

Germany and US wage 'silent war' over Greece

A leaked telephone conversation, and the reactions which followed, revealed a “silent war” between the United States and Germany over the Greek crisis, with Athens’ leftist government finding itself more in tune with Washington than Berlin.

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