The Brief: Greek debt delay hurts real people

The Brief is EURACTIV's evening newsletter.

Greece’s lenders and eurozone partners disappointed Athens once again last night. Despite Alexis Tsipras securing reforms that have made him less popular than Donald Trump, his country has been left to deal with the financial and social costs.

Yesterday, The Brief brought you the eurozone’s great success story, Portugal. Today, it’s time to look at Greece’s continuing woes.

Greece needs to repay €7.5bn in loans by July. To get that money, Athens needed to implement serious reforms. On 18 May, the Greek parliament duly backed a bill that meets the demands of its creditors.

The EU institutions and the International Monetary Fund (IMF) all praised that progress but at last night’s Eurogroup meeting they still couldn’t come to a decision on debt relief. Germany needs the IMF on board, the IMF needs clarity on debt relief first; we’ve heard it all before.

But drawing these negotiations out is taking a devastating toll on the country’s growth and its chances of breaking this vicious cycle of recession, debt and austerity.

Q1 data suggests that even its adjusted growth figure of 1.8% will be hard to match and Greece has now tipped back into recession. Eurozone GDP increased 0.5%. Greece was the only country to go into the red: the figure contracted by 0.1%.

Portugal posted its strongest numbers in a decade, with nearly 3% growth. Ireland’s economy grew by a massive 5.2%. Both have been bailed out in the not-so-distant past.

So why the lack of urgency? Never has ‘time is money’ been so true. One Greek government spokesperson said postponing the agreement last night was better than having a bad deal. The same spokesperson said in December that negotiations might conclude in early January.

Even Greece’s nemesis, German Finance Minister Wolfgang Schäuble, said in April that the longer the agreement was delayed the “more it unsettles the markets and businesses”.

Schäuble and his Greek counterpart, Euclid Tsakalotos, both insisted they are confident a deal will be finally struck in three weeks, “if all goes well”. But that’s a big assumption.

The Commission today said Greece has delivered and now it’s up to its creditors the deliver. But its creditors don’t seem to be on the same page. The IMF thinks predicting Greek growth in 2019 is difficult but the Eurogroup thinks it’s ok to predict surpluses for the next four decades.

The price being paid by normal Greek people is immense. Lifetime savings have evaporated, pensions have shrunk. It’s not an exaggeration to say futures have been destroyed.

That is why the empty congratulations of Greece’s creditors, coupled with no deal, are particularly galling.

The Roundup

Financial Affairs Commissioner Pierre Moscovici yesterday congratulated Italy, Spain and Portugal on turning their economies around. He described his relations with Italy as particularly close but denied any favouritism.

Italy’s transport minister blamed German austerity for weakening the European project and Rome signed a deal with three African countries to stop migrants crossing the Mediterranean.

Michel Barnier said ending the Brexit talks without a deal is “not my option”, after the UK’s David Davis said London would walk away if it didn’t like the terms.

Frankfurt is already licking its lips as it lines up for a slice of the Brexit pie, and a Portuguese EU minister told Jorge Valero that Lisbon’s better weather and food should help it secure the UK-based European Medicines Agency.

Britain woke up to news of a deadly terrorist attack at a concert in Manchester last night. EU leaders including Jean-Claude Juncker and Federica Mogherini offered their condolences.

Angela Merkel wants to breathe new life back into the “Normandy format” Ukrainian peace talks. Kyiv has passed a bill to limit the use of the Russian language on television and Emmanuel Macron has invited Vladimir Putin to celebrate 300 years of diplomatic ties.

Russia is negotiating with Greece and Turkey over where Gazprom’s Turkish Stream pipeline will enter the EU. Turkey has put the ringleaders of last year’s attempted coup on trial. Demonstrators brandished nooses and demanded the death penalty.

Madrid’s position has not softened but Catalonia’s regional president has vowed to hold an independence referendum nonetheless.

France is among the EU countries demanding more lenient carbon accounting rules for forestry, and it look like they will get their way. Perhaps Macron’s new environment minister Nicolas Hulot will take the 2030 climate objectives more seriously.

It’s RIP to Sir Roger Moore, the first official James Bond to go to the great Martini bar in the sky. Nobody did it better.

Samuel White contributed to this Brief.

Look out for…

Federica Mogherini will host a working dinner with the prime ministers of the Western Balkans 6 tomorrow (Albania, Bosnia and Herzegovina, Kosovo, Maceonia, Montenegro and Serbia).

Views are the author’s.

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