Confusing messages suggest tough Greek debt talks at Eurogroup

EURACTIV.com has learned that the Commission is working to find an overall agreement that would include medium-term debt relief measures. [EU Council Eurozone/Flickr]

Conflicting messages flying back and forth ahead of a Eurogroup meeting on Thursday suggest that the outcome of crucial debt talks with Greece could go either way, with Germany apparently unwilling to concede any further debt cuts to Athens.

The European Commission is optimistic about reaching an overall agreement with Greece at the meeting. But Athens says a deal is still not within reach, due primarily to opposition from Germany, the euro zone’s most powerful economy.

The International Monetary Fund (IMF) believes Greece’s debt is not sustainable and has put pressure on Berlin to allow for some debt relief. But Germany opposes that and insists that the IMF take part in the Greek bailout.

In an interview published on Wednesday (14 June), the EU’s Economic and Financial Commissioner Pierre Moscovici said he believed in a positive outcome.

He expected Greece and its international lenders to reach a compromise deal and said a “fair solution” would be found on debt relief.

“No one wants a debt cut anymore. It’s about debt relief, for instance, longer repayment schedules,” Moscovici told the Funke group of German newspapers.

Moscovici sees deal on Greek loans, fair solution on debt

European Union Currency Commissioner Pierre Moscovici said he expects Greece and its international lenders to reach a compromise deal on new loans this week and that a “fair solution” will be found on debt relief.

EURACTIV.com has learned that the executive is working on an overall agreement that would include medium-term debt relief measures, as Athens has pushed for.

The main objective is to reach a deal among the euro zone finance ministers but everything will depend on the ultimate stance of the IMF and Germany.

Athens: We have not seen anything yet

A Greek government official close to the talks told Athens News Agency, “We are far from finding a solution for the Eurogroup tomorrow, given that Germany has made no progress”.

The same official warned that a failure to bring Germany’s position closer to the proposed agreement would land “a hot potato” on Chancellor Angela Merkel’s hands during the upcoming EU summit on 22 June.

Reports in Athens suggest that the Greek prime minister has already agreed with EU Council President Donald Tusk to make a formal request to convene a Euro Summit with the 19 euro zone ministers on the sidelines of the general summit, should the Eurogroup meeting fail to produce a deal.

A Greek government source welcomed the Commission’s optimism for a positive outcome but cautioned: “We have not seen anything in particular yet”.

The source explained that waiting for the German elections in September 2017 would be too risky as the whole year “will be literally lost” and the growth trend will be damaged.

“We constantly meet potential investors but investments cannot move forward unless we get a deal that will bring stability and certainty to the Greek economy,” the source told EURACTIV.com.

The French proposal angers Berlin

During a visit to Athens this week, French Finance Minister Bruno Le Maire said, “I wanted to underline that we are doing our best with the other member states of the eurozone, with the IMF, with the Greek government, and I’m optimistic, I think we are not far from an agreement.”

Paris has proposed a mechanism of flexibility to lessen Greek debt repayment based on its economic growth.

“It’s a mechanism which should allow us to revise certain (debt) parameters based on Greek growth,” he told reporters.

The leftist government in Athens sees the French proposal as positive, but Berlin is far less forthcoming.

Deutsche Welle quoted sources close to German finance minister Wolfgang Schäuble on Wednesday as saying that Greece’s “obsession” with the French proposal was “a waste of time”.

For Berlin, Le Maire’s intervention was more of a political initiative and stepped “outside the context of Eurogroup’s agreement in 2016”, which envisages more debt talks only in 2018, if needed.

Germany believes that linking the debt with growth would actually mean an indirect debt reduction, which Berlin refuses to accept before the current program expires in 2018.

Tsipras: Time to make decisions

In an article in Le Monde and Die Welt, Greek Prime Minister Alexis Tsipras said the debt deal was a vital issue for Greece, while being just a front page in newspapers for the French, Germans, and Italians.

“For my fellow citizens, it is a daily agony, while they are trying to change their country and create businesses that will restore jobs and growth,” Tsipras said.

New Democracy: Schäuble was more aggressive with us

German Minister of Finance Wolfgang Schäuble was far more aggressive with Greece when a right-wing government was in power than the left-wing Syriza-led coalition, New Democracy’s Konstantinos Kyranakis told EURACTIV.com, adding that the European People’s Party did not work as an alliance during those days.

Greece’s main opposition party, the centre-right New Democracy party (ND), which is affiliated to the EPP, said Tsipras had cornered himself by pushing for a debt agreement and that he had only imposed more austerity without taking anything back.

On the other hand, the government says that ND has until recently argued that the debt is sustainable and does not need any relief measures.

 

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