In the wake of the Greek elections, the Eurogroup of Monday, 26 January, opted for a standby attitude towards the newly elected government, while demonstrating its willingness to offer more time in order for its positions and intentions to consolidate and become known. Among statements that indicate their readiness to work together, most European officials and ministers revealed their intention to initiate a political debate afresh or, better, on the basis of particular common parameters. Nevertheless, they made clear that the country should not count on “special treatment” and warned that all member-states of the Eurozone have to “comply with the rules and commitments” agreed upon.
“We are glad that their (SYRIZA’s) ambition is to realise this within the Eurozone and that is exactly our ambition too, and this is a good starting point for discussions,” Jeroen Dijsselbloem repeated many times during a press conference after the meeting.
In fact, the head of the Eurogroup referred to a fifteen-minute conversation that he held with the member of SYRIZA who is bound to take on the position of Finance Minister of Greece – without naming him. According to the head of the Euro, Yanis Varoufakis expressed the need to come up with solutions that will meet the objectives of both sides, for the benefit of the Greek people, but at the same time ensuring that Greece remains in the Euro.
A few hours later, the visit of Jeroen Dijsselbloem to Athens on Friday, 30 January had been confirmed, where he will meet with Prime Minister Alexis Tsipras and the new Finance Minister.
The speed at which the formation of the new government took place seems to be appreciated by Brussels, although the deadlines are tight.
One Eurozone official referred to the possible need to further extend the existing programme, whereas Jeroen Dijsselbloem said on Monday that the issue of the Greek programme shall be re-discussed in the coming Eurogroup of 16 February. It should be recalled, at this point, that the current extension of the Greek programme is bound to expire at midnight of 28 February and, according to Brussels, any new extension “must be requested by the Greek government” and also approved by its partners.
Until then, the two parties will have to agree on the reasons for requesting such an extension. Obviously, the conclusion of the fifth assessment remains on the partners’ agenda and is “a prerequisite for further aid to Greece,” said Mr. Dijsselbloem characteristically. When asked about the return of the Troika to Athens, however, he chose to refer to Athens, saying that a new government is in place whose intentions are not yet known, thus “there is very little he could say about it at the moment”. With regard to pre-election references of SYRIZA to a possible “diversion” from the programme, he replied that “we do not discuss with the media in the role of an intermediary”.
Reforms and debt
After this demonstration of good intentions on the part of the entire Eurogroup, the issue to be brought into question very soon concerns the mixture of reforms that the new government will be required to implement. Commissioner for Economic Affairs, Pierre Moscovici, pointed out on Monday that it is common desire that “Greece gets back on its feet, it returns to the path of growth and is able to pay off its debts”. He also noted that it is necessary to agree with the new government on the specific means to achieve this outcome, highlighting the assumption that “the objectives are common”.
Acknowledging that Greece has made tremendous sacrifices and difficult choices, he stressed that challenges still exist, which are mainly related to reforms.
For his part, Klaus Regling, head of the European Stability Mechanism, wished to point out that his organisation is “the main creditor of Greece, given that it holds 44% of the Greek debt,” while adding that the average maturity date for loans given to Greece exceeds 32 years. “The issue of debt was not discussed in this meeting,” clarified Mr. Regling, although he hinted towards a possible debate on a “haircut”.
Commenting on the future of negotiations, circles adjacent to the outgoing minister of finance that visited Brussels in the context of the last meeting of the Eurogroup with the participation of Gikas Hardouvelis, stressed that the tough stance of the IMF made it difficult for the outgoing government to complete the assessment, which is likely to be repeated. According to the same sources, Greece’s commitments for the first quarter of 2015 amount to €4.2 bn.; thus, the continuation of financing by the IMF will probably be necessary, while another €9 bn. has yet to be disbursed by 2016.
In an interview to the newspaper Le Monde, Christine Lagarde offered a first glimpse by referring to the reforms that the IMF deems necessary. As she said, these reforms include reforming the state apparatus and the tax collection system, as well as shortening legal proceedings. Notably, she said that “it is not a matter of austerity measures, but rather of crucial reforms that still need to be made”.