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Christina Vasilaki: Eurogroup: Countdown to next opportunity for an agreement

Jeroen Dijsselbloem, head of the Council of the Eurozone Finance Ministers, referred to the next Eurogroup meeting on May 11 for a renewed attempt to reach an agreement on Greece.

The informal Eurogroup in Riga (Latvia) took place amid an extremely tense atmosphere due to the prolonged delay in negotiations, whereas a sentiment of isolation against the Greek Finance Minister was also instigated. Greece’s partners sent no other message to Athens rather than it should speed up its efforts within the coming two weeks, given the shrinking time limit until May 12, namely the day when the country will be required to repay a reimbursement to the IMF worth €767 million.

In that context, the issue of inefficiency of the procedure which has been followed so far was raised during the meeting, with parallel negotiations in both Athens and Brussels, and Greece’s creditors insisting on the return of the three institutions’ representatives (IMF, ECB and European Commission) to Athens in order to speed up the completion of technical work.

On his part, the Greek Finance Minister, Yanis Varoufakis, clarified after the meeting that his government is willing to make compromises so as for a deal to be reached, which will have to be justified before the Hellenic Parliament as a “new growth model for Greece”. He characteristically said that the government cannot succumb to specific demands raised by the institutions, namely the reduction of supplementary pensions, their insistence on lifting the auctioning ban of primary residences, as well as unrealistic primary surpluses that are not justifiable according to current growth rates. Moreover, he argued that the original idea had been to promote four or five major reforms that would allow a partial payment of the installment, in order to avoid a liquidity crisis and until a comprehensive reform programme had been decided upon.

Nevertheless, as Jeroen Dijsselbloem made clear, in order for the green light to be given to any disbursement, an agreement in principle between the Greek authorities and the institutions is necessary to thoroughly discuss the Greek issue at the level of the Eurozone Finance Ministers. The creditors argue that an overall agreement on the Greek programme is needed first; only then can specific reforms be set out, whose implementation shall “unlock” the country’s financing.

Little progress, major divergences

As it emerged already before the meeting, the institutional representatives of the creditors referred to an intensification and progress of negotiations in recent days. Nevertheless, this picture was negated by the fact that most ministers blamed their Greek counterpart for having delayed the completion and submission of the structural reforms list. The joint message was that much time has already been lost, whereas time is running out swiftly.

According to Eurozone sources adjacent to negotiations, an agreement within two weeks is possible if Athens steps up its efforts and abandons some of its “red lines” relating, in particular, to non-performing loans, social security schemes and the labour market. Especially in the latter case, it seems that the creditors’ main concern is the draft bill currently under consultation, which provides for the unraveling of laws that came into force on the basis of the memoranda. In addition, the representatives of the institutions who are in contact with the technical ranks of the Greek Ministry of Finance believe that the forecasts of the government are excessively optimistic as far as growth and the primary surplus are concerned, which also makes it difficult to reach an agreement on the necessary measures to be taken.

Crisis of confidence, but concerted “No” to a Plan B

“I thinks it’s crucial that we need to have an agreement on what has to happen in these four months… that would have to come first, also to build trust, to get assurances on how we can work together after June,” said Jeroen Dijsselbloem during the press conference, in response to a question on what would ensue after the end of the extension in late June. The head of the Eurogroup pointed out that it is difficult to talk about the future when one cannot decide on a four-month programme, whereas he expressed the Eurogroup’s pessimism concerning the rescue of Greece in a subsequent interview in a Dutch newspaper. “Doubts on whether Greece can and wants to be saved intensify day by day,” he pointed out, implying that once again it is up to Athens to cooperate. “If the Greeks somehow keep their budget in order and offer economic recovery a chance, then they will be able to repay the emergency loans in the coming 30 years,” he concluded. On the other hand, he denied that a potential third programme of assistance between €30 and €50 bn. has already been decided upon.

At the same time, many Eurozone Finance Ministers made a coordinated barrage of statements denying a possible Grexit after the Eurogroup in Riga. Despite reports of delays and lack of sufficient cooperation from the Greek side, a “Plan B” was once again excluded.

“No plans B or C exist, nor D or E,” emphasised the French Finance Minister, Michel Sapin, in response to a question in the following day regarding the existence of alternative European plans in the case of Greece leaving the Eurozone, with the statements of most of the Eurozone ministers moving in the same direction. In fact, even the Slovenian Finance Minister, Dušan Mramor, who clearly expressed his support for a Plan B, sought to clarify that he was not referring to the possibility of Greece abandoning the Euro, but rather to the difficulties that exist in negotiations and the need to come up with an alternative procedure.

Thus, both parties are looking forward to the conclusion of technical negotiations in the coming days, as well as to the immediate improvement of the process, with the Brussels Group already having assumed responsibility for the negotiation since Monday, through videoconferencing.