Norbert Häring: Was it worth it? Concessions to Greece relative to the rejected draft of 16 February, Norbert Häring – Geld und Mehr Blog, 21 Φεβρουαρίου 2015.
On 16 February talks in the Eurogroup failed after Greece rejected a draft statement and received an ultimatum to ask for an extension of the current program before 20 February. Greece sent the letter and the Eurogroup reassembled on 20 February, agreeing on a Statement on Greece. It is very instructive to see what changed between the rejected statement and the one finally agreed. (What Schäuble gained by holding out after 11 February is examined in a companion piece.)
Eurogroup Statement of 20 February
The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments.
Meaning: Greece is asking for an extension of the financial support, which it needed to be able to pay back expiring bonds and credit contracts. The Eurogroup puts this in the context of the “existing arrangement”, a vague term, which avoids the name program but does point to the fact that – somehow – a reform program is attached to this ongoing financial support.
Changes: In the rejected draft Greece was to ask for a six month “technical extension” of the current program. In the statement, the six months are dropped and replaced by “maximum of four months”, to be decided later (see below).
Now it is not a “technical” extension of the “program” any more, but an extension of the funding arrangement, plus vague conditionality. “Technical” tends to refer to working level. Thus, the issue has gone up to a level there things can be decided and changed, not just executed.
Eurogroup Statement of 20 February
The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions. This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece.
Meaning: Neither the reform program nor the review of it have been completed in time, which would mean among other things that the ECB would normally not fund Greek banks any more after the expiration of the un-reviewed program. The extension avoids such consequences.
Changes: There is no mention any more of “successful conclusion of the program”, nor of “program” in the text. Instead a successful conclusion of the review of the “conditions in the current arrangement” is the new condition. This allows the Greek government to continue to say that the old program cannot be successful. It also allows for changes in the program, as “conditions of the arrangement” is deliberately more vague.
Eurogroup Statement of 20 February
The Greek authorities will present a first list of reform measures, based on the current arrangement, by the end of Monday February 23. The institutions will provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. This list will be further specified and then agreed with the institutions by the end of April.
Meaning: The measures already in the program agreed with the Troika are not sacrosanct any more. Athens can come up with their own list, taking the current “arrangement” only as the basis. Arrangement is not equivalent to the program, as it is a more vague term. The new Greek government is thus accepted as a negotiation partner, not as a passive executor of all the measures that have been agreed by the former government. It is accepted that this list of measures, if considered sufficient by the “institutions” can be the basis of the required successful conclusion of the review. “Institutions” instead of “troika” means – according to explanations by Varoufakis on why he rejected the Troika – that the Greek government will put their proposals to and have them be judged by the three institutions themselves, not by the group of emissaries called the Troika. The program does not need to be concluded, only the review. It is Athens which further specifies the list after it has been assessed by the institutions and the institutions will agree or not at the end of April, making it clear that the institutions do not draw up a list of measures.
Changes: The rejected draft used the word program throughout and allowed the plans and priorities of the Greek government only to enter into the execution of that program as long as the “built-in flexibility” allowed this.
Thus, there was no mention of a list of reform measures in the rejected draft, as only the pre-committed measures were meant to be executed.
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Σχετικές αναρτήσεις:
- Mauro, Ρ. (2015) “Greece’s Reprieve: In Praise of Kicking the Can Down the Road“, Peterson Institute, RealTime Economic Issues Watch, 24 Φεβρουαρίου.
- Sabri Öncü, T. (2015) “Greece, Its International Creditors and the Euro“, Naked Capitalism Blog, 17 Φεβρουαρίου.
- Wright, Τ. (2015) “Will Syriza’s Victory in Greece Mean Easing Austerity?“, Newsweek, 29 Ιανουαρίου.