Brussels, 20/02/2015 (Agence Europe) - At the start of the Eurogroup meeting on Friday 20 February (as EUROPE was going to print), the possibility of agreement on extending the Greek aid programme was uncertain.
The meeting of the eurozone finance chiefs, who were mostly hoping to reach agreement on a six-month extension to the Greek bailout (the master financial assistance facility agreement - MFAFA), was delayed to allow time for the head of the Eurogroup, Jeroen Dijsselbloem, to clear away obstacles in a series of meetings he was holding with individual ministers in the afternoon, his circle explained. Upon arrival at the Council of the EU, Dijsselbloem said that the situation was “difficult but there are still reasons for optimism”. An attempt to mediate between Greek finance minister Yanis Varoufakis and his German counterpart, Wolfgang Schäuble, was mentioned. The Greek question was also the subject of talks between Donald Tusk, the president of the European Council, on Friday with the French president, François Hollande, and the German Chancellor, Angela Merkel.
On Thursday, Germany rejected the Greek offer, and was not the only country to take a hard line. Belgium, Slovakia, the Baltic States, Finland, Portugal and Spain seemed to take a similar line, although the Spanish, Irish, Belgian and Latvian ministers were open about the question. All ministers said that they wanted clarification from the Greek politician, whose letters could be interpreted in a number of ways. “There is some contradiction between what's being said in Athens and what the letter says” about the request for an extension, explained Irish finance minister Michael Noonan. His colleague, Luxembourger Pierre Gramegna, wanted guarantees about the repayment of loans and the Greek government not taking unilateral measures.
Portuguese finance minister Maria Luis Albuquerque told Handelsblatt on Friday that the other 18 eurozone nations, along with the ECB and the IMF, all agreed that they did not want to discuss any conditions other than those contained in the existing programme. Taking a firmer line, Maltese finance minister Edward Scicluna told Malta Today, “I think they've now reached a point where they will tell Greece 'if you really want to leave, leave'”. Greek finance minister Yanis Varoufakis said that Greece had run not just the final mile, but the final ten yards, to reconcile positions. “We hope there's a collegial discussion. Hopefully at the end of this we will come out with white smoke.” Upon his arrival at the meeting, EU Economic and Financial Affairs Commissioner Pierre Moscovici said he was “persuaded and convinced” that agreement would be reached. Gramegna did not rule out a fourth Eurogroup meeting.
A source says that the technical meeting of national experts on Thursday following receipt of the Greek offer had done an enormous amount of work. But there were new leaks from Athens about Germany describing the Greek offer as a “Trojan horse”. In a German document, the Greek letter is said to be an attempt to win a bridging loan and close the current structural adjustment programme. Berlin says the three institutions should advise the Eurogoup following an assessment of Greek's financial position in light of the Greek letter requesting an extension of the bailout. Germany says the Eurogroup should then make three requirements of Greece: i) the Greeks should request an extension to the current programme while making use of margins of flexibility; ii) any changes to the memorandum of understanding should be discussed with the institutions and the programme should be completed; and iii) the Greeks must publicly commit to not taking any unilateral measures that would jeopardise their commitments under the current programme. The German document said that this means backtracking on the social and labour market measures to be voted through at the Greek parliament this week.
Germany feels that since the Greek banks passed the ECB stress tests last October, the €10 billion that was earmarked for them in the Greek national bailout fund (HFSF) should no longer be available. A source explained that the Greeks wanted to use this money to mop up toxic debts, but this would send a bad signal to people who were behind on their loans. The source adds that some experts feel that the cash should be used for other purposes rather than bailing out the banks. For example, as a financing buffer, as has been suggested in recent months (this would require the unanimous approval of the Eurogroup). Greek banks seem, however, to be in a critical position, with over €2 billion of savings being withdrawn from banks in a single week. At the last Eurogroup meeting, the ECB president, Mario Draghi, pointed this out.
The European Commission distanced itself on Friday from the comments made by the German commissioner, Günter Oettinger, on Deutschlandfunk radio station that “the Greeks behaved like elephants in a china shop,” and a eurozone summit might be held next week to settle the matter. The Commission said that this was simply the commissioner's personal opinion. A source said on Friday that one would have to wait and see whether it helped or whether it further ratcheted up the situation. (Elodie Lamer)