Brussels, 12/05/2015 (Agence Europe) - The script for the Eurogroup was set out in black and white well before the meeting began. Unsurprisingly, the finance ministers of the eurozone on Monday 11 May welcomed the “progress that has been achieved so far” in identifying the reforms requested by Greece and which are acceptable to the creditors of Athens within the 'Brussels group', which consists of Greece and the 'institutions' (European Commission, ECB, IMF and EFSF fund).
There has been progress on the substance, said the Commissioner for Economic and Financial Affairs, Pierre Moscovici. He said that positions on VAT, an independent tax authority and a strategy for non-performing loans had moved closer together. “This is not progress to be underestimated, it is considerable, specific and very welcome”, he said. The Greek finance minister, Yanis Varoufakis, confirmed that opinions had converged on these subjects.
However, Moscovici highlighted the “major gaps to be plugged on other subjects”, such as pensions and the employment market, two recurring stumbling blocks. Varoufakis said that the question of the employment market is more important to the Greeks than it is to the 'institutions'. When asked about the possibility that the Greek government would go back on some of its election promises, the Greek minister explained that it was all a question of compromise. In order for an agreement to be hammered out in the next fortnight, if possible, in view of the financial situation of the country, he laid down two conditions: putting an end to the deflationary cycle and better sharing out the economic burden, by transferring some of the weight from the weakest to the others.
In theory, the 'Brussels group' will resume its work on Wednesday, but this had not been confirmed on Tuesday morning. One source said that the next fortnight will be the minimum amount of time required to reach an agreement. For its part, the Eurogroup recognises that it will take “more time and effort” to conclude the subjects still pending.
The meeting between the Eurozone ministers is reported to have been very much like the declaration it led to: short. The ministers are said to have taken stock of the situation and then briefly discussed the joint declaration, without any contribution from the German and Slovakian ministers, who are generally among the least patient.
This declaration states that once the institutions have reached a technical agreement on the conclusion of the monitoring mission, “ the Eurogroup will decide on the possible disbursements of the funds outstanding under the current arrangement”. In spite of this brevity, the ministers stress that the pace of the implementation of the reforms will decide the pace at which the outstanding financial support is handed over. It is only on the basis of the implementation that tranches of aid will be disbursed, the Eurogroup President, Jeroen Dijsselbloem, confirmed. He said that it was likely that the measures expected would be categorised and linked to various disbursements of the final tranche of €7.2 billion from the EFSF.
Greece reiterated its promises to honour its debts, but there was no discussion on the state of the Greek coffers, reported Dijsselbloem. At the moment, therefore, Greece has to keep its head above water on its own. On Monday, one day early, it paid back €757 million to the IMF. However, it also paid various charges to the EFSF, for a total of €220,000. The question of Greece's cash flow situation is “extremely urgent”, according to the Greek finance minister. He expressed his hopes that a sufficiently positive Eurogroup declaration would allow the ECB to raise the level of Greek treasury bonds which the country's banks are allowed to buy. “The ECB is independent”, pointed out Jeroen Dijsselbloem, who said that the declaration could not be a signal sent out to the ECB.
The shortness of money and of time - there are just six weeks to go until the bailout plan expires in late June - mean that it is in everybody's interests to reach an agreement quickly, Dijsselbloem said. The director general of the EFSF, Klaus Regling, added that the time needed to conclude the national procedures to assess any agreement between Greece and its creditors would also have to be taken into account. However, the Eurogroup said that it was prepared to meet as soon as an agreement has been reached.
Declining to be drawn on the possibility of a referendum, which is exclusively a matter for the Greek authorities, Dijsselbloem did however point out that the consultation of this kind would add a further time constraint. The government has a mandate: it does not need a referendum, Varoufakis said. The 'institutions' reiterate that such a scenario is under consideration only in the event that negotiations break down.
So what happens after the end of June? “I don't see any political ground to start discussing what happens after June”, Dijsselbloem said, adding that substance was needed (analysis of the viability of the debt, budgetary prospects, and so on) in order to calculate the challenges in place at that time.
A source close to the discussions explained that something will have to be pulled out of the hat, in order to avoid being stuck in these discussions, which have already dragged on for weeks, for several more years. According to the Spanish newspaper El Mundo, the IMF is not keen on a third support plan, whilst Germany has made this participation a condition for drawing up any bailout plans. The new composition of the Finnish parliament could also be an obstacle. (Elodie Lamer with Camille-Cerise Gessant)