Brussels, 02/06/2015 (Agence Europe) - The latest developments in the talks with Greece may be a sign that the talks are finally reaching a conclusion. Although the contradictory messages that have been characterising the Greek question for the past few weeks seem aimed at reducing optimism, there was the feeling of an imminent agreement in the air on Tuesday afternoon.
The latest developments emerged after a high-level meeting at the German Chancellery on Monday evening where the French president, François Hollande, and the president of the European Commission, Jean-Claude Juncker, met the German leader, Angela Merkel. At the last minute, it was announced that the IMF director general, Christine Lagarde, and the president of the ECB, Mario Draghi, had also been invited. The Greek prime minister Alexis Tsipras' close guard met on Monday evening but was not informed about what happened in the Berlin meeting, where the talks went on past midnight. The Greek government announced that it had sent in a full list of reforms on Monday.
On Tuesday afternoon, the European Commission refused to comment on what it described as “paperology.” “Many documents are being exchanged between institutions and the Greek authorities to clarify how to implement agreement on 20th February. The fact that documents are being exchanged is already a good sign,” said European Commission spokesperson Annika Breidthardt, adding “We're not there yet.”
The international press reported on Tuesday morning that the lenders were fine-tuning an offer to be submitted to Athens over the next few days. “After submitting a complete proposal for a deal last night to institutions, we are not waiting for them to submit their own plan back to us. Greece is the one that submits the plan,” said Greek prime minister Alexis Tsipras on Tuesday morning in Athens. The institutions (European Commission, ECB and IMF) have stressed from the start that the Greek authorities must have ownership of the list.
The exchange of documents that has taken place is in the right direction. The Greeks have presented spectral reform plans that the institutions are to examine in terms of their scope and ambition. The institutions are also said to be working on a proposal describing what a staff level agreement might look like.
On Dutch television on Tuesday, the head of Eurogroup, Jeroen Dijsselbloem said there had been progress, but not enough. That morning, Economic and Monetary Affairs Commissioner Pierre Moscovici said on France Inter: “We are starting to work in depth on pensions. The Greek government has made some first proposals and the pros and cons are being considered.”
Even if the lenders agree among themselves, that does not necessarily mean that Greece will accept their offer, points out the Financial Times, explaining that the document would contain ideas that Greece has not yet accepted. The key question of the primary budget surplus would be more acceptable for Athens, which has been calling from the start for realistic targets that would enable it to ease up on austerity. The FT said the lenders agree to review the target of a primary surplus of 3% of GDP to set it as just below 1% with a medium-term average of 3.5%. If the target is revised down, that would not necessarily mean less effort on the part of Greece, because the economy is currently in deficit and it will therefore have to continue to tighten the belt in order to get by.
Greece hopes agreement will be reached by 5 June, when it is due to repay €300 million to the IMF. It seems that it would be able to make this repayment, but the following ones appear more problematic. The current aid programme has €7.2 billion left. The plan expires on 30 June, as does the €10.9 billion earmarked for the banks.
The idea of a new prolongation of the current programme (a third bailout) is beginning to circulate, although no practical moves have yet been made. The institutions seems to be taking the view that as much progress must be made as possible in the remaining time, but the most realistic option would appear to be to extend the current programme in order to leave time to discuss what will happen after 30 June. An exit from the bailout without a safety net seems to have been ruled out.
The Financial Times believes such an extension could require the €10.9 billion earmarked for the banks to be converted so that it can be used for other purposes, basically to pay the bills that become due in the summer (€3.5 bn and €3.2 bn for the ECB in July and August respectively). This would require the unanimous agreement of the member of the eurozone, along with the approval of a number of national parliaments, but eurozone sources say it's an option. (Elodie Lamer)