Brussels, 16/06/2015 (Agence Europe) - There are less than two weeks left to reach an agreement with Greece which will allow the eurozone to resume its payments, before the fund expires on 30 June. At this stage, a further extension of the programme is not under discussion.
On Tuesday 16 June, nobody really seemed to know how, when and where an agreement could be reached, as Greece and its partners don't even seem to agree in which forum the dossier ought to be tackled. The press reported contradictory statements on the possibility that an extraordinary summit of the eurozone leaders would be held on Sunday 21 June.
EUROPE can confirm this confusion through its own contacts. One source told us that the Greeks were the only ones confident that talks could be held this weekend at the highest political level. Other sources, on the other hand, recommended keeping Sunday free, just in case an emergency summit was called. Only the Greek Prime Minister, Alexis Tsipras, has any ground to give over the question of pensions, a eurozone source stressed.
Expectations of the Eurogroup to be held in Luxembourg on Thursday 18 June are not high, even though its outcome will determine whether a eurozone summit will be necessary or not. On Tuesday, the Commission was standing ready should the Greeks put forward any new proposals in the meantime. However, in the absence of any such developments, it was able to say no more.
The Eurogroup is “not the forum to which we can present positions or proposals which have not previously been discussed and negotiated at a lower level”, said the Greek finance minister, Yanis Varoufakis. Having declared that he expected the creditors to adopt a dose of realism, Tsipras upped the ante on Tuesday. “The situation in which we find ourselves today is that the IMF positions prevail when it comes to the strictness of austerity measures asked, while at the same time the EU positions prevail when it comes to the denial for any discussion about the Greek debt sustainability”, he told the national parliament. Later, addressing the party Syriza, of which he is the leader, he said that the IMF bore criminal responsibility for the current situation.
According to Greek sources, the breakdown of the talks at the weekend is due to the fact that their interlocutors had no negotiation mandate (see EUROPE 11335). A source of the 'institutions', in other words the creditors of Athens, stated that the discussions were brief because there was “nothing” to discuss.
A Greek source said that there was no disagreement with the 'institutions' on the budgetary deficit for 2015. The discussions are reported to have focused on the budgetary effort required for 2016, for which easily quantifiable measures (for instance, tax increases) would be required. The 'institutions' have put the budgetary deficit for 2016 at 2.5% of GDP, whilst the Greek government is anticipating a shortfall of 1.65%. According to the same Greek sources, the compromise put forward by Athens contains measures equivalent to 2% of GDP.
In order to plug the gap between the forecasts of the 'institutions' and the Greek proposals, Athens is reported to have proposed using administrative measures already put forward (fighting tax evasion, for instance) or called for more flexibility from the 'institutions'. These “refuse to allow any administrative measures to help close the fiscal gap on the grounds that they are uncertain. This is quite extraordinary since 500 million euros' worth has already been collected from our new instalment scheme for tax arrears”, this Greek source explained.
According to a document published by the Financial Times, the European Commission and the ECB believe that savings in the order of €200 million could be possible in 2016 by putting lower ceilings on the expenditure of the Ministry of Defence.
As regards the controversial issue of the Greek debt, the Austrian Chancellor, Werner Faymann, told the Austrian daily newspaper Oesterreich upstream of a trip to Athens that Greece should be given a kind of moratorium on the repayment of the debt, together with tougher conditions. Any agreement would have to contain savings measures and reforms whilst making investment possible, he added.
The Greeks have not yet made any official request for a further extension of the programme. The remaining funds will expire on 30 June if no agreement is reached by then. A source close to the negotiations anticipated the possibility of an extraordinary Eurogroup meeting before the end of this month. Another source, however, warned that if no further Greek proposals are forthcoming, there will not be a great deal of appetite to extend the Greek partners' programme.
The German daily Süddeutsche Zeitung reported that a 'plan B' featuring a control on movements of capital was being put together by the 'institutions' in the event that no deal can be struck at Thursday's Eurogroup. From Vilnius, the Vice-President of the Commission, Valdis Dombrovskis, said that it was entirely to be expected that the eurozone states were discussing the possible implications of less favourable scenarios for Greece. That was the case between the Treasury directors last week.
Like a breath of fresh air in the face of the resistance of the most stubborn factions of his own party, Tsipras was given the support of the leaders of the opposition parties Pasok and To Potami on Tuesday, the latter stating that he was prepared to vote through any agreement reached with the creditors. Earlier this week, the President of the Commission, Jean-Claude Juncker, held a telephone conversation with the leader of To Potami, and with the leader of New Democracy, the former Prime Minister Antonis Samaras. According to opinion polls, the Greek people also seem to prefer a tough agreement to coming out of the eurozone, or 'Grexit'. (Elodie Lamer)