Luxembourg, 18/06/2015 (Agence Europe) - In view of the persistent stalemate over the Greek dossier, the President of the European Council, Donald Tusk, decided on Thursday 18 June, following the breakdown of the Eurogroup meeting in Luxembourg, to convene a eurozone summit for Monday 22 June, with the European Council already scheduled for the end of next week.
“In light of the outcome of the Eurogroup meeting today, I have decided to convene a Euro Summit on Monday 22 June at 19: 00. It is time to urgently discuss the situation of Greece at the highest political level”, Tusk told the Eurogroup press conference.
This eurozone summit, which will aim to “inform and involve” the leaders, will be prepared at Eurogroup level as required by the procedure, Jeroen Dijsselbloem, the president of the Eurogroup, announced. The finance ministers of the eurozone are expected to meet on Monday morning. “Obviously it's urgent. The word has been used many, many times also in the Eurogroup”, the Dutch finance minister added. “Mr Tsipras need not hope for a vague agreement at the summit. Usually, when the leaders come along at the end of the game, it's to conclude something. The success of a summit is built on hard work on the proposals”, a source who took part in the negotiations commented. Monday's convocation of the Euro Summit is tied in to the haemorrhaging of capital, of which the Greek banks are once again the victims.
The second Greek bailout plan, which was extended for four months at the end of February, and the financial assistance still available, will expire on Tuesday 30 June. The Greeks have not as yet formally applied for a further extension, even though this now seems inevitable. This application is expected to come at the eleventh hour, if a deal can be struck. Greece and its creditors have spent months negotiating the measures the Greek government will apply in exchange for continued financial life support. In the absence of an agreement, Athens will not be able to pay €1.6 billion back to the IMF at the end of the month and will find itself in a situation of default.
The Washington-based IMF would then not be able to disburse any more funds until the arrears have been paid back. By virtue of a so-called 'cross default' clause, the European Financial Stability Facility (EFSF) would face three possible scenarios: immediately demand the reimbursement of the loans granted, an unlikely scenario, waive its rights or reserve its rights. The third option is the most probable. “It's not our responsibility as ministers to discuss this failure”, said the Greek finance minister, Yanis Varoufakis, expressing concern at approaching a state of mind that accepts an accident.
Confidence shaken. Still desperate to believe in the possibility of an agreement, the creditors of Athens put the blame for the deadlock squarely on the shoulders of the Greek authorities, accusing them of failing to make a counterproposal to the package of measures already on the table. “No agreement is yet in sight”, Dijsselbloem regretted, adding that the ball is now in the Greek authorities' court. Describing the situation as “worrying”, Pierre Moscovici, the commissioner for economic affairs, urged both sides to strive to avoid a “disastrous outcome”, with “not long to go until close of play”. “The key issue is to restore the dialogue - with adults in the room”, said the director general of the IMF, Christine Lagarde. All parties declared their willingness to work night and day to reach a solution.
A reduction of the debt, Greece's sine qua non. There are still three questions outstanding: pensions reform, VAT and budgetary targets. On the last of these, an agreement is reported to be within reach. However, as far as the Greeks are concerned, a reduction of the debt burden is a sine qua non condition of any agreement, according to Varoufakis. He gave his word that Greece would continue with its reforms, but added that this was no time for any more budget cuts.
Reiterating that they had already relaxed their position considerably, the institutions once again expressed flexibility, if certain measures are not to the liking of the Greeks. When asked about savings in the defence sector, which the institutions have referred to as a possible option, Varoufakis said that this had initially been a Greek idea. “It wouldn't satisfy them if we shut down the army”, he said. “What is on the table is entirely reasonable”, said Moscovici. On pensions, the institutions are calling for a haircut of €1.8 billion.
On VAT, Varoufakis admitted that more revenue was needed. “But we can't do this by increasing the rate. The problem we have is collectability”, he added.
When asked about the message to send out to the Greek people, Dijsselbloem said that Greece needed to regain financial independence in order to continue to evolve within the eurozone. “It will require difficult measures and politicians who are prepared to tell the truth to their people”, said the Eurogroup president, who concluded: there is nothing we want more than for Greece to stay in the eurozone, but we are prepared for all eventualities. (Mathieu Bion and Elodie Lamer)