Brussels, 06/07/2015 (Agence Europe) - Meeting in Paris on the eve of an emergency summit on the Greek crisis, French President François Hollande and German Chancellor Angela Merkel have left the door open to talks which could prove crucial to keeping Greece in the eurozone.
The Franco-German team stresses that they respect the results of the Greek referendum, in which the Greeks express their exasperation at the bailout plans they have been living under since May 2010. “The door is open to talks” and it is now up to Greek Prime Minister Alexis Tsipras to make “serious and credible” proposals to allow the political class to make good on their desire to remain in the eurozone, Hollande said. At this Tuesday's eurozone summit, we will also have to study the reaction to the situation and to the proposals of the other 18 countries of the eurozone - “that, too, is democracy”, Merkel stressed. She repeated the words of the French president that Europe is a community of values and principles based on “solidarity and responsibility”. She went on to say that the creditors of Athens had “already shown quite a lot of solidarity”, describing the package of measures rejected by the Greeks as “extremely generous”. Hollande also stressed the “urgency for Greece and Europe” to find a solution.
Meanwhile, the European Central Bank has decided to keep unchanged, at nearly €89 billion, the level of emergency liquidity (ELA) to be provided to the Greek banking system. The closure of the Greek banks is expected to continue until at least Wednesday 8 July, as will the restrictions on movements of capital set in place in Greece last week.
Referendum 'no' result has complicated matters, says Dombrovskis
On Monday, the Vice-President of the European Commission with responsibility for the Euro, Valdis Dombrovskis, called on all parties to act responsibly to “solve this very difficult situation”. He stressed that Greece's place remains in Europe, but took pains to avoid stating whether it would be able to remain in the eurozone. The victory of the 'no' vote in the Greek referendum has “widened the gulf between Greece and the other countries of the eurozone”, he said, calling on the Tsipras government to be “straight with the Greek people about the potential consequences of the decisions they make”.
In order to start talks with Greece on a third bailout plan, the European Commission needs a mandate from the Eurogroup. At this point in time, it is by no means certain that the eurozone ministers will make a decision to this effect, at their extraordinary meeting on Tuesday 7 July to prepare for the eurozone summit. The Eurogroup's objective will be to “take stock”, the eurozone source said on Monday.
Before anything else can happen, the eurozone finance ministers are awaiting new proposals from Athens. According to the news agency AFP, the German Chancellor, Angela Merkel, and the Greek Prime Minister, Alexis Tsipras, agreed that Greece would put proposals forward at the eurozone summit of Tuesday evening. However, earlier that day, a spokesperson of the German government said that in view of the result of the Greek referendum (see EUROPE 11351), the conditions to negotiate a new bailout plan had not been met. Spain and Italy have both announced that they would be open to negotiations.
The IMF states that it is prepared to help Athens if requested to do so. The IMF aid plan is still current, and will be until the first quarter of 2016, but the financial body cannot make any more payments until Greece has paid off its arrears to the IMF.
Greek debt, the issue at the heart of the talks
According to a number of media reports, Greece is planning to make proposals on the basis of the Commission's latest package of proposals, making sure that proposals on the Greek debt are included, in light of the latest IMF report (see EUROPE 11347). On this point, the Commission denied rumours that the eurozone had leant on the IMF to prevent its publication. Dombrovskis explained that the update of the debt sustainability analysis bore the stamp of the three 'institutions' (Commission, ECB and IMF) which represent the creditors of Athens. The German finance minister, however, said that he can still see no basis for any discussion of the subject.
The German Vice-Chancellor, the Social Democrat Sigmar Gabriel, anticipated further talks at the Summit on the possibility of humanitarian aid to Greece. “We cannot abandon Greece, all of the European countries must be prepared to grant humanitarian aid (…). I imagine that this will be discussed tomorrow in Brussels”, he said.
Following talks lasting several hours, all of the opposition leaders, with the exception of the Communist KKE party and the Golden Dawn extreme right-wingers, pledged to support the Greek Prime Minister in his negotiations with Europe. A joint declaration was anticipated in the course of the day, to include a reference to the debt issue.
Tsipras also held talks through the day with the French President, François Hollande, the President of the ECB, Mario Draghi, and the Russian President, Vladimir Putin. Putin promised the Greek people his support. The heads of the European institutions were also in touch with each other on Monday morning.
Euclide Tsakalotos to replace Varoufakis
The finance minister, Yanis Varoufakis, has been replaced by Euclide Tsakalotos, who was reponsible for the negotiations with the 'institutions'. This change-over can be interpreted as a gesture of appeasement on the part of the Greek government to find a solution to the current crisis. Varoufakis explained on his blog that he had been made aware of “a certain preference by some Eurogroup participants (…) for my absence, an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement”.
With the ECB's decision on emergency support to the Greek banks hotly anticipated, a number of banking sources have told Reuters that the closure of the banks could be extended by a number of days, until Friday or Monday of next week. (Elodie Lamer with Mathieu Bion)