Brussels, 07/07/2015 (Agence Europe) - Five days. That is the time left to Greece, according to the eurozone leaders, to try and finalise an agreement on reforms that will enable it to receive international financial assistance again. Otherwise, the scenario of a Greek exit from the eurozone could become a reality.
On Tuesday 7 July, the leaders of the eurozone countries set the pace for the rest of the week. On Wednesday 8 July the Greek government, led by Alexis Tsipras, will have to request a third bailout plan - this time from the European Stability Mechanism (ESM). The eurozone finance ministers will discuss this request during a video-conference the same day (see other article) and should, in principle, appoint the European Commission to analyse Greece's economic and financial situation, in conjunction with the ECB, and to produce a debt sustainability analysis (DSA).
On Thursday 9 July evening-Friday 10 July morning, according to European Commission President Jean-Claude Juncker, Greece will have to be more specific about its request, with a range of detailed reforms. These will be put to the 'institutions' (Commission, ECB, IMF) for assessment. A Eurogroup meeting will be held on Saturday 11 July. This will note whether or not there is a real basis for conducting negotiations on this third aid plan.
A European summit has been scheduled for Sunday 12 July, but it seems that the outcome of the previous day's Eurogroup meeting will determine whether or not this summit is held. “If everything goes as well as possible on Saturday, then it won't be necessary for a meeting to be held on Sunday”, said Austrian Chancellor Werner Faymann.
Behind the scenes, it is stated quite openly - a meeting of the 28 EU member states will be held if the worst has to be prepared and humanitarian measures have to be planned to support the Greek people (using the European budget). “The Commission is prepared for everything”, Juncker told a press conference.
Tsipras stated that he had put forward definite Greek proposals on Monday with the party leaders (see EUROPE 11352). However, many European leaders criticised the Greek delegation for arriving empty-handed. Indeed, the Greek government had promised its people that an agreement would be possible within 48 hours of the referendum, Juncker recalled.
Pessimism predominates. “Unfortunately, we cannot exclude a black scenario if there is no agreement by Sunday. We need to discuss the whole consequences for the European Union” and the possible humanitarian crisis, said European Council President Donald Tusk, adding that those who believe the “bankruptcy of Greece” would not have “geopolitical consequences” are naively mistaken.
“I didn't hear any proposals from Mr Tsipras” that permit hope for approval from the Eurogroup on Saturday, said Dutch Prime Minister Mark Rutte, believing “a small miracle” would be needed for the Eurogroup to note that negotiations for a third programme are possible. Rutte's Belgian counterpart, Charles Michel, said he had only heard “banal phrases - nothing new, nothing concrete”. “This is not serious [behaviour]”, he criticised. “I'm not very optimistic today”, said German Chancellor Angela Merkel, who believes that the meeting of the European Council planned for Sunday shows that “the situation is relatively serious”. Malta's Prime Minister Joseph Muscat warned that he was not prepared to stand before his parliament to ask for another loan for Greece. In short, “the Greek position was very much weakened this evening”, Juncker stated.
“Either Greece remains in the eurozone, or it leaves - doubtless with an accompanying programme. Don't think this won't cost anything. There will be the problem of the loans that we have already granted, liquidity that has been provided, and consequences on a certain amount of trade”, Hollande warned, convinced that “the option of a parallel currency [was] not an option”.
In the quest for a workable solution, two issues are particularly significant - the short-term financing of Greece, and the long-term recovery of its economy.
“The short-term agreement must be part of a medium-term agreement. A comprehensive and sustainable agreement that focuses on everything - structural reforms, improving public accounts, a number of measures that must be taken to give Greece more growth, and the Juncker investment plan. And a short-term agreement for the necessary financing for the period we know”, Hollande stated.
Underlining that “the second programme [had] never come to an end according to the rules”, Merkel said she thought it was “normal” that “more conditons” should accompany the granting of new pluriannual financial assistance. In her view, the package of measures negotiated before the announcement of the referendum in Greece had left certain points out - such as the reform of the labour market and privatisation. “These points need to be revisited, and only then will we speak about the sustainablity of the debt”, she said. Juncker hoped that the issue of the public debt, which is crucial for the Greeks, could be addressed in “October”. Nevertheless, “given what I have heard, I don't believe there is any room for addressing the issue of the debt”, said Renzi.
Conflict of democratic legitimacy. “Greece will continue its efforts, having as a weapon the result of the referendum that expressed the Greek people's wish for a sustainable agreement”, Tsipras stated.
The other leaders were nevertheless quick to remind him that they too were accountable to their citizens. “We respect the referendum but there are 18 other countries with a political debate. Account must be taken of the sovereignty of 19 member states”, Merkel stated. Several concurring sources acknowledge that Juncker's last proposal could be the basis for future discussions - despite the fact that the Greek electorate rejected this proposal last Sunday.
“Given the result [of the summit], it might well be asked what good the referendum served”, said Luxembourg's Prime Minister Xavier Bettel.
Whatever happens, failing an agreement by Sunday, the ECB will have to consider the crucial issue of emergency liquidity to the Greek banks. “The ECB will take its decisions. Sunday is the right time”, said Merkel. Michel, for his part, said that the issue of liquidity for Greek banks was “extremely urgent”. (Elodie Lamer with MB, EH, IL, PH, CG, SP, AN)