Economy Tsipras sees Greek deal, but differences remain after EU talks

Tsipras sees Greek deal, but differences remain after EU talks

Greek Prime Minister Alexis Tsipras (L) walks with European Union Commission President Jean-Claude Juncker prior to a meeting at the European Union Commission headquarter in Brussels, on June 3, 2015
Greek Prime Minister Alexis Tsipras (L) walks with European Union Commission President Jean-Claude Juncker prior to a meeting at the European Union Commission headquarter in Brussels, on June 3, 2015

Greek Prime Minister Alexis Tsipras emerged from late-night talks with senior EU officials in Brussels saying a deal with creditors was “within sight” and that Athens would make a payment due to the IMF on Friday.

But while the European Commission said “progress was made in understanding each other’s positions”, the leftist-led Greek government still rejects benefit cuts and tax rises its EU and IMF creditors want before they release fresh loans to avert a bankruptcy that could disrupt the euro zone and world markets.

Commission President Jean-Claude Juncker, who hosted Tsipras for a late dinner at the EU executive’s headquarters along with the chair of euro zone finance ministers Jeroen Dijsselbloem, would reconvene their meeting in the coming days, officials said after the talks broke up in the early hours of Sunday.

With Europe’s big powers – and the United States – concerned about the unpredictable effects of negotiations dragging on while Greek reserves shrink toward zero, creditors signaled a will to compromise, notably by lowering how much surplus they want a new budget to generate to service Athens debts.

But as Tsipras’s party battles to retain support from voters who elected in January to end years of austerity, its spokesman in parliament renewed tough rhetoric at home. Nikos Filis told a Greek broadcaster the government would not sign any “ultimatum” and would rather hold a new election if forced into a corner.

Tsipras is balancing a hardline faction in his party that is keen to spend Greece back towards economic growth with impatient lenders in the rest of the euro zone and the wish of a large majority of Greeks not to be forced to give up the EU currency.

Hours after Syriza party spokesman Filis warned that Greece might not repay the 300 million euros ($335 million) in International Monetary Fund loans that fall due on Friday if a deal was not at hand, a smiling Tsipras gave assurances in Brussels that Athens would continue to honor its commitments.

“Don’t worry about it,” he told reporters. “We have already paid 7.5 billion, so we will continue.”

NEED TO BE “REALISTIC”

Of the negotiations, he reprised the positive tone he has taken since he secured a four-month extension of a bailout package in February: “I believe an agreement is in sight,” he said. “But we need to conclude the discussions with a realistic point of view,” he added, making clear his reservations.

Referring to what negotiators say have been reductions in the targets creditors are setting for Greece’s primary budget surplus – what it has left from other expenses to fund its debts – Tsipras said: “We are very close to an agreement on the primary surplus. That means all sides agree to go further without tough austerity measures of the past.”

But he also again ruled out scrapping a particular benefit for low-income pensioners or a value-added tax change that he said would raise the tax on electricity by 10 percentage points.

This week has seen the creditors sketch out a possible compromise and the government draft its own proposals. “At the end of the day,” Tsipras said, “I think the proposals on the table will be the proposals of the Greek government.”

Juncker, whose institution is not itself a creditor, has been active in trying to broker a deal and has ruled out Greece stumbling from the euro zone, an outcome many EU officials fear would undermine the long-term stability of the project.

Euro zone finance ministers, wary of voters at home who have already contributed to bailing out Greece, are at pains to avoid Athens exploiting divisions between hawks and doves among the various negotiators. Tsipras, whose government has been critical of a hard line from the IMF, again praised Juncker’s executive for showing understanding of the Greek predicament.

“I believe from the side of the Commission there is the intention to go on in a realistic point of view,” he said.

Juncker’s office issued only this short statement: “It was a good, constructive meeting. Progress was made in understanding each other’s positions on the basis of various proposals. It was agreed that they will meet again. Intense work will continue.”

MERKEL, HOLLANDE CALLS

On Wednesday, Tsipras agreed in a telephone call with German Chancellor Angela Merkel and French President Francois Hollande on the need for an immediate solution involving a lower primary budget surplus target for Greece, a Greek official said.

Their third call in a week took place before Tsipras met Juncker in Brussels to hear the terms of a plan drawn up by the Commission, the European Central Bank and the IMF after a meeting of leaders chaired by Merkel in Berlin on Monday.

With time running out, and looking to draw a line under four months of acrimonious negotiations, the creditors have effectively come up with a take-it-or-leave-it offer.

However, Tsipras has produced a plan of his own and said he intended to discuss that document in Brussels, calling on euro zone partners to show some “realism” and urging a deal that would let Greece escape from “economic asphyxiation”.

Hardline German Finance Minister Wolfgang Schaeuble said an initial look at Greece’s reform suggestions indicated that talks aimed at securing an aid-for-reforms deal will take time.

“I have no information that anything decisive has changed in terms of substance,” he said in Berlin on Wednesday.

Looking for a compromise, the creditors suggest that Greece should post a budget surplus before interest payments of one percent of gross domestic product this year and two percent in 2016, instead of 3 percent and 4.5 percent under the terms of the current plan, sources familiar with the proposal said.

The sources said the Greek government had offered a primary surplus of 0.8 percent this year and 1.5 percent next year.

However, the relatively small gap in headline numbers masks tougher unresolved issues on how to achieve the fiscal targets.

Athens has offered to curb early retirement to save on pension payouts but the lenders wanted cuts in supplementary pensions, a smaller civil service and an easing of private sector layoffs to make the economy more competitive.

Sounding more upbeat and conciliatory than Schaeuble, Hollande suggested an agreement was within reach: “We are a few days or hours away from a possible deal,” he said. “Asking too much of Greece could stifle growth. But asking too little would have consequences for the euro zone as a whole.”

Previous articlePresident Ortega’s Home Flooded Amid Heavy Rains in Nicaragua
Next articleEurope’s bond markets are spiraling out of control