German Chancellor Angela Merkel in Brussels on Thursday. Photographer: Jasper Juinen/Bloomberg
German Chancellor Angela Merkel and her fellow European Union leaders told....
their finance ministers to unblock Greece talks once and for all as positions hardened around conditions the country must meet to secure aid.
In the rundown to the June 30 expiry of Greece’s euro-area bailout, hopes were raised -- then dashed -- by Prime Minister Alexis Tsipras, who came to Brussels with a set of proposals only to push back when more cuts were demanded. With Greece’s stay in the euro at stake, negotiations have picked up in frequency as a breakthrough has proved elusive.
Euro-area leaders are convening in Brussels for a second day of talks Friday for a regularly-scheduled summit where Greek talks aren’t officially on the agenda. Rather than clinch the deal, EU leaders Thursday refused to discuss it in detail and only exposed the confusion and frustration at play.
French President Francois Hollande and Merkel both said it was “crucial” for finance chiefs, reconvening Saturday for their fifth session on Greece in just over a week, to finally get a deal.
“Saturday has taken on a decisive significance, because time is short,” Merkel told reporters in Brussels in the early hours of Friday. European leaders “agreed that everything must be done to find a solution on Saturday,” she said.
A separate EU official said earlier that without a deal by then, ministers would have to map out ways to manage the potential consequences of a Greek default.
The Athens Stock Exchange Index is still nearly 14 percent up this week, having rallied on expectations of a deal earlier. Prices in the government bond market, where liquidity is thin, have been mixed. The yield on the two-year bond was 29 basis points lower early Friday at 21.2 percent from more than 30 percent a week ago as some investors remain hopeful an accord will be reached.
their finance ministers to unblock Greece talks once and for all as positions hardened around conditions the country must meet to secure aid.
In the rundown to the June 30 expiry of Greece’s euro-area bailout, hopes were raised -- then dashed -- by Prime Minister Alexis Tsipras, who came to Brussels with a set of proposals only to push back when more cuts were demanded. With Greece’s stay in the euro at stake, negotiations have picked up in frequency as a breakthrough has proved elusive.
Euro-area leaders are convening in Brussels for a second day of talks Friday for a regularly-scheduled summit where Greek talks aren’t officially on the agenda. Rather than clinch the deal, EU leaders Thursday refused to discuss it in detail and only exposed the confusion and frustration at play.
French President Francois Hollande and Merkel both said it was “crucial” for finance chiefs, reconvening Saturday for their fifth session on Greece in just over a week, to finally get a deal.
“Saturday has taken on a decisive significance, because time is short,” Merkel told reporters in Brussels in the early hours of Friday. European leaders “agreed that everything must be done to find a solution on Saturday,” she said.
A separate EU official said earlier that without a deal by then, ministers would have to map out ways to manage the potential consequences of a Greek default.
The Athens Stock Exchange Index is still nearly 14 percent up this week, having rallied on expectations of a deal earlier. Prices in the government bond market, where liquidity is thin, have been mixed. The yield on the two-year bond was 29 basis points lower early Friday at 21.2 percent from more than 30 percent a week ago as some investors remain hopeful an accord will be reached.
Do Everything
“We must do everything to reach a global and durable accord,” Hollande said at news conference. “Greece must make proposals that will allow institutions to enter a conclusive phase.”
Tsipras, who has been in Brussels all week, insists his government brought credible proposals to the table and that some of his colleagues were being inflexible, according to a Greek official with knowledge of the talks.
Tsipras faces the difficult task at home of winning support from his own lawmakers on a package that runs against his Syriza party’s pledge to end austerity. If the government is faced with an agreement that is against its campaign promises in the Jan. 25 election, it may be forced to seek a fresh mandate, Labor Minister Panos Skourletis said in an interview with Mega TV on Friday.
“If Greece’s government faces dilemmas that are outside its mandate, it will turn to Greek people to overcome them,” Skourletis said in a sign that a referendum or new elections may be on the cards.
“We must do everything to reach a global and durable accord,” Hollande said at news conference. “Greece must make proposals that will allow institutions to enter a conclusive phase.”
Tsipras, who has been in Brussels all week, insists his government brought credible proposals to the table and that some of his colleagues were being inflexible, according to a Greek official with knowledge of the talks.
Tsipras faces the difficult task at home of winning support from his own lawmakers on a package that runs against his Syriza party’s pledge to end austerity. If the government is faced with an agreement that is against its campaign promises in the Jan. 25 election, it may be forced to seek a fresh mandate, Labor Minister Panos Skourletis said in an interview with Mega TV on Friday.
“If Greece’s government faces dilemmas that are outside its mandate, it will turn to Greek people to overcome them,” Skourletis said in a sign that a referendum or new elections may be on the cards.
Differences Remain
Creditors were initially encouraged by Tsipras coming forward earlier this week with what they saw as his first serious attempt to break an impasse since coming to power five months ago. After closer examination, they found Greece’s plan too reliant on tax increases. Differences remain over the extent of pension reform, sales-tax increases and whether to include debt relief.
Each side has their own red lines. For Tsipras, elected on a promise to end austerity, it is paramount to show that it’s not his country’s poor paying for across-the-board cuts. For those footing the bill -- the International Monetary Fund, the European Central Bank, the European Commission -- the plan needs to be financially sustainable, grounded in reality and based on terms they set.
Creditors were initially encouraged by Tsipras coming forward earlier this week with what they saw as his first serious attempt to break an impasse since coming to power five months ago. After closer examination, they found Greece’s plan too reliant on tax increases. Differences remain over the extent of pension reform, sales-tax increases and whether to include debt relief.
Each side has their own red lines. For Tsipras, elected on a promise to end austerity, it is paramount to show that it’s not his country’s poor paying for across-the-board cuts. For those footing the bill -- the International Monetary Fund, the European Central Bank, the European Commission -- the plan needs to be financially sustainable, grounded in reality and based on terms they set.
Tight Deadlines
With no follow-on financing in place, Greece may struggle to pay 1.5 billion euros ($1.7 billion) it owes the IMF at the end of the month. Failure to close a deal by the weekend raises the odds that Greece might have to impose capital controls to prevent a run on its banks. Greeks have withdrawn about 20 percent of deposits held by the nation’s lenders this year as concern of an exit from the euro intensified.
“Ideally, the aim was to strike a deal in time to allow the Greek government to pass legislation before markets open on Monday, and then have some national parliaments approve the deal in the very next days, so as to allow the disbursement of the loan tranche just before IMF payments come due,” Martina von Terzi, economist at UniCredit Bank AG, wrote in a note to clients. “But the risk is growing that this timeline will prove too optimistic.”
Source: http://www.bloomberg.com/europe
With no follow-on financing in place, Greece may struggle to pay 1.5 billion euros ($1.7 billion) it owes the IMF at the end of the month. Failure to close a deal by the weekend raises the odds that Greece might have to impose capital controls to prevent a run on its banks. Greeks have withdrawn about 20 percent of deposits held by the nation’s lenders this year as concern of an exit from the euro intensified.
“Ideally, the aim was to strike a deal in time to allow the Greek government to pass legislation before markets open on Monday, and then have some national parliaments approve the deal in the very next days, so as to allow the disbursement of the loan tranche just before IMF payments come due,” Martina von Terzi, economist at UniCredit Bank AG, wrote in a note to clients. “But the risk is growing that this timeline will prove too optimistic.”
Source: http://www.bloomberg.com/europe
