Admitting it won’t get a deal at a May 11 Eurozone meeting as hoped – because it still hasn’t completed reforms – Greece’s Radical Left SYRIZA-led government still hopes for political backing to unlock blocked aid soon.
With the country running out of money fast, Prime Minister Alexis Tsipras’ coalition, which includes the far right-wing Independent Greeks (ANEL) hasn’t come up with a credible list of reforms almost three months after being given a four-month bailout extension by the troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
The lenders, who have put up 240 billion euros ($260 billion) in two rescue packages since 2010, have set a number of deadlines since SYRIZA took over for tough new measures to be imposed, but Tsipras has rejected them.
In return, the troika is holding back a delayed 7.2-billion euro installment as Greece is locked out of the markets by prohibitively high interest rates and depositors in Greek banks have yanked out more than 26 billion euros in the last six months, fearful the country will default and be pushed out of the Eurozone.
For weeks, the government said it was expecting the May 11 meeting would give it a chance to show it had made enough progress in talks for the loan to be disbursed but that has been rejected out-of-hand.
While he’s made a few concessions, Tsipras said he’s already given in too much and wants the EU and lenders to show the “political will” to help Greece, but they want real progress, not talk.
LOTS OF TALK, NO ACTION
The meeting will come after days of whirlwind tours around EU capitals by Greek officials anxious to get support for the government’s intransigent position, and to avoid a default.
Tsipras has been burning up the phone lines calling around the EU but has been rebuffed on every front as he continues a defiant stance.
Greece last week made a 200-million euro payment due the IMF and on May 12 must come up with another 750 million euros at the same time the government ordered state entities and cities and towns to turn over all their month last money to pay salaries and pensions.
Unable to do that again, Tsipras has found himself backed further into a corner with no where to turn apart from pleading for help at the same he won’t compromise, angering many EU officials.
He continues to say Greece has made a lot of progress in talks while the troika says almost none has been made, apart from the last few days.
Greek officials said the IMF will be paid on May 12 although Kathimerini said the hardest-core elements of the radical SYRIZA party don’t want to pay and favor default.
If Greece doesn’t meet the payment, it would be declared bankrupt imminent and the government have to establish capital controls to halt a run on the banks.
German Finance Minister Wolfgang Schaeuble, whose country has put up much of the loans and demanded big pay cuts, tax hikes, slashed pensions and worker firings in return, warned Greece could find itself bankrupt and without friends or allies.
“Experience in other parts of the world has shown that a country can suddenly slide into bankruptcy,” he was quoted as telling Frankfurter Allgemeine Zeitung.
European Economic and Monetary Affairs Commissioner Pierre Moscovici said reform talks are dragging dangerously slow while Eurogroup President Jeroen Dijsselbloem said the May 11 meeting “won’t be decisive.”
Greece though hopes at least there will be enough support to convince the ECB to increase emergency liquidity to keep the country’s banks from collapsing. The ECB won’t lift the ceiling on Treasury bills to allow the sale of bonds, which had been bought recently only by already-beleaguered Greek banks.
THE GREEK TEAM
Finance Minister Yanis Varoufakis, who had been sidelined by Tsipras because of a combative stance that ired EU officials, will represent Greece at the Eurogroup but will have with him Deputy Prime Minister Yiannis Dragasakis or Alternate Foreign Minister Euclid Tsakalotos, who is the new negotiations “coordinator,” or possibly both.
Talks at the technical level continued in Brussels on May 9 with three key sticking points reported: cutting pensions further, keeping a ban on collective bargaining for workers, and the level of Greece’s primary surplus.
The troika wants a surplus of 2 percent of Gross Domestic Product (GDP) while the government wants only 1 percent. Talks also were about tax revisions, included a flat Value Added Tax (VAT).
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