Greek Finance Minister Yanis Varoufakis says the country and its creditors have a “moral and political responsibility” to swiftly conclude much-delayed bailout talks, but Athens will not budge from its key negotiating positions.
Stock markets fell in the Eurozone and Greece as expectations were low for a breakthrough on May 11 as the bloc’s finance chiefs were meeting in Brussels to confront the country’s negotiating team as talks have stalled since a four-month bailout extension was given on Feb. 20.
Varoufakis was to with his Eurozone peers, which provide the bulk of the loans keeping Greece afloat. His role has been reduced after his colleagues complained he was too combative and he will be joined by Deputy Prime Minister Yiannis Dragasakis, Deputy Foreign Minister Euclid Tsakalotos, or both.
Despite three months of talks, Greece and its creditors have failed to agree on further reforms and savings Athens needs to qualify for a 7.2 billion euro ($8 billion) loan installment. Without the cash, Greece could go bankrupt within weeks.
Varoufakis said his ruling Radical Left SYRIZA party of Prime Minister Alexis Tsipras and its partner the far right-wing Independent Greeks (ANEL) will reject any deal that doesn’t guarantee a credible prospect of ending Greece’s crisis or forces the government to cross red lines and impose more of the austerity it rejected ahead of the Jan. 25 snap elections.
Still, Greece is expected to plead for leniency and for a release of money just because the government believes there has been progress in talks while the troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) said there has been virtually none.
The Eurozone’s 19 ministers meet in Brussels one day before Greece must pay a €750 million ($840 million) loan installment bill to the IMF at the same time the government is trying to cobble together enough cash to pay salaries and pensions at the end of the month.
NO DEAL IN SIGHT
So far, even the prospect of a Greek default and the country being forced out of the Eurozone hasn’t swayed the lenders from sticking to a hard line and hold back money until Tsipras gives in.
“We have made progress, but we are not very close to an agreement,” said the head of the Eurogroup ministers, Dutch Finance Minister Jeroen Dijsselbloem, in an interview at the weekend, Agence France Presse said.
“We need more time,” he said.
Led by Germany, Eurozone ministers demand that Greece impose more austerity measures but Tsipras, after showing signs of relenting, is digging in his heels at the risk of a bankruptcy and default.
With no overall deal in sight, officials said Greece is hoping for a “positive statement” on negotiations that will allow for at least part of a delayed 7.2-billion euro ($8.1 billion) installment to be released even though no reforms have been completed.
That could also possibly persuade the ECB to keep emergency liquidity coming so that the country’s banks won’t collapse as they’ve seen an outflow of more than 26 billion euros in the last seven months by depositors fearful of a default and return to drachma, making their euros useless, or confiscation of their money by the government.
“We want a clear confirmation of the progress that has been made” in the talks, Tsipras told a cabinet meeting although the troika said there isn’t any.
No one outside the Greek government knows for sure how long Athens can go without a deal to end Greece’s 240 billion euro bailout, which began in 2010 and expires at the end of June.
Greece must also pay the IMF 1.5 billion euros in June – when the country’s bailout extension ends and talk of a third bailout of as much as 50 billion euros is being speculated.
“Experience elsewhere in the world has shown that a country can suddenly slide into insolvency,” Wolfgang Schaeuble, the powerful German finance minister, warned.
Tsipras spoke three times by phone to German Chancellor Angela Merkel, and made calls to European Commission President Jean-Claude Juncker, a former Eurozone chief.
“After weeks of painful negotiation, if the other side is willing, it will become apparent that … the deal is very close and will be sealed in the coming period,” Tsakalotos said although there’s no evidence of that.
Tsipras, whose SYRIZA party swept to power on an anti-austerity platform, has called for an “honorable compromise,” and the government reportedly plans a number of concessions to win over its creditors.
AFP said those include a new unified valued added tax (VAT) rate of 16 per cent for several goods and services currently taxed at 13 percent, forcing Tsipras to break his promise to lower taxes.
The new VAT rate, along with a restriction on early retirement and keeping the ENFIA property tax Tsipras also vowed to end would bring in as much as six billion euros but the troika said it has been getting continuing conflicting, contradictory and mixed messages from the government.
(Material from the Associated Press was used in this report)
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