Greece’s lenders, and analysts, are bewildered why the government keeps saying a deal is near when there’s no evidence the two sides are anywhere close, world press reports say.
Markets Have Had it Up to Here with Greece
Toronto Globe and Mail – Michael Badad
The markets have lost their patience with Greece and its creditors.
Just like the last time. And the time before that.
It’s different this time, though, as the young government of Prime Minister Alexis Tsipras tries to fulfill his anti-austerity mandate.
Greece now hopes it can strike a deal by Sunday with the International Monetary Fund, the European Central Bank and the European Commission as it runs up against a payment to the IMF next week.
Of course, it said as much a few weeks ago, and several Sundays have passed.
And, as always, there are different reports and varying comments from officials.
This is playing out in the markets again today.
“The long-winded negotiations and the lack of resolution between Greece and its creditors continues to hang over equity markets like the sword of Damocles this morning with European indices shedding an average 1 per cent in early trade,” said analyst Brenda Kelly of London Capital Group.
“Despite assurances from each side that progress is being made behind the scenes, the rhetoric from [IMF chief] Christine Lagarde and the European Commission would suggest that a default would equate to Greece leaving the euro,” Ms. Kelly added.
At this point, she noted, markets see a 70-per-cent chance that Athens will default.
There has been a crisis atmosphere surrounding Greece since the election, and the new government is looking to ease the controversial austerity measures put in place earlier in bailout talks.
The markets don’t know what to think – other than that there’s trouble – and the ups and downs of currencies and stocks bear that out.
“Traders are sick of the non-stop back and forth, and whenever Greece is in crisis talks there is always a series of comments from different parties involved in the negotiations which contradict each other, and traders do not know who to trust,” IG market analyst David Madden said yesterday in a research note.
Time Politicians Handed Greece an Ultimatum
The Wall Street Journal – Simon Nixon
The Greek government has spent the past four months demanding a “political solution” to its debt crisis. The time may have come for the eurozone to offer it one.
Until now, Europe’s political leaders have been reluctant to be drawn into the process, preferring to hide behind the officials in the institutions formerly known as the Troika: the European Central Bank, the International Monetary Fund and the European Commission. Partly, that reflects practical and legal reality: elected politicians do not have the capacity or capability to negotiate the details of bailout programs.
But it also reflected a political reality: no one wanted to be seen to be sitting in judgment on a fellow eurozone member state’s budget.
They preferred to stay one step removed, providing time and space for an inexperienced government to reach its own agreement with the creditors, reflecting its own political choices while respecting eurozone rules.
But the reality is that the bailout talks have gone—and appear to be going—nowhere. Despite daily assurances from Athens that a deal is imminent, eurozone officials say that the two sides remain “miles apart.”
Deadlines have come and gone: no one now expects a deal by the end of May, agreed only last week. Athens still resists key reforms to its pension system and labor market that its creditors consider essential to Greece’s long-term prospects while continuing to unpick earlier reforms.
Eurozone governments were never under any illusion that it would be hard to reach a deal with Prime Minister Alexis Tsipras, whose radical left Syriza party had won the election on a platform of tearing up the bailout agreement, rejecting austerity and embarking on a fiscally expansionary program.
But Mr. Tsipras had also campaigned on a commitment to keep Greece in the eurozone.
They assumed that when the financial pressure mounted, it would be this part of his mandate that he chose to honor. They assumed that his party would back whatever deal he agreed, or that he would dump his government’s hard-liners and seek backing from pro-euro opposition parties.
But these assumptions look increasingly misplaced. For all Syriza’s talk of tackling corruption and clientelism in Greece, it has shown little interest in reform in its first four months in power. It has come up with no ideas of its own to turn Greece into a functioning modern economy …
That’s why the time may have come for eurozone governments to hand Athens an ultimatum: a take-it-or-leave-it deal with a clear deadline. This ultimatum would include an explanation of what the eurozone has done and is willing to do for Greece, what it requires from Greece in return and the reasons why.
No Deal: Greece’s Creditors Vent Frustration
Bloomberg – Ian Wishart & Hans Nichols
Greece’s creditors said a deal to unlock rescue aid isn’t imminent as they demanded the debt-ravaged nation make stronger commitments to overhaul its economy.
The Greek government saw its optimism over an agreement rebuffed as European officials gathered in the German city of Dresden for a Group of Seven meeting and said much more effort is needed. Greece had claimed a solution could be reached by Sunday.
There is a “substantial way to go,” European economic commissioner Pierre Moscovici said in a Bloomberg television interview on Friday. “I wouldn’t give a day for a deadline. There have been some deadlines in the past, and there we are today. But it’s clear that we need to speed up, that time is running short.”
With time and patience running out, the Mediterranean nation hasn’t yet said how it will pay almost 1.6 billion euros ($1.74 billion) in International Monetary Fund payments scheduled for next month, with the first transfer due June 5.
International creditors said they need an agreement on an economic plan next week to be able to release funds before Greece’s current loan arrangement expires at the end of June, according to a European Union official who spoke on condition of anonymity. Moscovici said that needs to be settled before any third bailout can be dealt with.
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