Greece’s international lenders are offering carrots for reforms – then warning of bringing in the sticks if they’re not imposed, world reports say.
Merkel Says Greece Needs Harsh Reforms
CNBC – Fred Pleitgen
Greece needs to return to the path of tough economic reforms to secure its future in the eurozone, German Chancellor Angela Merkel said Thursday.
Speaking to CNN after hours of talks Wednesday between Greece and its creditors failed to produce a breakthrough, Merkel said a solution to the current crisis needed “big efforts” by both sides.
But she made clear that Greece should look to the example of other countries in the eurozone — such as Ireland — that had implemented painful changes to their economies in response to the financial crisis.
“They went through such a program and now have the best growth in the eurozone,” she said.
“That is the kind of course Greece needs to get on. And that is why the negotiations are tough, but they are clearly aimed at keeping Greece in the eurozone.”
Merkel hosted an emergency session of talks with French President Francois Hollande, ECB President Mario Draghi and the head of the International Monetary Fund Christine Lagarde in Berlin Monday.
They agreed a proposal to solve the Greek crisis, which was put to Prime Minister Alexis Tsipras in Brussels on Wednesday. Tsipras came to the meeting with his own proposal. There was little evidence that the talks produced major progress on the big stumbling blocks.
Greece has to pay the IMF 300 million euros ($336 million) on Friday, and about 1.6 billion euros in total this month.
But Athens is running out of money. Its current international bailout program expires at the end of June.
Without access to the remaining 7.2 billion euros ($7.9 billion) in bailout funds, it may not be able to continue to pay wages and pensions, as well as its creditors.
It only managed to stay afloat last month by raiding its emergency reserves, and forcing local government and other public bodies to hand over cash. Without the bailout cash Greece will be forced into default, and could stumble out of the euro.
ECB Hints at Concessions for Greece
The New York Times – Jack Ewing
The message to Greece from European Central Bank headquarters in Frankfurt on Wednesday was, on the surface, much the same as it has always been: Stick to the program.
But beneath the customary rhetoric about how Greece must keep a tight rein on government spending and slog onward with a deeply unpopular economic overhaul, there was a softer subtext.
Mario Draghi, the president of the European Central Bank, said that “social fairness” — a new phrase from him — should be an element in the program that Greece will need to accept in order to receive more financial support from the rest of the eurozone. And he indicated a willingness to slightly ease the fiscal targets that Greece has been asked to meet.
His words suggest that one very influential eurozone leader is willing to make some concessions to Athens’s demands for a less painful economic program — although probably nowhere near as painless as the leftist Syriza government would like.
It remains an open question whether Greece and the creditors can bridge their huge differences and make a deal before the country runs out of money, perhaps within weeks, which could lead to its exit from the eurozone.
“The Governing Council of the E.C.B. wants Greece to stay in the euro,” Mr. Draghi said on Wednesday at a news conference after a meeting of the council, the bank’s decision-making body.
“The current downgraded growth perspectives of the Greek economy,” he said, “should be taken into account in determining what the appropriate budget surplus figures should be.” Translated, that means Greece should be given a little slack in its fiscal targets.
Mr. Draghi habitually plays down the role of the central bank in negotiations over Greece and did so again on Wednesday. “We are not either interfering or in any way taking a stance with respect to the current negotiations,” he said.
Despite his demurrals, the central bank is in fact a crucial party to talks that will determine Greece’s fate.
As Greece Teeters, Fallout for Europe Uncertain
Associated Press – David McHugh
Many economists think a Greek departure from the euro would be a disaster indeed. For Greece.
But for the rest of Europe?
Some think a Greek exit, or “Grexit,” would not in fact inflict serious damage on Europe’s economy as it struggles to work past a crisis over too much government and bank debt. Comparing a Greek exit to the collapse of U.S. investment bank Lehman Brothers in 2008, which spread panic and deepened a global financial crisis, are misplaced, they say.
Others aren’t so sure. They think that while short term market turmoil might pass quickly, letting a eurozone member leave could permanently damage the 16-year old currency that’s now shared by 19 countries.
Greece’s new left-wing government is struggling to convince its international creditors, which includes its eurozone partners and the International Monetary Fund, that its reform plans are credible.
Agreement is necessary for Greece to get the remaining funds in its bailout fund. Without the release of that 7.2 billion euros ($8.1 billion), Greece faces the prospect of an imminent bankruptcy and a potential exit from the euro.
The Greek government is resisting the tough conditions attached to more bailout loans and on Thursday even requested to have the four payments it has to make to the IMF this month bundled together into one on June 30 — a sign that the country is facing acute financial difficulties.
A failure to pay its debts when they are due does not immediately mean Greece leaves the euro. But it raises the chance of an endgame in which Greece simply runs out of money, introduces restrictions on the flow of capital and gears up a new national currency so it can print money to pay its bills.
The post World Press View: Troika Plays Good Cop, Bad Cop Game appeared first on The National Herald.Source: The National Herald