Thursday

27th Jun 2019

Leaked Juncker plan seeks to avoid Greek default

European Commission Jean-Claude Juncker sent a memo to the Greek government on Monday (18 May) outlining proposals to find an agreement in the bailout discussions, according to Greek newspaper To Vima.

The Greek prime minister’s office refused to comment on the leaked document, while EU Commission spokespeople said they "could not confirm" the report but did not deny it.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • The reported plan could allow Tsipras find a way to a deal (Photo: Constantine Gerontis)

According to the leaked paper, part of the €7.2 loan Greece has been waiting since a Eurogroup deal in February would be unblocked without there being comprehensive deal on reforms.

Under the plans, some money from the bailout fund (EFSF) would be unlocked in June while a full agreement between Greece and creditors on the next step forward would come in autumn.

It foresees the Greek government carrying out reforms by June that would result in expenditure cuts worth €5bn to cover the fiscal gap for 2015 and 2016.

According to To Vima, the European Commission is suggesting that €1.8 billion be paid in June as well as €1.9 billion from the profit made by the European Central Bank from the interest on Greek bonds bought on the secondary markets.

This would allow Greece to avoid defaulting on its upcoming payment deadlines.

The country will have to repay €1.5 billion to the International monetary fund (IMF) in June and €6.5 billion to the European central bank (ECB) in July and August.

Last week the Greek government repaid the IMF using money from an emergency fund and said it would face a major liquidity problem after it pays pensions and salaries at the end of May.

The Juncker plan also proposes less ambitious budget primary surplus targets of 0.75 percent of GDP in 2015 rather than 3 percent.

Lower primary surplus targets is a key demand by Athens to reduce austerity measures.

The third proposal reportedly made by Juncker is to postpone some reforms asked by Greece’s lenders.

According to To Vima, VAT reform would be introduced only in October and the discussion on pensions would take place "in the autumn".

Ccollective bargaining, one of Greece’s "red lines" in the current talks, would be reevaluated "in light of the International labour organization's (ILO) recent report on 'better practices' in the EU's job market".

The Juncker proposal contains a mix of concessions such as measures to address the “humanitarian crisis in Greece” but maintains some unpopular ones such as a recent property tax.

The proposal "paves the way towards an honest compromise," tweeted MEP Dimitrios Papadimoulis, who hails from the governing left-wing Syriza party. He is the first politician to give credence to To Vima’s report.

Juncker’s leaked proposal follows a report by the UK’s Channel 4 over the weekend saying the IMF believed Greece would default on 5 June, the day of the next repayment deadline.

There have also been reported differences between Athens’ creditors over whether a Greek debt haircut should be considered with the IMF in favour.

While To Vima said that the Greek government, the ECB and the IMF have all received the proposal, others said this was not the case.

One official involved in the talks, quoted by the Financial Times after the leak, said neither the ECB nor the IMF were aware of the Juncker proposal.

"We are thunderstruck," the official said.

Is Greece about to default?

Greece just used emergency funds to pay the IMF and needs to find another €3bn by the end of May. But is it really on the edge of default?

Eurogroup keeps alive hope of Greek deal

Eurozone finance ministers on Monday welcomed progress in talks between Greece and its lenders but could not say when a deal will be possible.

No outcome from Greece talks in Riga

A two-hour meeting between the leaders of Germany, France, and Greece in Riga produced no tangible outcome on the Greek debt crisis.

EU top court backs Canada trade deal in ruling

The European Court of Justice ruled on Tuesday that the EU-Canada free trade agreement, and its controversial dispute settlement mechanism, is in line with the bloc's rules.

News in Brief

  1. EU warns Turkey as 'Gezi Park' trials begin
  2. EU universities to share students, curricula
  3. Migrant rescue ship loses Human Rights Court appeal
  4. Denmark completes social democrat sweep of Nordics
  5. Johnson offers 'do or die' pledge on Brexit
  6. Weber indirectly attacks Macron in newspaper op-ed
  7. EU to sign free trade deal with Vietnam
  8. EU funding of air traffic control 'largely unnecessary'

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  2. Nordic Council of MinistersNo evidence that social media are harmful to young people
  3. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  4. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  5. Nordic Council of MinistersEducation gets refugees into work
  6. Counter BalanceSign the petition to help reform the EU’s Bank
  7. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  8. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  9. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  10. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  11. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  12. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate

Latest News

  1. EU moves to end car-testing 'confidentiality clause'
  2. EU parliament gives extra time for leaders on top jobs
  3. Europe's rights watchdog lifts Russia sanctions
  4. EU-Vietnam trade deal a bad day for workers' rights
  5. EU 'special envoy' going to US plan for Palestine
  6. Polish judicial reforms broke EU law, court says
  7. EU study: no evidence of 'East vs West' food discrimination
  8. Russia tried to stir up Irish troubles, US think tank says

Join EUobserver

Support quality EU news

Join us