Tuesday

26th May 2020

Greece and lenders discuss last details of deal

  • Greece and lenders still have thorny problems on pensions and VAT (Photo: YoungJ523)

Wednesday night's meeting between Alexis Tsipras, Jean-Claude Juncker, and Jeroen Dijsselboem has raised optimism there’ll soon be an agreement.

But thorny issues, such as pensions and VAT, remain to be settled, while Greece keeps moving the goalposts.

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The talks, which ran past midnight, discussed the final details of a deal between Greece and its creditors.

The date of the next meeting is unclear.

"It should be Friday, get some rest," European Commission spokespeople told reporters.

But on Thursday evening, the International Monetary Fund (IMF) said Greece planned to bundle its four June repayments, a total of €1.6 billion, into one due on 30 June.

This new deadline, which is also the end of the current bailout plan, makes Greek need for fresh cash less urgent and should give more time to close a deal.

Meanwhile, the sense of optimism comes after the Tsipras-Juncker-Dijsselbloem talks were described by all concerned as "constructive".

"The most positive thing about the meeting was the atmosphere," an EU source told EUobserver, adding that, for the first time, EU leaders felt Tsipras is ready to compromise.

"Things are going to change" in Athens, a source told this website. "Tsipras will impose his will [on his party]” and accept a compromise "even if negotiations go on for a while".

The talks in Brussels were "successful in narrowing down the remaining issues”, but divergences "are still quite large", the Eurogroup head, Dijsselbloem said.

The proposal sent by the Greek government to its creditors on Tuesday and the creditors’ plan put forward to Tsipras on Wednesday were leaked to Greek media, showing a gap on issues such as pensions, VAT, and budgetary primary surplus.

The easiest issue to solve will be the primary surplus, as both sides are proposing progressive targets lower than the current targets required by the former troika (officials from the EU, the European Central Bank and the International Monetary Fund, or IMF).

Thorny issues

Pension and VAT are the trickiest.

After his meeting with European Commission chief Juncker and Dijsselbloem, Tsipras warned that "proposals such as abolishing the supplementary pensions of low-pension retirees or increasing VAT on electricity by 10 percentage points are proposals that cannot constitute a basis for discussion."

On VAT, the leaked papers show that creditors demand a unified 23 percent rate, while the Greek government wants to keep three different rates between 6 percent and 23 percent.

On pensions, according to the leaked paper, Greece's lenders demand savings of up to 1 percent of GDP next year, "strong disincentives to early retirements, including by adjusting early retirement penalties" and the phasing out of a solidarity grant for all pensioners.

In its proposal, the Greek government is ready to accept a "progressive adaptation of the early retirement rules to the limit of 62 years”, but refuses to agree that "vested pensions rights are affected".

According to the leaked document, the Greek government is also considering a restructuring of its debt to the IMF, which would be repaid in two phases before March 2016.

But the issue of the debt is not formally part of the current talks to unblock the last €7.2 billion tranche of the bailout agreed in 2012.

A teleconference of the Eurogroup at a technical level was held on Thursday afternoon "to focus on the outstanding issues and clear the way for a deal", an EU source told EUobserver.

Phone negotiations between Germany's Angela Merkel, France's Francois Hollande and Tsipras are also expected.

Varoufakis idea

For his part, in an article published on the Project Syndicate website, Greek finance minister Yanis Varoufakis suggested another idea.

"A 'Speech of Hope' for Greece would make all the difference now," he wrote, referring to a speech addressed to Germany by the US Secretary of State in 1946.

"Who should deliver it? In my mind, the speaker should be German chancellor Angela Merkel, addressing an audience in Athens or Thessaloniki or any Greek city of her choice."

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