Saturday

19th Sep 2020

Creditors put more pressure on Greece

  • The EU and the IMF "have encouraged" Greece to "accelerate the work", Eurogroup president Jeroen Dijsselbloem said. (Photo: Council of the EU)

Two years after a crisis that led Greece to the brink of leaving the eurozone pressure from creditors is again mounting, this time to adopt austerity measures or see the end of the bailout programme.

Eurozone ministers have asked the Greek government to present measures ensuring budget targets set for 2018 and the following years will be respected.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • IMF's Poul Thomsen (l) and Delia Velculescu (r). The fund's presence is "not negotiable at this point".

EU finance commissioner Pierre Moscovici said after a Eurogroup meeting on Thursday (26 January) that a "global agreement" was needed, that includes "a mechanism to reassure all stakeholders about Greece's commitment for budgetary seriousness after the end of the programme".

These additional measures are required by the International Monetary Fund (IMF) as a condition to remain in the programme and were endorsed by the EU.

The IMF is also needed to conclude the second review of the programme, agreed in 2015, running until 2018. An agreement on the review would unlock a new tranche of financial aid for Greece.

Eurogroup president Jeroen Dijsselbloem said that the IMF's presence in the programme was "not negotiable at this point".

The creditor institutions - the IMF, the European Commission, the European Central Bank and the European Stability Mechanism - asked the Greek government to design further measures on the labour market, pensions and tax that would guarantee that it reaches 3.5-percent primary budget surplus required by the bailout programme.

"We have encouraged them to accelerate that work," Eurogroup president Jeroen Dijsselbloem said after the meeting, adding that "a quick finalisation of the second review is in everyone's interest". But Greece and its creditors did not make much progress on Thursday.

Greek finance minister Euclid Tsakalotos came to Brussels with two letters outlining proposals, but creditors said they were insufficient. As a consequence, the creditors' experts can still not go back to Athens to prepare the second review agreement.

About a third of the review's requirement have been dealt with and another third will be "in the coming weeks", Dijsselbloem explained, adding that "the last ones are always the hardest".

One roadblock, in addition to the extent of the measures demanded by the IMF, is whether the Greek government should pass them through parliament now to be implemented when needed, or just commit to acting on them if the deficit goes off track in 2018 or after.

'Not reasonable'

French minister Michel Sapin told journalists that asking Greece to legislate new austerity measures as a precondition was "not reasonable" because Tsipras was "politically not able to do that".

"It is legitimate to ask to describe what measures he [Tsipras] would take, but it is not useful and may be politically negative, to ask him to legislate," Sapin said, implying he was almost alone in making that point.

Moscovici told EUobserver that he hoped all parties would soon agree on the conditions of the mission's return to Athens, in order to prepare a deal for the next Eurogroup on 20 February.

EU officials are concerned that the February meeting is the last opportunity to find a political agreement before election campaigns in Netherlands, France and Germany this year.

Yet Greece is facing another deadline in July when a series of loan repayments come due.

The Greek government and its prime minister Alexis Tsipras are now under pressure.

Sources told EUobserver that all now depends on how Athens and the Washington-based institutions break the deadlock.

"It's mainly an IMF-Greece thing," an EU source noted, adding that EU institutions could not do much more in the meantime.

'Everyone must stay calm'

"It's up to Tsipras to realise that he cannot lose more time," an EU official said.

An official with knowledge of the talks admitted that the Greek PM was facing a low-intensity version of 2015 when he was almost pushed out of the eurozone after trying to change the conditions for the bailout.

Another official, also close to the discussions, said that even if negotiations with the IMF were hard, "everyone must stay calm".

The IMF is demanding more austerity measures because it says that the budget targets set by the bailout programme cannot be met and that the Greek debt will remain unsustainable. IMF rules don't allow it to participate in programmes in countries whose debt is unsustainable.

Greek debt will reach 160 percent of GDP in 2020, compared to 179 percent expected this year, but will become "explosive" after 2030, according to IMF documents leaked in Greek media during Thursday's Eurogroup meeting.

According to the 2015 programme, the second review should have been closed a year ago, but discussions on the first review, closed last May, and the current one have run late because of disagreements on additional austerity measures and debt assessment.

"You can copy-paste your articles and just change the day," a jaded diplomat said on Thursday.

Greece and creditors break bailout deadlock

Athens agreed on budget cuts worth up to €3.6 billion and extracted some concessions from creditors, but the IMF warned the package might not be enough.

Watchdog urges creation of EU bad bank

EU growth is being held back by more than €1 trillion of bad loans, its banking regulator said, comparing the eurozone to 1990s Japan.

Agenda

Pence, Greece and Brexit This WEEK

The US vice-president becomes the first senior Trump administration official to visit EU institutions. Greece's creditors try to break deadlock in talks, and British Lords will debate Brexit.

Opinion

Lenders seek to undermine Greek workers' rights

As focus turns to negotiations between Greece and lenders over a new loan package, both the European Commission and the International Monetary Fund seem determined to press for further reforms, undermining trade unions, workers' rights, and collective bargaining agreements.

News in Brief

  1. Belarus president puts army on EU borders
  2. US: Lebanese group hoarding explosives in EU states
  3. Russia loses EU sanctions appeal
  4. UK guidelines explain Brexit treaty-violation plan
  5. Over 10,000 corona cases a day in France
  6. Greek police move Moria refugees following fire
  7. WHO warns Europe not to cut 14-day quarantine period
  8. MEPs urge EU Council to 'finally' protect rights in Poland

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  2. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector
  3. UNESDAReducing packaging waste – a huge opportunity for circularity
  4. Nordic Council of MinistersCOVID-19 halts the 72nd Session of the Nordic Council in Iceland
  5. Nordic Council of MinistersCivil society a key player in integration
  6. UNESDANext generation Europe should be green and circular

Latest News

  1. Commissioner: No one will like new EU migration pact
  2. Buying an EU passport 'no use for evading sanctions'
  3. MEPs call for first-ever EU law on Romani inclusion
  4. EU to help draft Libya's strategy on border security
  5. Spain to recognise Kosovo if it gets Serbia deal
  6. Ylva Johansson on Migration and Drama Queens
  7. Does Erdoğan's long arm now reach Belgian universities?
  8. Biden threatens UK trade deal over Brexit shambles

Stakeholders' Highlights

  1. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  2. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  3. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  4. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  5. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis
  6. UNESDACircularity works, let’s all give it a chance

Join EUobserver

Support quality EU news

Join us