Sunday

26th May 2019

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 18 year's of archives. 30 days free trial.

... or join 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. Former EU climate chief cheered by 40,000 activists in Denmark
  2. UK's May announces June 7 resignation date
  3. Ireland votes for EU election and divorce referendum
  4. Report: May to announce resignation plan on Friday
  5. Leading politicians: time for EU to have female leaders
  6. Poll: Finland's Green party to surge in EU elections
  7. High demand for postal voting in Denmark
  8. Some EU citizens turned away at UK polling stations

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. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Latest News

  1. Thunberg: We can still fix climate, but must start today
  2. Turnout up in Slovakia, with pro-EU liberals scoring high
  3. Belgium votes in hybrid EU-national election
  4. Irish greens take Dublin in second EU exit poll
  5. EU election results to trigger top jobs scramble This WEEK
  6. Don't tell the Dutch - but Timmermans 'won'
  7. EU says goodbye to May with 'respect'
  8. Strache scandal: how big a hit will Austrian far-right take?

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us