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24th Feb 2024

Eurogroup keeps alive hope of Greek deal

  • Greek Finance minister Yanis Varoufakis and Eurogroup president Jeroen Dijsselbloem recognised progress in talks but an agreement remains elusive (Photo: Consillium)

As was widely expected, Monday’s (11 May) Eurogroup meeting produced no agreement to unblock the last tranche of Greece’s bailout but there was cautious optimism that a deal could be in reach.

In their final statement, the Eurozone finance ministers "welcomed the progress that has been achieved so far".

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But they added "that more time and effort are needed to bridge the gaps on the remaining open issues" and expressed hope that an agreement could be reached "in a timely fashion".

Greece was only one item on the meeting’s agenda and discussions proved less contentious than the previous Eurgroup on 24 April.

"The discussion was rather short with no controversy and no lyrical flight," a source with knowledge of the talks said.

The official said that German Finance minister Wolfgang Schaeuble, one of Greece’s harshest critics, did not speak when Greece was discussed.

"Important issues were discussed in depth, but more time is needed to bridge the gap," Eurogroup president Jeroen Dijsselblome said at a press conference.

Progress was made on harmonisation of VAT rates, the creation of an independent agency to manage state revenues and the management of the so-called non-performing loans - loans which are not repaid.

"We should not underestimate this progress, which is important, precise and welcome," EU finance commissioner Pierre Moscovici said after the meeting.

But differences remain over pensions and labour market reforms which have been designated for long as "red lines" by the Greek government.

"Greek authorities are very clear about what they do not accept, but they have to bring propositions forward," Moscovici said.

With six and a half weeks before the end of the current bailout programme, Eurogroup leaders said both time and Greek finances were running short.

The Greek government has tried to ease fears over a default and repaid a €750 million tranche to the IMF one day before it was due. But concerns are growing about the state of Greek finances as Athens seeks to secure the €7.2bn loan.

"Hopefully we will get that agreement before the time runs out or the money runs out," said Dijsselbloem.

Greek Finance minister Yanis Varoufakis Monday admitted that the "liquidity issue is terribly urgent".


He also said that "of course" the Greek government would have to abandon some of the promises the governing Syriza party made during the electoral campaign.

But he insisted that, despite the growing danger of bankruptcy, the government would "not be compromised".

Varoufakis explained that the Greek government would accept an agreement once "two fundamental questions are answered".

The first question is whether the potential deal can end the deflationary cycle of the Greek economy.

The second question is "whether is it going to be a redistribution of the burden of the crisis" from the poorest Greeks to the richest and whether a deal "would be embraced by a population that for five years has associated reforms with cutbacks".

Referendum

Alexis Tsipras’ government is under pressure from hardline backbencher not to compromise and it is still supported by a majority of the Greek public opinion, although less strongly than before.

Recently there has been talk of holding a referendum on any agreement - something the German finance minister said should happen if needed.

"If the Greek government thinks it must hold a referendum, let it hold a referendum," Schaeuble said.

"It might be a helpful measure for Greece to decide whether it's ready to accept what is necessary, or whether it wants something different," he added, suggesting the Greek government would take the responsibility of a possible exit from the Eurozone if it did not accept a compromise.

Dijsselbloem, for his part, warned that a referendum would block any cash pay-out for Greece

Meanwhile, an EU diplomat told this website: "A referendum would be a way to rein in the Syriza majority, but there is not enough time to do that and it would cost money."

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