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27th Nov 2022

Tsipras in Brussels, as markets fret

  • Markets began to fall less than one hour after Tsipras' tweet (Photo: europarl.europa.eu)

EU markets fell on Wednesday (24 June) morning following a tweet by the Greek PM saying creditors had rejected his latest proposal.

Tsipras tweeted at 11.32am local time: “The repeated rejection of equivalent measures by certain institutions never occurred before - neither in Ireland nor Portugal”.

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He said, in a follow-up: “This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed”.

The Athens Stock Exchange index fell 3.6 percent by 1pm, following a 15 point rally earlier in the week. The spread on German and Greek bonds also increased.

In London, The Stoxx Europe 600 Index in London fell 0.5 percent. Portugal’s PSI 20 Index also went down 1.7 percent.

But markets later recovered some of the losses on news the talks remain ongoing.

Tsipras arrived in the EU capital at lunchtime to meet with the heads of the three creditor institutions: Jean-Claude Juncker of the European Commission, the European Central Bank's Mario Draghi, and the IMF's Chrstine Lagarde.

He said, while entering the commission HQ: “This is a time for a substantial deal that would allow Greece to come back to growth, within the eurozone, and with social justice and cohesion”.

Finance ministers from centre-right EPP group, including Germany’s Wolfgang Schaeuble, will also meet in Brussels later in the day, prior to a full-blown euro-ministers’ talks in the evening.

But with Germany and Greece trying to save face by adopting tough positions, the negotiations are expected to culminate at an EU summit on Thursday.

For its part, the EPP group in the EU parliament also held a “heated” discussion on Wednesday morning.

The feeling in EPP circles is that Greek people should be more grateful that EU taxpayers have been, de facto, paying Greek public sector wages and Greek pensions since 2010.

There is concern that if Germany makes too many concessions, the Bundestag will reject the deal on grounds that Germany won’t get its money back.

But there is also concern that if Tsipras bends too far, he will face a rebellion by far-left hardliners in his Syriza party.

Tsipras’ market-shaking tweets referred to Greek proposals, filed on Monday, which promised to: cut early retirement; raise VAT; increase income tax for high-earners; and introduce a new corporate tax.

Signs from creditors on Monday and Tuesday indicated the package, worth €8 billion, isn't good enough in terms of repaying lenders, especially the IMF.

But the Tsipras tweets amounted to confirmation that there’s no deal yet, with the clock ticking to a Greek default on an IMF repayment on 30 June.

The creditors also filed new proposals on Wednesday.

For his part, Greek labour minister Panagiotis Skourletis said in an interview on state-run radio the same day that the IMF doesn’t accept tax hikes for high-earners only.

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