Wednesday

30th Nov 2022

Tsipras calls for EU summit as bailout talks halt

  • Tsipras "wants to secure that the terms of the July bailout agreement will be respected" (Photo: Consillium)

Greek prime minister Alexis Tsipras is asking for a summit over last year's bailout after talks with lenders were suspended on Tuesday (26 April) and an expected meeting of eurozone finance ministers on Thursday was cancelled.

Tsipras will call European Council president Donald Tusk later to request an emergency meeting of eurozone leaders.

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  • Tens of thousands of migrants stuck in Greece after Austria and Western Balkan states sealed borders (Photo: Nonviolent Peaceforce)

"He wants to secure that the terms of the July bailout agreement will be respected," a Greek source told Reuters agency.

Talks to conclude the first review of the bailout and unblock more than €5 billion resumed on Monday in Athens between Greek officials and representatives of the quartet of lenders - the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund (IMF).

They were stopped after only half an hour on Tuesday. As a result, a plan for eurozone finance ministers to meet on Thursday to approve an agreement was dropped.

Greek finance minister Euclid Tsakalotos said the reason was that the quartet's officials needed to consult between themselves and with their political authorities.

Discussions stumbled on how to secure contingency measures asked by the lenders in case Greek finances fare worse than expected in the future.

Highest political level

Greece's lenders, especially the IMF, want the Greek parliament to adopt a €3.6 billion package of austerity measures that would be implemented only if Greece missed its primary surplus target for 2018, set at 3.5 percent of GDP by the bailout memorandum signed last year.

The primary surplus is the budget surplus before the state has to repay interests on its debt.

The Greek government, which said legislating in advance was unconstitutional, has proposed to commit to take measures in the future if fiscal data approved by Eurostat show that the target will be missed.

A more political argument is that the quartet's request for a contingency package goes beyond what was agreed by eurozone leaders last July and then written down in the bailout memorandum of understanding signed in August.

That is why Tsipras, who always said he would do "nothing more and nothing less" than what was agreed last summer, is trying to push the discussion back to the highest political level.

A eurozone summit is however unlikely, as EU leaders have been willing to let their finance ministers deal with the Greek crisis. The leaders took over the talks last year only when a Greek exit from the eurozone became a real danger.

Debt repayment

Concluding the first review, which focused on pension and tax reforms before the contingency package came in the table, would help Greece to face a €3.5 billion debt repayment in July.

It would also open the way for a discussion on debt relief, one of Tsipras' main goals.

The difficulty for him is that the main supporter of debt relief is the IMF, which is also asking for the most austerity measures during the first review.

Tsipras and Taskalotos have already agreed to budget cuts worth €5.4 billion though pension cuts and tax hikes.

The additional contingency measures could prove difficult to get through parliament, where the Syriza-led government has only a three-seat majority.

As talks with the lender drag on amid an unprecedented humanitarian crisis due to the presence of thousands of refugees, rumours of a new election have been circulating.

Lenders press Greece to adopt conditional laws

New talks will take place on measures to be triggered if Greek finances are not good enough, in parallel with discussions on a review of Greek reforms and, for the first time, debt relief.

Greece to force 'moment of truth' for creditors

Greek prime minister Alexis Tsipras travelled to Paris, Strasbourg and Brussels to gather support ahead of a week when he wants to force an agreement on the country's bailout programme.

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