Tuesday

11th May 2021

Eurozone slams door on Greek hopes

  • The responsibility lies mainly on the side of the Greek authorities, according to ECB president Draghi and euro-group president Dijsselbloem. (Photo: consilium.europa.eu)

Greece is no closer to agreeing a new deal with its eurozone creditors after the latest round of talks broke up acrimoniously, with one fellow minister describing the meeting as a ‘complete communication breakdown’.

Greek finance minister Yanis Varoufakis was on the receiving end of heavy criticism at a meeting of eurozone finance ministers in Riga. The meeting broke up on Friday lunchtime (24 April) without agreement on an economic reform package that would allow the remaining €7.2 billion of Greece’s bailout programme to be paid out.

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  • Greek finance minister Yanis Varoufakis put on a more positive front, telling reporters that the negotiation process had converged in recent weeks.

Speaking following the meeting, Dutch finance minister Jeroen Dijsselbloem, who chairs the Eurogroup, warned that “a comprehensive and detailed list of reforms” was needed before any further money would be distributed. “It was a very critical discussion and reflected the urgency of the situation,” he added.

But Dijsselbloem could not hide his frustration with Alexis Tsipras’ government, which was elected in January on a platform of ending the austerity policies that many Greeks blame for its economic turmoil.

“We are all aware that time is running out. Too much time has been lost in the past two months. It is therefore clear that these discussions need to make significantly more progress,” said Dijsselbloem, who added that “the responsibility for that lies mainly on the side of the Greek authorities.”

“We had hoped to hear a positive result and an agreement, so we could take a decision.....and we are still far from that.”

For his part, EU economics commissioner Pierre Moscovici also called on Greece to “accelerate” the reform process.

“I would describe today’s meeting as a complete breakdown in communication with Greece,” Maltese Finance Minister Edward Scicluna told reporters after the meeting.

Ministers will next meet on 11 May.

Meanwhile, European Central Bank chief Mario Draghi also piled on the pressure, warning that the bank could impose tougher collateral requirements on Greek banks if the crisis deepens.

“The higher are the yields, the bigger is the volatility, the more collateral gets destroyed,” he commented.

The ECB has more than doubled its exposure to Greek debt from €50 billion to €104 billion since December, equivalent to almost two thirds of the country’s annual economic output. Meanwhile, Greek banks, which have been losing around €1 billion per day in deposits for the last three months, are reliant on the €75 billion of emergency liquidity assistance currently provided by the ECB.

However, Greek finance minister Yanis Varoufakis put on a more positive front, telling reporters that the negotiation process had converged in recent weeks.

Brokering an agreement would be difficult but there was “no other option,” he said.

He also raised the prospect of a “partial disbursement” of the funds in return for a “narrower list of reforms”, although this was rejected by Dijsselbloem.

The most recent reform offer from Tsipras was a 26-page document proposing a raft of tax increases aimed at boosting treasury coffers by between €4.6 billion and €6.1 billion, alongside an extra €1.1 billion in spending commitments, most of which comes from increases to state pensions.

Tsipras asks for quick deal

The Greek PM met with Angela Merkel and Francois Hollande Thursday to try to shore up political support in talks with the country's lenders.

Analysis

Sidelining Varoufakis is Tsipras' wild card

Isolated in the eurogroup and less popular at home, the Greek finance minister will no longer be in sole command of negotiating with lenders.

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