Time is — once again — running out for Greece. This time the sticking point is a €7 billion tranche from its bailout program. Greece needs the money by July, but European officials had hoped to reach an agreement with the International Monetary Fund about the payment early next week, lest Greece’s debt crisis become an issue in the Dutch and French elections.
The mood in Brussels isn’t hopeful, the Financial Times reports. The expectation is that the creditors will miss their self-imposed deadline.
That would be especially unfortunate for the Dutch prime minister, Mark Rutte, who faces reelection in four weeks. He famously promised voters in 2012 that he would not support any more bailouts for Greece — but then he did. This is the worst possible time for him to be reminded of that broken promise.
There is no immediate risk of bankruptcy, let alone ejection from the eurozone, for Greece. But the closer we get to July, the more markets will worry and the more pressure will rise on lenders to hash out a compromise.
For the nth time, Greece is testing Europe’s patience by circumventing the spending commitments it made to qualify for financial support.
Surprised by a high budget surplus this year, the Greece prime minister, Alexis Tsipras, immediately vowed to use the money to fund free school meals for poor children, top up pensions for low-incomes retirees and freeze sales tax hikes on islands that are struggling to cope with refugees.
European Council president Donald Tusk has refused to call an emergency summit of government leaders to discuss Greece’s latest altercation with its creditors, maintaining that this must be resolved at the level of the finance ministers instead.
A day earlier, Jeroen Dijsselbloem, the Dutchman who chairs eurozone meetings, canceled just such a conference because he said there was no progress to discuss.
Greece has balked at implementing €3 billion in cuts to comply with the terms of its financial rescue package.
Alexis Tsipras, the Balkan nation’s far-left prime minister, sought to elevate discussion to the leadership level to circumvent Dijsselbloem as well as monitors from the International Monetary Fund who insist that Greece honor its agreements.
Are there another people in Europe so determined to shoot themselves in the foot as the Greeks?
Against all the advice of other euro states, they elected — twice — in recent years leaders who vowed to reverse what little progress had been made to liberalize the Balkan nation’s economy. Labor market reforms came undone last year. Privatizations were canceled or pushed back.
The country only agreed to sustain reforms in return for a third, €86 billion bailout this summer when it, once again, teetered on the brink of default.
Now promises have already been broken and targets missed. Greece is typically slow to implement the economic policy changes it commits to undertake. Yet there seems to be no holdup in policies that make things worse. Read more “Greece Continues to Drive Businesses Away”
Pensions are at the center of Greece’s latest dispute with its creditors.
The Greek Kathimerini newspaper reports that the International Monetary Fund’s managing director, Christine Lagarde, stressed to Prime Minister Alexis Tsipras during a recent meeting at the World Economic Forum in Davos, Switzerland that his government’s proposal for pension reform was inadequate.
The IMF jointly administers Greece’s €86 billion bailout with the European Union.
But Tsipras has said Greece won’t succumb to “unreasonable and unfair demands” and reportedly told Lagarde “there is no way” he can cut pensions for current retirees.
Greece pushed back the start of the privatization of the port of Piraeus this week for the third time in a month while Kathimerini reports that the country is once again trying to reduce its selloff targets in talks with creditors.
The far-left government of Prime Minister Alexis Tsipras argues that because it needs less money to recapitalize Greek banks than expected, it should also have to privatize less.
Greek prime minister Alexis Tsipras is expected to resign on Thursday and call early elections that should give him a fresh mandate to face off a rebellion inside his far-left Syriza party.
He doesn’t need one.
Tsipras got two mandates from Greek voters this year, the first in parliamentary elections in January when Syriza fell only two seats short of an overall majority and the second in July when his government overwhelmingly won a referendum on the terms of its last bailout. Read more “Tsipras Shirks Responsibility, to Call Early Elections”
European finance ministers were optimistic on Friday that a third bailout for Greece, worth €85 billion, could be finalized by the end of the day.
“I think that, at the end of this day, we will have a result,” Wolfgang Schäuble, the hawkish German finance minister, told reporters going into a eurozone meeting in Brussels.
His Finnish counterpart, Alexander Stubb, said he would be “very surprised” if there was no agreement tonight.
Both ministers took a hard line in negotiations with the Greeks for a third support package which is conditioned on liberal economic reforms and spending cuts that the far-left government in Athens previously opposed.
The Greek parliament approved the three-year plan in the early hours on Friday although 31 of Prime Minister Alexis Tsipras’ own Syriza delegates voted down the measures. Another eleven abstained. The bailout plan passed with support from the opposition
Syriza rebels are expected to split off at a party congress next month, likely triggering early elections. They blame Tsipras for capitulating to the demands of Greece’s creditors for comprehensive economic and judicial reforms despite winning January’s election on promises to cancel austerity and later getting 61 percent support in a referendum to reject the terms of the last bailout.
Other countries, especially in the north of the currency union, are skeptical that Tsipras will honor the conditions of the bailout when his more pro-European predecessors struggled to enact reforms in the last five years. In Germany, a fifth of Chancellor Angela Merkel’s conservative lawmakers voted against a third bailout. In Finland and the Netherlands, leaders had to break their election promises not to help the Greeks again.
Without a third aid package, Greece would have risked default and ejection from the eurozone.