Merkel takes bull by the horns

Chan­cel­lor push­ing for re­view con­clu­sion for Greece to join QE, but Athens must agree to mea­sures

Kathimerini English - - Front Page -

Kathimerini un­der­stands that Ger­man Chan­cel­lor An­gela Merkel is pre­pared to do what­ever it takes to con­clude the sec­ond re­view of Greece’s third bailout so that it can join the Euro­pean Cen­tral Bank’s quan­ti­ta­tive eas­ing pro­gram (QE), on the con­di­tion that the gov­ern­ment agrees to a pack­age of pen­sion cuts and a re­duced tax thresh­old – amount­ing to roughly 2 per­cent of GDP.

Ac­cord­ing to sources, Merkel has, to this end, al­ready seized the ini­tia­tive and met with ECB head Mario Draghi.

The Ger­man chan­cel­lor is also ex­pected to by­pass any ob­jec­tions that may be raised by her fi­nance min­is­ter, Wolf­gang Schaeu­ble, and will push for a spe­cific out­line of what midterm mea­sures for debt re­lief will look like – once Greece agrees to mea­sures de­manded by the In­ter­na­tional Mon­e­tary Fund.

Draghi, as well as ECB ex­ec­u­tive board mem­ber Benoit Coeure, have al­ready made it clear that Greece can only join the QE mech­a­nism if it con­cludes the re­view, and midterm mea­sures for debt re­lief are in place – which is some­thing that, so far, Schaeu­ble has op­posed.

Merkel’s plan stip­u­lates that af­ter a staff level agree­ment is reached, the Greek Par­lia­ment will vote through the mea­sures. When this is done, the specifics of the debt re­lief mea­sures will be pre­sented as a car­rot to Athens. This will open the way for it to join the QE scheme and the IMF to re­join the Greek pro­gram.

Mean­while, gov­ern­ment min­is­ters and ex­perts re­sumed talks with Greece’s lenders in Athens yes­ter­day.

The ne­go­ti­a­tions seek to break the months-long dead­lock, stem­ming pri­mar­ily from the in­abil­ity of the Euro­pean Union and the IMF to agree over Greece’s fis­cal goals be­yond 2018, when the cur­rent bailout pro­gram ex­pires.

“To­day we will be ex­am­in­ing the fis­cal gap and any steps which should be taken af­ter 2018,” a gov­ern­ment of­fi­cial said yes­ter­day.

The im­passe in the talks has reignited fears of an­other fi­nan­cial cri­sis – along the lines of 2015 – ahead of elec­tion races in the Nether­lands, France and Ger­many.

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