Euro­pean fi­nance min­is­ters con­front Greece on its daunt­ing bailout deal

The China Post - - WORLD BUSINESS - BY ALEX PIG­MAN

Eu­ro­zone fi­nance min­is­ters on Mon­day meet for the first time since Greek vot­ers re-elected left­ist premier Alexis Tsipras, who now faces the daunt­ing task of im­ple­ment­ing the coun­try’s cash­for-re­forms bailout deal.

Re­turn­ing as Greek fi­nance min­is­ter is the dis­creet Eu­clid Tsakalo­tos who must hurry through a raft of re­forms agreed in July in re­turn for an 86-bil­lioneuro (US$96-bil­lion) res­cue, the coun­try’s third in five years.

The three-year res­cue pack­age came af­ter six months of ac­ri­mo­nious ne­go­ti­a­tions led by then­fi­nance min­is­ter Yanis Varoufakis, who so an­gered his 18 eu­ro­zone coun­ter­parts that Greece was left on the cusp of a hu­mil­i­at­ing evic­tion from the sin­gle cur­rency.

“Dif­fi­cult de­ci­sions lie ahead,” Prime Min­is­ter Tsipras warned law­mak­ers from his Syriza party on Satur­day, launch­ing a cru­cial week that sees a con­fi­dence vote in Greek par­lia­ment on Wed­nes­day.

The chal­lenge comes as the coun­try is also strug­gling to cope with a huge in­flux of mi­grants and refugees ar­riv­ing on its shores, mostly Syr­i­ans flee­ing civil war.

On re­turn­ing to of­fice on Septem­ber 25, Tsipras pledged to “quickly im­ple­ment” the terms of the EU bailout he ini­tially re­jected in an anti-aus­ter­ity ref­er­en­dum in early July, con­found­ing his Euro­pean part­ners.

His U-turn at a dra­matic sum­mit shortly af­ter split the Syriza party and forced Tsipras to step down, but he com­fort­ably won re­elec­tion last month with a pledge to soften the im­pact of the bailout.

Tsipras also promised to win debt for­give­ness, which Greece’s eu­ro­zone part­ners have ac­cepted in prin­ci­pal, though the talks to clinch a deal prom­ise to be dif­fi­cult.

“We need to quickly wrap (up) the first re­view, so that the in­dis­pens­able dis­cus­sion on the restruc­tur­ing of the debt can be­gin,” Tsipras said on Satur­day.

“Our main goal is to exit as soon as pos­si­ble the su­per­vi­sion and re­gain ac­cess to the for­eign mar­kets,” he said.

Aid, Banks and Debt

The first re­view of whether Athens is abid­ing by the strict bailout pro­gramme agreed to pull Greece back from the brink of eco­nomic col­lapse is due later this month.

At stake for the new gov­ern­ment will be the re­lease of a new 3-bil­lion-euro tranche of aid, a res­cue of Greek banks and the talks on slash­ing debt.

Sev­eral Euro­pean sources told AFP that the re­view would be de- layed, but this was not seen as an im­me­di­ate is­sue.

“It seems clear that this will be post­poned, no date is fixed,” a top Euro­pean diplo­mat said.

Another source added: “The first re­view I pre­sume will start in Oc­to­ber but not fin­ish in Oc­to­ber.”

The bailout in­cludes pro­vi­sions deeply op­posed by Greeks such as re­form­ing state pen­sions, tax in­creases on farm­ers, pri­va­ti­za­tions of state com­pa­nies, and free­ing up of closed mar­kets like phar­ma­cies.

In all, Greece’s par­lia­ment will have to pass 15 re­forms in Oc­to­ber alone.

A Euro­pean source said the re­cap­i­tal­iza­tion of Greece’s banks would be han­dled sep­a­rately from the tough­est part of the bailout re­view, which in­volves cut­ting pen­sions.

Up to 25 bil­lion eu­ros of Greece’s bailout are ear­marked for the re­cap­i­tal­iza­tion of the bank­ing sec­tor.

Of this, 10 bil­lion eu­ros is im­me­di­ately avail­able to be in­jected into the fi­nan­cial sys­tem once the Euro­pean Cen­tral Bank has as­sessed the fall­out of bank clo­sures suf­fered by Greece at the height of the cri­sis this sum­mer.

The so-called bank re­cap would take place by Nov. 15 in re­turn for fi­nan­cial sec­tor re­forms that are not con­sid­ered con­tro­ver­sial, the Euro­pean source said.

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