Greece, EU compromise in the works
Technical talks on Greek bailout to start after PM meets with official
Greece and its creditors in the 19-country eurozone made a breakthrough Thursday, agreeing to launch technical discussions on Athens’ demands to lighten the load of its bailout after weeks of acrimony.
Both sides made conciliatory moves at the summit of European Union leaders in Brussels, encouraging investors’ hopes that a deal will be reached to avoid Greece’s exit from the euro. Greece’s main stock market closed around 5.5 per cent higher.
“Europe always has been geared towards finding compromises,” said German Chancellor Angela Merkel. “Compromises are agreed when the advantages outweigh the disadvantages. Germany is ready for this.”
Merkel has faced a barrage of criticism in Greece for being the key cheerleader of the austerity policies that Greek Prime Minister Alexis Tsipras wants to consign to history. The Greek leader came to power last month on a promise to scrap the country’s bailout in favour of a new, lighter program.
For his part, Tsipras also seemed in a mood for compromise.
“We will need to find a solution that respects the positions of all parties, so this agreement will have to be based on the core values of Europe, democracy and the vote of the people, but also on the necessity to respect the European rules,” he said.
Despite the tensions surrounding their meeting, the two leaders exchanged warm greetings, holding each other by their elbows, and chatting amiably, if briefly.
The improved mood appeared to yield a breakthrough. Following a meeting with Jeroen Dijsselbloem, the head of the eurogroup of finance ministers, Tsipras has agreed to allow representatives from his government to meet Friday with those from the European Commission, European Central Bank, International Monetary Fund.
Simone Boitelle, spokesperson to Dijsselbloem, said the purpose of the talks is to see if any common ground exists between Greece’s current bailout program and the government’s proposals. The findings will inform Monday’s meeting of eurozone finance ministers, the last scheduled one before Greece’s bailout program expires after Feb. 28.
Tsipras and his radical-left Syriza party blame the current policies of budget austerity for choking Greece’s economy.
Despite a recent modest return to growth, the Greek economy is around 25 per cent smaller than it was before the crisis and poverty and unemployment have swelled. Greece is lumbered by huge debts, which stand at around 175 per cent of GDP, and it has repayments this year that it will have trouble meeting without outside help.
Tsipras wants Greece’s current bailout deal, which runs out at the end of the month, to be scrapped and replaced by a new one — a “bridging program,” according to
We will need to find a solution that respects the positions of all parties.
Greek Finance Minister Yanis Varoufakis. But a group of eurozone countries, led by Germany, insists that discussions can only proceed if the current bailout program is extended.
Without the bailout’s financial support, Greece faces bankruptcy — and a possible exit from the eurozone, a development that would damage Greece’s economy, at least in the short-term, and throw global financial markets into turmoil.
Tsipras said his government was willing to launch further structural reforms “against tax evasion, fighting against corruption, fighting against a state based on clientelism.” Those ambitions are likely to be welcomed by the more skeptical members of the eurozone. The question is whether it is enough to ensure a deal.