Creditors, Greeks fail to see eye to eye
Athens set to default next week
GREECE’S international creditors put a final cash-for-reform proposal to euro zone finance ministers yesterday in a showdown with Athens after lengthy negotiations failed to yield an agreed plan to avert an imminent default.
Defiant Greek ministers said they would stick to their own proposals, based largely on increases in tax and social contributions, which the country’s lenders say would not raise enough revenue to plug a gaping budget hole.
“The decision lies exclusively with the Greek authorities. They have, however, rather gone backwards,” German Finance Minister Wolfgang Schaeuble said on arrival for the second emergency Eurogroup meeting in less than 24 hours.
Without a deal by the weekend to unlock frozen aid, Greece, which has received two bailouts worth € 240 billion (about R3 trillion) since 2010, is set to default on a crucial repayment to the International Monetary Fund (IMF) on Tuesday. That could trigger a bank run and capital controls, setting the country on an uncharted path out of the 19 nation euro zone and damaging the European monetary union.
After five months of acrimonious negotiations, the heads of the European Commission, European Central Bank and IMF gave leftist Prime Minister Alexis Tsipras an ultimatum to offer a credible reform plan by mid-morning yesterday, saying they would otherwise send their own version to the Eurogroup.
Greece let the deadline slip, saying it stood by proposals it had submitted on Monday with some modifications. They included restoring an exemption from VAT for Greek islands, as demanded by Tsipras’s coalition partners.
Eurogroup chairman Jeroen Dijsselbloem said: “The only thing we have presented to the Eurogroup is what the institutions have made together. We don’t have an agreement from the Greeks on that, so we will have to hear in the Eurogroup meeting what their ideas are.”
The dramatic move came hours before EU leaders met in Brussels for a summit on migration, the long-term future of the euro zone and renegotiating Britain’s membership terms, which has been overshadowed by the Greek debt crisis.
Tsipras left European Commission headquarters smiling after three hours of meetings, but made no comment. Diplomats said the lenders’ tactics reflected exasperation at his refusal to compromise on key reforms of pensions, labour markets, wages and taxation, which cross his Syriza party’s self-declared “red lines”.
Finance Minister Yanis Varoufakis arrived at the Eurogroup meeting carrying a set of hand-written talking points. They included: “Significant savings in pensions; closing early retirement risks; higher social security contributions; Harmonising contributions.”
Greek officials said the government had compromised on its red lines by offering to raise taxes and pension deductions. They said the lenders kept revising downwards estimates of how much each measure proposed by Greece could raise, making it difficult to come up with an acceptable offer. – Reuters
The decision lies exclusively with the Greek authorities. They have, however, gone backwards.