Tsipras sees happy end to debt talks

But EU says no breakthrough on Greece’s ‘red lines’

GREEK Prime Minister Alexis Tsipras forecast a happy end soon to fraught negotiations with creditors on a cash-for-reform deal, and the chairman of eurozone finance ministers said talks were making progress, though not enough for a deal tomorrow.

However, with Greece’s cash reserves dwindling, EU officials said there was no breakthrough in talks with the IMF, the European Commission and the European Central Bank on sticking points such as pension and labour market reforms and budget targets.

“The organisation and structure of the talks have improved, compared to what it was before, but we are still quite some way away from a situation that you could describe as a final agreement being well in sight,” a senior eurozone official said.

Greece’s leftist-led government, which was elected earlier this year on promises to end austerity policies, has dragged its feet on accepting unpopular reforms promised by a previous government under the country’s EU-IMF bailout programme.

Greece faces the risk of defaulting on debt repayments and being forced out of the eurozone, but negotiations have moved so slowly that the lenders have ruled out an agreement at tomorrow’s meeting of eurozone finance ministers.

Tsipras, who has taken personal charge of the negotiations, told parliament in Athens: “I am confident that we will soon have a happy ending and that despite the difficulties . . . we will carry out the agreement which will be concluded soon in Europe.”

He said his government was “doing whatever it should in order to reach . . . an honest and mutually beneficial agreement with our partners”, but gave no indication of yielding on the lenders’ core demands for painful reforms.

The government has said its “red lines” are that it will not make further pension cuts or legislate to ease layoffs in the private sector. It has given some ground on privatisations and VAT, but gaps remain.

Eurogroup chairman Jeroen Dijsselbloem said tomorrow’s meeting would not be decisive, but negotiations were moving forward. Greece’s partners would consider debt relief only once Athens had committed to, and completed, its current bailout programme, he said.

EU officials said they were keen for the Eurogroup to send a positive message tomorrow that a deal is in the works and avoid another clash with Greek Finance Minister Yanis Varoufakis like the one at a meeting in Riga last month.

“I cannot exclude that ministers will issue a statement, but if it appears, it is likely to be anodyne, taking stock, et cetera,” the senior eurozone official said.

That would not be enough to prompt the ECB to allow Greek banks on emergency liquidity support to buy more short-term Treasury bills to ease the government’s funding crunch.

The official said Athens had easily enough money left to pay a crucial à750million (R3.347-billion) debt instalment to the IMF on Tuesday and meet other payment obligations this month.

Another EU official said it was essential to reach a deal by month-end to allow time for some parliaments to approve the agreement and authorise disbursement of à7.2billion left in Greece’s existing bailout, which expires at the end of June.

ECB policymaker Ewald Nowotny said restricting cash withdrawals from Greek banks and the movement of capital might be needed if the talks failed. “They can be applied only in very special circumstances,” the Austrian central bank chief said, citing the example of Cyprus.

As so often since the eurozone’s debt crisis began in 2010, much hinges on the position of Germany, the EU’s main paymaster and Greece’s biggest creditor nation. Tsipras had spoken by phone to Chancellor Angela Merkel several times this week, a German government spokeswoman said, most recently on Wednesday.

A source briefed on German government thinking said Merkel was willing to take a deal to continue financial support for Greece to an increasingly sceptical German parliament provided Tsipras made serious commitments on reform.

The source said Finance Minister Wolfgang Schäuble and a growing number of legislators in Merkel’s conservative Christian Democratic Union party were sceptical about Greece’s ability to stay in the eurozone.

Another hurdle may lie in Finland, where the head of a Eurosceptic party who has agreed to enter a governing coalition said it would make sense for Greece to leave the eurozone. Timo Soini, leader of the Finns Party, when asked if he would like to see Greece thrown out, said: “That would perhaps be the clearest option for everybody, also for the Greeks.”—