Greece is racing to convince its worldwide creditors that it will deliver tough reforms- which include tax hikes, pension cuts and privatisations- in order to secure a cash-for-reforms deal and remain in the euro zone.
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France and others are pushing for a deal with Greece, while a group of sceptical countries led by Germany harbour grave reservations. Ahead of the referendum, the government had campaigned against the measures.
Merkel requires the assent of the German parliament to agree to the opening of loan negotiations.
But in a sign of division among the leaders, a draft document also included an option for Greece to temporarily leave the euro if no deal was agreed – a potential “time-out”.
“No one wants to see a North Korea in southeastern Europe”, a European Commission official said. I understand that, in fairness, the Greeks have applied for a programme. Accordingly, weak actors have no interest in being trustworthy either, since they do not anticipate that powerful actors will reciprocate their behavior.
Which is ironic, since a week ago, the Greeks voted against such sweeping austerity measures.
“In Ireland’s case, trust was only built with the troika through incremental analysis, and as a consequence payments when we have proven what we could actually do”.
European Commissioner for Economic and Financial Affairs, Pierre Moscovici, expressed hope that an agreement between Greece and its worldwide creditors could be reached by the end of the day, as he arrived at euro-zone talks on the Greek debt crisis in the Lex building in Brussels, Sunday.
The future of the euro is at stake – and that is concentrating minds. “We don’t want to look back in ten years’ time and have a situation where this could have been saved but wasn’t”. “If that succeeds we will have to see”.
“I think we have a very good proposal on the table; it has far-reaching conditionality”, Stubb said.
He said in a scale of 1-to-10, Greece and its 18 partners in the eurozone were only “somewhere between 3 and 4” when it came to any agreement.
The two sides negotiated for eight hours Saturday where Jeroen Dijsselbloem, the eurozone’s top official, says “the issue of credibility and trust was discussed”.
Athens’s creditors fear it will not keep its promises after two previous bailouts worth 240 billion euros merely added to a debt mountain, now worth almost 180 percent of the country’s gross domestic product (GDP).
Eurozone finance ministers said the leaders of the 19 European Union countries using the single currency would need to make further decisions on conditions for granting new funding to Greece at a summit meeting later on Sunday.
Finland has been one of Greece’s strongest critics.
A deal tonight could pave the way for a third bailout – but the process is fraught with uncertainty. Reports out of the country said the coalition government was balking at further assistance for Greece. But it was neither presented nor discussed at the meeting, attendees said, and it did not go down well at the meeting. Then Eurogroup finance ministers would meet again on Friday or at the weekend to formally launch the negotiations.
The ministers agreed in principle to seek ways to ease Greece’s debt burden by extending loan maturities and other steps stopping short of a “haircut” or writedown, provided Athens first implements key reforms of taxation, pensions, labour markets and public administration. Scicluna has just told reporters in Brussels.
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Meanwhile, Russian Federation says it is considering sending direct deliveries of fuel to Greece to help prop up its economy, as indicated by Energy Minister Alexander Novak, quoted by Russian news agencies.
