Eurozone finance ministers seek Greek deal
Greece’s eurozone and IMF creditors remain locked in a tense stalemate over debt relief and budget targets
Brussels — Eurozone finance ministers will on Monday seek the outline of a deal to unblock bailout cash for Greece before fraught elections across Europe endanger a quick fix.
Greece’s eurozone and IMF creditors remain locked in a tense stalemate over debt relief and budget targets, spooking financial markets with fears of a return of the "Grexit" crisis.
Athens will soon need the latest tranche of the huge €86bn bailout agreed in 2015 so it can afford to repay €7bn in debt in July, or risk defaulting.
"We are more positive after various telephone calls this weekend between the Eurogroup president Jeroen Dijsselbloem, EU economic affairs commissioner Pierre Moscovici and Greek Finance Minister Euclid Tsakalotos and other ministers," a source said.
Greece said last week that it hoped for a "political agreement in principle" at the meeting of the Eurogroup of 19 eurozone finance ministers in Brussels.
A senior eurozone official involved in the talks said that the "best-case scenario" on Monday was a bare bones outline of a deal, with the tough choices left to negotiators who would return to Athens.
"It’s important to have a solution as soon as possible because the markets are starting to react," the official said in an interview.
German Chancellor Angela Merkel meets IMF chief Christine Lagarde and European Commission head Jean-Claude Juncker in Berlin on Wednesday, in hopes of making further progress. German Finance Minister Wolfgang Schaeuble said late on Sunday that he expected the IMF to continue participating in the bailout despite the lender’s doubts on the terms and Greece’s ability to meet them. "I think this will be achieved in the coming weeks."
The Europeans remain at loggerheads with the IMF over the Washington-based lender’s demands for easier budget targets and for debt relief for Athens
The Europeans remain at loggerheads with the IMF over the Washington-based lender’s demands for easier budget targets and for debt relief for Athens. The IMF insists that budget targets demanded of Greece by the Europeans are too ambitious.
But if the eurozone is going to stick with its plans, then the IMF has demanded what it sees as the necessary tax hikes and pension cuts to meet them before it will lend further to Athens.
Greece, led by leftist premier Alexis Tsipras, refuses the further tightening of the screws, calling it an unfair addition to what he has already delivered.
Meanwhile eurozone hardliners led by Germany refuse to back down on the IMF’s call for debt relief, while insisting at the same time that the IMF stays on board with the bailout.
The stakes could hardly be higher as the last such crisis, which followed Tsipras’s election, nearly saw Athens expelled from the euro.
A possible default by Athens is still some months off but fears are that a long series of elections, starting with the Netherlands in March and France in April, could delay matters dangerously.
Anti-EU candidates are leading polls in those elections and officials worry that Greece’s future could get ensnared in the campaigning. "Absent political agreement on Monday, a deal … is likely to drift until April or indeed May," said Mujtaba Rahman, an analyst at the Eurasia group risk consultancy.
The delay would worry already jittery markets. Greece’s two-year borrowing rates have risen as high as 10% in recent weeks, while France has also come under some pressure as investors seek safety in German assets.