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EU looks at Plan B for Greece

από | 14 Ιούν, 2015 | ENGLISH | 0 Σχόλια

Euro Working Group starts thinking about implications if talks break down.

By , Politico, 

Greek Prime Minister Alexis Tsipras is sending send a delegation to Brussels Saturday with a new economic reform proposal to attempt to break the deadlock with creditors.

The Greek proposal include low primary surplus targets, no cuts to pension and salaries, and a public debt restructuring, according to a statement released late Friday night. It is similar to earlier versions that European creditors have rejected over the past two weeks.

The proposals come at the end of a week when a chorus of voices told Athens to take the negotiations seriously.

“We need decisions — not negotiations — now,” European Council President Donald Tusk told the Greek government in Brussels this week.

On Friday, Eurozone deputy finance ministers discussed a possible “Plan B” if the Greek debt talks fail, according to sources involved in the meeting.

The scenario debated by the Euro Working Group, which gathered in Bratislava Thursday and Friday, provided additional evidence that EU officials now view next week as the final chance for Greece and its international creditors to strike a deal to avoid a default and an exit for the eurozone.

Following a new and apparently fruitless round of talks between leftist Greek Tsipras and EU leaders in Brussels earlier this week, which resulted in the International Monetary Fund team withdrawing from technical talks over Greek economic reforms and heading back to Washington, some Greek ministers are getting the message: it’s now or never.

The Plan B talks focus on the potential implementation of capital controls in response to a bank run and how the negotiations between Greece and its creditors could move forward without a deal by the deadline of the second bailout package on June 30, the sources said.

Martin Jäger, chief spokesman for German Finance Minister Wolfgang Schäuble, said Friday that the departure of the IMF negotiators from the talks in Brussels should be read as a “wake-up call.”

His comments came a day after an IMF spokesman acknowledged that there remained “major differences between us in most key areas” and that “there has been no progress in narrowing these differences recently.”

Panos Kammenos, Greek defense minister and the leader of Syriza’s coalition partner, the Independent Greeks, said a deal must be reached by the meeting of eurozone finance ministers in Luxembourg next Thursday — “or never.”

“If by the end of the month a solution has not been found we will not pay the IMF,” Kammenos told Greek TV. “We are no longer in a position to pay interest on debt.”

Greece owes €1.6 billion in bundled payments to the IMF on June 30.

IMF Managing Director Christine Lagarde will travel to next week’s Eurogroup meeting, which represents the last practical chance for a deal before the extension to Greece’s second bailout package expires at the end of the month.

Miranda Xafa, a Greek economist formerly on staff at the IMF, who is a senior scholar at the Center for International Governance, told POLITICO: “This is the end game for Greece. Without agreement, we are staring at both domestic and external default.”

Considering the parliamentary processes in countries like Finland and Germany that must ratify any Greek deal on economic reforms to release further Eurosystem credits, the meeting next week is already late. A special session of the Bundestag would have to be called if a deal does not take shape at the start of next week — and would rankle already sour German lawmakers.

A new poll by German public television showed that a majority of Germans oppose any further concessions to Greece in negotiations. Only 41 percent of Germans want Greece to remain in the eurozone, according to the ZDF-Politbarometer, down from 55 percent at the beginning of the year. A majority of Germans (51 percent) want Greece to leave the euro and 70 percent don’t think European creditors should make any further concessions to the Syriza governments anti-austerity positions.

According to the German tabloid Bild, Angela Merkel’s government is preparing contingencies for a Greek government bankruptcy. “Nobody will be able to say that we didn’t give our everything,” a member of the German government told the newspaper.

Senior government officials in Athens, on the other hand, remain certain a deal is possible next week and that they will be able to get a majority in parliament to approve the reforms. Greek citizens appear eager for a deal. In a Greek Marc poll for Alpha TV this week, just 18.9 percent said they want to break with the eurozone while 77.4 percent of Greeks prefer the euro to the drachma.

On the Athens Stock Exchange, where bank stocks have lost more than 50 percent of their value since December, the gains made earlier in the week on hopes of a deal from Tsipras’ talks with Merkel, French President François Hollande and Commission President Jean-Claude Juncker have already been wiped out. But some analysts still see space for a deal next week.

“The IMF’s departure should therefore not be over interpreted: time is running short, yes, but there is still over a week for an agreement to emerge,” said Mujtaba Rahman of the Eurasia group. “In this very dynamic back and forth environment, that is a substantial amount of time.”

In a column for The New York Times, Greek Finance Minister Yanis Varoufakis rejected talk that his government is bluffing: “If anything, my game-theory background convinced me that it would be pure folly to think of the current deliberations between Greece and our partners as a bargaining game to be won or lost via bluffs and tactical subterfuge.”

But, he added: “We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must.”

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