Alexis Tsipras seeks interim deal for Greece in talks with Angela Merkel
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Version 0 of 1. Greece’s increasingly desperate financial state was highlighted on Thursday when the country’s prime minister, Alexis Tsipras, urged the German chancellor, Angela Merkel, to use her influence to speed up deadlocked negotiations over a new aid package. Amid signs that the long-running talks between Athens and its creditors are having a dampening effect on the eurozone economy, Tsipras used a meeting with Merkel in Brussels to seek an interim deal by the end of the month that would provide money in return for a Greek commitment to reform. The conversation between Tsipras and Merkel came on the fifth anniversary of Greece’s first call for a financial bailout, and raised hopes in the financial markets that a deal can be done before the stricken eurozone country runs out of money to pay pensions, salaries and debts to the International Monetary Fund. Shares in Athens rose by 2.4% after falling to a three-year low on Wednesday while interest rates (the yield) on two-year Greek bonds fell from 27.6% to 25.5%. A Greek official said the meeting between Tsipras and Merkel had taken place in a “positive and constructive atmosphere” and expressed confidence that a deal was close. The official gave no details of the discussion but said: “During the meeting, the significant progress made since the Berlin meeting until today was noted. The prime minister asked that the procedures be speeded up so that the 20 Feb decision, which foresees a first interim agreement by the end of April, be implemented.” An interim deal would give Greece some of the money it needs to meet its €2bn (£1.4bn) wages and pensions bill on 30 April, and to make two payments to the IMF totalling €970m in early May. Related: Greece can still put together finance deal before money runs out, eurozone says But the mood among European commission officials was less upbeat, with Brussels sources saying that the refusal of Athens to provide information meant little real progress had been made. It had been hoped that finance ministers from the 18-strong eurozone would sign off a new package of help for Greece when they meet in Riga on Friday. That, though, has proved impossible, prompting speculation that Greece is moving closer to a debt default that could lead to its departure from the eurozone. The European commission and the European Central Bank have been expressing confidence that there would be no serious consequences from a Greek exit from the single currency. But the latest snapshot of the eurozone economy provided evidence of a slowdown in activity, which analysts blamed on the protracted Greek crisis. Jessica Hinds, a European economist at Capital Economics, said: “April’s fall in the eurozone composite PMI suggested that fears over Greece might already be starting to dampen economic growth in the region, offsetting any boost from loose monetary policy and the weakness of the euro. “The decline in the headline economy-wide output index from 54.0 to 53.5 was in contrast to the consensus and our own expectation of a small rise. The fall reflected declines in both the manufacturing and services components.” Failure to reach an agreement in Riga means the next meeting of the euro group of finance ministers on 11 May is now being seen as the make-or-break date. In Athens, some leading politicians expressed concern about the lack of progress. Kostas Chrysogonos, the prominent Syriza MEP, said a referendum may be the only way out, telling Mega TV that if the talks fail by the cutoff date of 11 May, a plebiscite should be immediately put to the Greek people. Athens’s leading negotiator, Nikos Theoharakis, expressed further pessimism, telling reporters in Paris that “the distance between the two sides” was so great only a “political solution” could yield results. Meanwhile, Antonis Samaras, Tsipras’s predecessor as prime minister, warned that Greece had reached a “dead end” and urged the government to reach a deal with its creditors. “The government has fooled society. At this point it has to clash either with our creditors, or with itself … The country is isolated. If the government does not pay, Grexit returns. There must be a deal.” |