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Tsipras to Defend Bailout Proposal in Brussels Greece and Eurozone Send Positive Debt-Deal Signals
(about 4 hours later)
ATHENS — As Prime Minister Alexis Tsipras of Greece headed to Brussels on Wednesday for 11th-hour talks on a financial bailout for his country, an official in his Syriza party warned that Athens would not make a large loan payment to the International Monetary Fund on Friday unless a deal was reached. ATHENS — As Prime Minister Alexis Tsipras of Greece visited Brussels on Wednesday to compare his country’s debt-relief plan with one drafted by Greece’s creditors, there were signals from around Europe that the two sides might be edging closer to an agreement.
“If there is no prospect of a deal by Friday or Monday, I don’t know by when exactly, we will not pay,” Nikos Filis, the spokesman for Syriza lawmakers, said in an interview on Greek television. “It is a matter of a few days or even hours from a possible settlement,” President François Hollande of France said at a news briefing at the Organization for Economic Cooperation and Development in Paris. Mr. Hollande had spoken with Mr. Tsipras and Chancellor Angela Merkel of Germany on Wednesday afternoon by telephone in a conversation that Mr. Tsipras later called “constructive.”
The warning came as Mr. Tsipras faced a moment of truth in Greece’s long-running debt crisis. He planned to meet in Brussels with Jean-Claude Juncker, the president of the European Commission, to discuss proposals to try to unlock 7.2 billion euros, or about $7.9 billion. Greece and its creditors — the European Commission, the International Monetary Fund and the European Central Bank — worked on dueling proposals this week to try to end the stalemate. Earlier, the European Central Bank president, Mario Draghi, said in Frankfurt that the central bank wanted Greece to “stay in the euro,” and called for a “strong agreement” that “creates growth, and which is fiscally sustainable and addresses the remaining sources of financial instability.”
A deal appeared unlikely on Wednesday. While Mr. Juncker was expected to spend considerable time in the Brussels evening trying to persuade Mr. Tsipras to agree to a compromise, the European Commission did not “expect any final outcome tonight,” said Margaritis Schinas, chief spokesman for the commission. “This is a first discussion, not a concluding one.” One possible area for compromise, according to a Greek official, was relief on the amount of money Greece would be required to make available for debt payments — the so-called primary surplus — rather than being able to spend it to stimulate the economy.
Mario Draghi, the president of the European Central Bank, said on Wednesday that it was still unclear if a deal with Greece would be reached, and he warned that any agreement should promote “growth, social fairness and fiscal sustainability.” Mr. Tsipras was set to meet Wednesday evening in Brussels with Jean-Claude Juncker, the president of the European Commission, to discuss proposals to try to unlock 7.2 billion euros, or about $7.9 billion, of money from Greece’s existing international bailout program.
“There is a general will and strong determination that, in the end, an agreement will be found,” Mr. Draghi said at a news conference after the central bank announced its decision to keep the eurozone’s benchmark interest rate steady. That program is set to expire at the end of the month, and Greece’s creditors have been unwilling to release the funds unless Athens agrees to a set of revised economic policies meant to put it on a firmer financial footing in the future.
Members of the Syriza party have signaled fierce resistance to any deal that would impose further austerity measures on Greece. Some Syriza lawmakers have hinted in recent days that they might break into open dissent if Mr. Tsipras strikes a deal that they consider unacceptable. Greece and the creditors — the European Commission, the International Monetary Fund and the European Central Bank — have worked on dueling proposals this week to try to end the stalemate.
Greece needs to unlock the emergency financing to avoid a default. While Finance Minister Yanis Varoufakis signaled this week that Greece could meet the €300 million loan payment due to the I.M.F. on Friday, the country owes about €1.2 billion more to the fund this month. The Greek official, speaking on condition of anonymity as is the government’s policy, said Wednesday that Mr. Tspiras and the French and German leaders had agreed on the need for a quick solution. The statement also cited an agreement in principle on the key compromise on the economic overhauls. That involves the primary surplus, the amount of revenue that would be required to remain in Greece’s coffers after expenses have been paid and before servicing its debt.
Late Monday, Greece sent to Brussels its own proposal, which would seek to ease the austerity measures that creditors have required Athens to put in place in exchange for funding. At the same time, Greece’s creditors were working out the details of a separate plan that they want Greece to accept in exchange for fresh financing. Mr. Tsipras has argued that Greece’s creditors have been forcing Athens to keep its primary surplus amount too high, requiring large sums that should instead have been made available to stimulate the economy, which has slumped back into a recession. And so a compromise on that measure, if it comes, could represent a significant breakthrough in the talks. Although none of the parties were citing specific numbers, Mr. Draghi indicated on Wednesday that a lower primary surplus target might be acceptable.
While the terms that the creditors might offer to Greece have not been disclosed, European officials are unlikely to waver on several principles that could be difficult for the Greek government to accept. For all the brighter signs, however, no final deal appeared likely to be clinched on Wednesday night.
The creditors were expected to insist that Greece go back on campaign pledges to reverse cuts in pension benefits, part of the austerity measures outlined in previous bailout terms. The creditors are also expected to press Athens to maintain a so-called primary surplus — the amount of revenue in Greece’s coffers after expenses have been paid and before servicing debt — although at a lower level than they had previously required. The European Commission, the executive arm of the European Union, has been a crucial broker between Greece and the eurozone countries to it owes money. While the commission president, Mr. Juncker, was expected to spend considerable time Wednesday night trying to persuade Mr. Tsipras to come to terms, the commission’s chief spokesman, Margaritis Schinas, cautioned beforehand: “This is a first discussion, not a concluding one.”
Mr. Tsipras has argued that Greece’s creditors have been forcing Athens to keep its primary surplus too high, requiring large sums that should instead have been made available to stimulate the economy, which has slumped back into a recession. Mr. Tsipras still faces potential resistance to any debt deal from his own leftist Syriza party. A number of party officials have expressed exasperation over the perception that Mr. Tsipras may be softening his anti-austerity pledges in order to secure an agreement. Some Syriza lawmakers have hinted in recent days that they might break into open dissent if Mr. Tsipras strikes a deal that they consider unacceptable.
Mr. Schinas, the European Commission spokesman, declined to comment on news reports that Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, would participate in the meeting in Brussels on Wednesday. “Our role now is to mediate,” Mr. Schinas said, referring the European Commission. Nikos Filis, the spokesman for Syriza members of Parliament, said Wednesday morning that Athens would not make a large loan payment to the International Monetary Fund on Friday unless a deal was reached.
“This is an important moment,” he added. “We need to create the conditions that would allow the Eurogroup to come to a final agreement, and this final agreement has to be a unanimous agreement between all 19 members of the eurozone.” “If there is no prospect of a deal by Friday or Monday — I don’t know by when exactly — we will not pay,” he said in an interview on Greek television. “The government will do the best it can to bring to the people an agreement that will break the vicious circle of austerity and recession.”
The remarks may have been played mainly for a domestic audience. Earlier in the week, the finance minister, Yanis Varoufakis, said Greece would make good on the ¤300 million loan repayment due to the I.M.F. on Friday — although he, too, linked the promise of a payment to a debt deal’s being reached.
But the remarks in Athens underscored the fine line that Mr. Tsipras must walk between international compromise and his domestic obligations, as he negotiates a final deal.
As he headed to Brussels on Wednesday, Mr. Tsipras said: “We need unity, we must avoid division. I am confident that the political leadership of Europe will do what needs to be done. It will accede to realism.”
Mr. Hollande, the French leader, acknowledged in his news briefing that austerity had pushed Greece’s already feeble economy to the brink. But he also indicated that creditors would by no means give Greece additional emergency funding unless Athens took concrete steps to overhaul the economy and mend its tattered finances.
“To demand too much from Greece will prevent the return of growth,” Mr. Hollande said. “But asking for nothing or not enough would have consequences for the whole eurozone.”