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Greece nearing compromise deal on EU debts, says Alexis Tsipras Greece nearing compromise deal on EU debts, suggests Alexis Tsipras
(35 minutes later)
The Greek leader, Alexis Tsipras, indicated on Sunday evening that his negotiating team was nearing a compromise deal to avert Athens defaulting on its debts and being dumped out of the eurozone.The Greek leader, Alexis Tsipras, indicated on Sunday evening that his negotiating team was nearing a compromise deal to avert Athens defaulting on its debts and being dumped out of the eurozone.
After a weekend of intense talks with EU officials in Brussels, the final bid to keep Greece afloat will boil down to a tug-of-war deal over the country’s staggering debt load, which Athens has insisted be cut as the price for further cuts in public spending.After a weekend of intense talks with EU officials in Brussels, the final bid to keep Greece afloat will boil down to a tug-of-war deal over the country’s staggering debt load, which Athens has insisted be cut as the price for further cuts in public spending.
Politicians instructed by the radical left prime minister to fight Athens’s corner, in what is being billed as the very last chance to cut a deal, will press for debt relief in exchange for concessions demanded by international creditors. Politicians instructed by the radical left prime minister to fight Athens’s corner, in what is being billed as the very last chance to cut a deal after five months of fruitless talks, will press for debt relief in exchange for concessions demanded by international creditors.
“If we have a viable agreement, no matter how difficult the compromise we will bear the burden,” a statement quoted the leader as telling his closest aides. “If we have a viable agreement, no matter how difficult the compromise, we will bear the burden,” a statement quoted the leader as telling his closest aides.
Barely two weeks remain before Greece’s bailout accord expires on 30 June with lenders at the EU, European Central Bank and International Monetary Fund setting a meeting of euro group finance ministers on Thursday as the cut-off date for an agreement to be sealed. Greece’s bailout accord expires on 30 June with lenders at the EU, European Central Bank and International Monetary Fund setting a meeting of euro group finance ministers on Thursday as the cut-off date for an agreement to be sealed.
A deal – almost certain to be an extension of the current programme – would release more than €7bn in bailout funds the country now desperately needs to avoid defaulting on loans to the IMF this month and the ECB over the summer. Creditors have refused to disburse loans since August last as both sides have wrangled over reforms.A deal – almost certain to be an extension of the current programme – would release more than €7bn in bailout funds the country now desperately needs to avoid defaulting on loans to the IMF this month and the ECB over the summer. Creditors have refused to disburse loans since August last as both sides have wrangled over reforms.
But a gesture on the ever-contentious issue of Athens’s debt would also allow Tsipras to sell a deal to hardliners in his Syriza party – catapulted into power in January on a pledge to end five gruelling years of “”self-defeating” austerity – and Greeks at large. At more than €320bn – the equivalent of 180% of the country’s entire economic output – Greece has the highest debt-to-GDP ratio in the EU with economists far and wide agreeing it is unsustainable.But a gesture on the ever-contentious issue of Athens’s debt would also allow Tsipras to sell a deal to hardliners in his Syriza party – catapulted into power in January on a pledge to end five gruelling years of “”self-defeating” austerity – and Greeks at large. At more than €320bn – the equivalent of 180% of the country’s entire economic output – Greece has the highest debt-to-GDP ratio in the EU with economists far and wide agreeing it is unsustainable.
Signalling that debt was now the name of the game, Tsipras’s close ally and minister of state, Nikos Pappas, insisted that resolution of the vexed issue was now vital to reaching a viable agreement at a political level given that the medicine prescribed so far had failed so dramatically. In the five years since the debt crisis erupted – forcing the country out of international markets and the then socialist government to request emergency loans from the EU and IMF – the Greek economy has suffered a depression-era contraction as it has implemented painful budget cuts in exchange for the financial assistance. Signalling that debt was now the name of the game, Tsipras’s close ally and minister of state, Nikos Pappas, insisted that resolution of the vexed issue was now vital to reaching a viable agreement at a political level given that the medicine prescribed so far had failed so dramatically.
In the five years since the debt crisis erupted – forcing the country out of international markets and the then socialist government to request emergency loans from the EU and IMF – the Greek economy has suffered a depression-era contraction as it has implemented painful budget cuts in exchange for the financial assistance.
“Our mission is Greece’s decisive exit from crisis and the avoidance of adventures for all of Europe,” Pappas told party newspaper Avgi before flying to Brussels with the deputy prime minister, Yannis Dragasakis, and chief negotiator, Euclid Tsakalotos, to participate in the talks. “Greece has views, proposals, the determination, to work with [its] partners to get out of this destructive austerity with a viable debt and social cohesion. What is needed is a political solution.”“Our mission is Greece’s decisive exit from crisis and the avoidance of adventures for all of Europe,” Pappas told party newspaper Avgi before flying to Brussels with the deputy prime minister, Yannis Dragasakis, and chief negotiator, Euclid Tsakalotos, to participate in the talks. “Greece has views, proposals, the determination, to work with [its] partners to get out of this destructive austerity with a viable debt and social cohesion. What is needed is a political solution.”
Time is now of the essence with EU officials sounding the alarm as never before. “We need a deal in the next few days,” European commission vice-president, Valdis Dombrovskis, told Germany’s Die Welt newspaper. “Time is not on our side.”Time is now of the essence with EU officials sounding the alarm as never before. “We need a deal in the next few days,” European commission vice-president, Valdis Dombrovskis, told Germany’s Die Welt newspaper. “Time is not on our side.”
The German media said EU president, Jean-Claude Juncker, a Grecophile who has long supported Athens, had been forced to warn of the risk of a potentially catastrophic departure from the euro when he met Tsipras in Brussels last week.The German media said EU president, Jean-Claude Juncker, a Grecophile who has long supported Athens, had been forced to warn of the risk of a potentially catastrophic departure from the euro when he met Tsipras in Brussels last week.
At the centre of talks that top-ranking players from the EU, ECB and IMF will attend over the next two days, is a new set of counter-proposals the Greek government has devised in what after five months of fruitless talks is widely seen as a last effort to break the deadlock. The proposals aim to resolve the remaining differences the two sides have over pensions, tax and a primary surplus Athens is expected to achieve this year. At the centre of talks that top-ranking players from the EU, ECB and IMF will attend over the next two days is a new set of counter-proposals from the Greek government which aim to resolve the remaining differences the two sides have over pensions, tax and a primary surplus Athens is expected to achieve this year.
On Sunday Greek media reports suggested the government would row back on pension reform – vowing to overhaul its social security system – in return for the promise of debt forgiveness in the future. As a lender of last resort, the Washington-based IMF has long argued that Athens’s debt mountain is unmanageable and has to be addressed – a stance that has created friction with euro zone creditors. On Sunday, Greek media reports suggested the government would row back on pension reform – vowing to overhaul its social security system – in return for the promise of debt forgiveness in the future. As a lender of last resort, the Washington-based IMF has long argued that Athens’s debt mountain is unmanageable and has to be addressed – a stance that has created friction with eurozone creditors.
In sharp contrast to any other single currency member, Greece saw a huge chunk of its debt held by private investors written off in 2012. A further write-down would almost certainly draw the ire of Germany where taxpayers have footed the bulk of the monumental €240bn financial lifeline. But Greek officials say there are other ways of lessening the burden, including extending maturities on debt now owed. In sharp contrast to any other single currency member, Greece saw a huge chunk of its debt held by private investors written off in 2012. A further writedown would almost certainly draw the ire of Germany where taxpayers have footed the bulk of the €240bn financial lifeline. But Greek officials say there are other ways of lessening the burden, including extending maturities on debt now owed.
With officials on both sides suffering from negotiation fatigue, the hope is that differences can be narrowed to the point that an interim agreement is sealed to keep bankruptcy at bay in the months ahead. Well-placed insiders say Athens is holding out for a nine-month extension that would give it time to prepare reforms.With officials on both sides suffering from negotiation fatigue, the hope is that differences can be narrowed to the point that an interim agreement is sealed to keep bankruptcy at bay in the months ahead. Well-placed insiders say Athens is holding out for a nine-month extension that would give it time to prepare reforms.
Lenders are erring towards a four-month extension with significant reforms implemented in that time. Either scenario would simply kick the can that is the great Greek debt crisis down the road – but both would ensure the country that symbolises so much of Europe’s spirit remains in the fold.Lenders are erring towards a four-month extension with significant reforms implemented in that time. Either scenario would simply kick the can that is the great Greek debt crisis down the road – but both would ensure the country that symbolises so much of Europe’s spirit remains in the fold.