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Tsipras Signals Greece May Accept Bailout Terms Tsipras Signals Greece May Accept Bailout Terms
(35 minutes later)
ATHENS — The Greek government has indicated to its creditors that it is willing to accept many of the terms of a bailout package that it had earlier rejected, if they are part of a broader deal to address the country’s funding needs for the next two years, officials said on Wednesday.ATHENS — The Greek government has indicated to its creditors that it is willing to accept many of the terms of a bailout package that it had earlier rejected, if they are part of a broader deal to address the country’s funding needs for the next two years, officials said on Wednesday.
The development raised the prospect of progress in resolving a financial crisis that has sent shudders through global markets and deeply strained European unity.The development raised the prospect of progress in resolving a financial crisis that has sent shudders through global markets and deeply strained European unity.
In a letter sent on Tuesday to the creditors — the European Central Bank, the International Monetary Fund and other eurozone countries — Prime Minister Alexis Tsipras said Greece was “prepared to accept” a deal set out publicly over the weekend by the creditors, with small modifications to some of the central points of contention on issues like pension cuts and tax increases. Mr. Tsipras linked Greece’s acceptance of the terms to a new package of bailout aid that would need to be negotiated.In a letter sent on Tuesday to the creditors — the European Central Bank, the International Monetary Fund and other eurozone countries — Prime Minister Alexis Tsipras said Greece was “prepared to accept” a deal set out publicly over the weekend by the creditors, with small modifications to some of the central points of contention on issues like pension cuts and tax increases. Mr. Tsipras linked Greece’s acceptance of the terms to a new package of bailout aid that would need to be negotiated.
Chancellor Angela Merkel of Germany responded by repeating her position that there should be no further negotiations until Greece holds a referendum on Sunday on whether to accept the terms of a previous offer from the creditors — a vote that many European leaders are hoping will amount to a rebuke of Mr. Tsipras.Chancellor Angela Merkel of Germany responded by repeating her position that there should be no further negotiations until Greece holds a referendum on Sunday on whether to accept the terms of a previous offer from the creditors — a vote that many European leaders are hoping will amount to a rebuke of Mr. Tsipras.
Any further talks are likely to be complex and contentious. An existing bailout agreement expired at midnight Tuesday, meaning that Greece and its creditors would have to start over in assembling a package of aid and budget cuts. Moreover, many European officials remain deeply skeptical of whether Mr. Tsipras’s leftist government would implement the more painful elements of any agreement. The initial responses from European officials to the latest Greek proposal ranged from cautious to dismissive.Any further talks are likely to be complex and contentious. An existing bailout agreement expired at midnight Tuesday, meaning that Greece and its creditors would have to start over in assembling a package of aid and budget cuts. Moreover, many European officials remain deeply skeptical of whether Mr. Tsipras’s leftist government would implement the more painful elements of any agreement. The initial responses from European officials to the latest Greek proposal ranged from cautious to dismissive.
Valdis Dombrovskis, a vice president of the European Commission who is responsible for the euro, said that the expiration of the old bailout program meant that “we are now in a new situation,” with far worse conditions than before. Greek’s decision to close banks and impose other capital controls, he said, “make the situation much more problematic. Now much more damage has been done and much more effort will be needed to restore the situation.”Valdis Dombrovskis, a vice president of the European Commission who is responsible for the euro, said that the expiration of the old bailout program meant that “we are now in a new situation,” with far worse conditions than before. Greek’s decision to close banks and impose other capital controls, he said, “make the situation much more problematic. Now much more damage has been done and much more effort will be needed to restore the situation.”
The European Commission, he said, still hopes for an agreement so that Greece can meet loan payments to the European Central Bank that are due in late July.The European Commission, he said, still hopes for an agreement so that Greece can meet loan payments to the European Central Bank that are due in late July.
“The doors for talks are open,” Mr. Dombrovskis said, blaming Greece for upending previous negotiations with its decision early Saturday to call a referendum. “There is certainly a possibility to reach an agreement before the next payments come due, but it is important that both sides have a willingness” to reach an accord, he added.“The doors for talks are open,” Mr. Dombrovskis said, blaming Greece for upending previous negotiations with its decision early Saturday to call a referendum. “There is certainly a possibility to reach an agreement before the next payments come due, but it is important that both sides have a willingness” to reach an accord, he added.
Finance ministers from the countries using the euro were scheduled to confer later on Wednesday. They had turned aside a last-minute plea for help Tuesday night from Greece but left open the possibility that they would take up Greece’s request for a new round of aid.Finance ministers from the countries using the euro were scheduled to confer later on Wednesday. They had turned aside a last-minute plea for help Tuesday night from Greece but left open the possibility that they would take up Greece’s request for a new round of aid.
The change of tone from Mr. Tsipras, who in recent days had vehemently opposed the terms sought by the creditors, came hours after Greece missed a debt payment to the I.M.F., leaving Greece effectively in default and raising the pressure on the country to find a solution to its rapidly escalating financial squeeze. With its banking system shut down and access to more aid cut off, Greece faced the prospect of further debt defaults and the possibility of being forced to abandon the euro as its currency.The change of tone from Mr. Tsipras, who in recent days had vehemently opposed the terms sought by the creditors, came hours after Greece missed a debt payment to the I.M.F., leaving Greece effectively in default and raising the pressure on the country to find a solution to its rapidly escalating financial squeeze. With its banking system shut down and access to more aid cut off, Greece faced the prospect of further debt defaults and the possibility of being forced to abandon the euro as its currency.
The letter from Mr. Tsipras was first reported by The Financial Times. The report sent stock prices in Europe higher. Mr. Tsipras was expected to speak publicly later on Wednesday.The letter from Mr. Tsipras was first reported by The Financial Times. The report sent stock prices in Europe higher. Mr. Tsipras was expected to speak publicly later on Wednesday.
News of the letter emerged ahead of a meeting of the European Central Bank’s Governing Council to consider whether to cut off entirely the line of credit that has kept the Greek banking system from collapsing.News of the letter emerged ahead of a meeting of the European Central Bank’s Governing Council to consider whether to cut off entirely the line of credit that has kept the Greek banking system from collapsing.
In the letter, Mr. Tsipras said he was prepared to accept the European Commission’s proposal of June 28, with five amendments on issues that had been particular sticking points.In the letter, Mr. Tsipras said he was prepared to accept the European Commission’s proposal of June 28, with five amendments on issues that had been particular sticking points.
He continued to ask for a lower value-added tax on Greek islands, for instance, to help bolster tourism and compensate for the high price of delivering goods to such areas. And he still objected to a system of automatically adjusting pension payments according to the financial strength of the underlying pension funds rather than relying on government assistance to maintain the payments.He continued to ask for a lower value-added tax on Greek islands, for instance, to help bolster tourism and compensate for the high price of delivering goods to such areas. And he still objected to a system of automatically adjusting pension payments according to the financial strength of the underlying pension funds rather than relying on government assistance to maintain the payments.
But he accepted the bulk of what the Europeans had asked for in their last proposal, including creating strong disincentives to early retirement.But he accepted the bulk of what the Europeans had asked for in their last proposal, including creating strong disincentives to early retirement.
The situation left unclear what Greeks would be voting on in the referendum on Sunday, assuming it goes ahead as planned. The wording was to ask Greeks to vote yes or no on whether they supported the terms offered by creditors last week — an offer that in effect expired with the existing bailout package on Tuesday night, and that appears to have been supplanted in any case by the offer put forward by Mr. Tsipras.The situation left unclear what Greeks would be voting on in the referendum on Sunday, assuming it goes ahead as planned. The wording was to ask Greeks to vote yes or no on whether they supported the terms offered by creditors last week — an offer that in effect expired with the existing bailout package on Tuesday night, and that appears to have been supplanted in any case by the offer put forward by Mr. Tsipras.
In Berlin, Ms. Merkel indicated that Germany no longer considered the offer that the Eurogroup of eurozone finance ministers made to Greece over the weekend to be valid, telling lawmakers in an address to Parliament that the proposal had been coupled to the aid program that expired at midnight on Tuesday.
“With the expiration of the program, the basis for the offer has been removed,” Ms. Merkel said.
The chancellor repeated her view that Europe depends on trust and compromise, but said that Germany was not willing to make concessions at any price.
She emphasized that Europe’s strength meant that it was in a position to take time to hammer out a new aid program for Greece, and said that the International Monetary Fund, the European Commission and the European Central Bank would all have to be involved.
“The overarching goal has always been to create a union of stability in Europe, with responsibility and corresponding rewards,” the chancellor said.
Wolfgang Schäuble, Germany’s powerful finance minister, backed the chancellor’s remarks, telling reporters that additional talks would be necessary before a new assistance program could be considered for Greece.
He said the process had been made more difficult by a breakdown of trust.
The first step toward a resumption of negotiations, Mr. Schäuble said, would be clarity from Athens about its aims and goals. “The Greek government needs to clarify what it wants,” he said.
“It’s not just about Greece,” Mr. Schäuble said. “We need to make sure the basis of people’s trust in Europe is not completely destroyed. We are defending Europe.”