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Greece Gets Last-Minute Help From France on Bailout Proposal Greece Submits 11th-Hour Bailout Proposal to Creditors
(about 3 hours later)
ATHENS — As Greece engaged in a last-minute scramble on Thursday to formulate a bailout proposal that could determine whether it remains in the euro, France, its most sympathetic ally among Europe’s big powers, stepped in to give a helping hand. ATHENS — Only a day after grim predictions of financial and social collapse in Greece, a scramble appeared underway to work out the details of a new bailout package to bring the country back from the brink.
While the assistance appears to be mostly technical, it highlighted the contrasting approaches being taken by the two leading powers in the European Union. Germany has stood firm against concessions to Greece, while France has thrown itself into the search for a deal. Germany’s truculent finance minister, Wolfgang Schäuble, finally gave a little on debt relief for Greece, admitting Thursday that “debt sustainability is not feasible without a haircut,” or writedown of debt.
Donald Tusk, the prime minister of Poland and the president of the European Council, said on Twitter that any “realistic proposal from Athens needs to be matched by realistic proposal from creditors on debt sustainability to create win-win situation.”
Prime Minister Alexis Tsipras of Greece wentbefore Parliament to seek a commitment for reform measures in the new plan that, presumably, went beyond what had been offered previously.
Thursday night at the eleventh hour, Greece submitted its latest proposal to its creditors. The details of that plan have not been released, and there is no way to know if this prospective bailout will balance the demands of the creditors against some relief from austerity.
What was breathtaking, however, was how in a matter of hours the entire dynamic in the Greek crisis seemed to shift, from apocalyptic warnings of a Zimbabwe in the Balkans, to a fresh optimism that the basics of a deal could be worked out.
The question now is whether that apparent change of heart reflected a new political determination to cut a deal that keeps Greece in the eurozone.
The representatives of Greece’s main creditors — the eurozone nations, the European Central Bank and the International Monetary Fund — are scheduled to review the new proposal in Brussels on Friday. Final approval will also require an assessment by the 19 finance ministers of eurozone countries. That meeting, of the so-called Eurogroup, has been scheduled for Saturday afternoon in Brussels.
Prospects for a deal improved through the day as a procession of European leaders came around to the bedrock position of Mr. Tsipras that pure austerity measures were insufficient in their own right and had to be accompanied by a commitment to reduce Greece’s stupendous debt.
Greece received vital political support and technical assistance from France, help that highlighted the contrasting approaches being taken by the two leading powers in the European Union. Germany has played the bad cop, standing firm against concessions to Greece and, in Mr. Schäuble’s case, openly doubting the country really belonged in the eurozone. France has thrown itself into the task of finding a deal.
The French assistance appeared to be an effort to make sure the Greek proposal, due by midnight, would be as thorough and salable as possible to Greece’s creditors and would smooth the way for a compromise on a new bailout package to keep Greece afloat financially and inside the euro.The French assistance appeared to be an effort to make sure the Greek proposal, due by midnight, would be as thorough and salable as possible to Greece’s creditors and would smooth the way for a compromise on a new bailout package to keep Greece afloat financially and inside the euro.
“There is a group of people who have been sent to help the Greeks, to try to transform words into action,” said a French government official with knowledge of the effort.“There is a group of people who have been sent to help the Greeks, to try to transform words into action,” said a French government official with knowledge of the effort.
The representatives of Greece’s main creditors — the European Commission, the European Central Bank and the International Monetary Fund — are scheduled to review the new proposal in Brussels on Friday. Any sign at that meeting that Greece had assuaged its creditors by agreeing to pension cuts, tax increases and other steps could make it easier to reach a deal when all 28 leaders of European Union member states gather on Sunday to decide once and for all whether Greece should receive bailout funds or be pushed out of the eurozone.
Reaching the decision will also require an assessment by the 19 finance ministers of eurozone countries. That meeting, of the so-called Eurogroup, has been scheduled for Saturday afternoon in Brussels.
France has been the most steadfast major nation in Europe supporting Greece ever since Prime Minister Alexis Tsipras was ushered in to power in January on a mandate to repudiate austerity. Paris has been particularly outspoken in recent days about the need for a compromise that would help Greece and hold the eurozone together.France has been the most steadfast major nation in Europe supporting Greece ever since Prime Minister Alexis Tsipras was ushered in to power in January on a mandate to repudiate austerity. Paris has been particularly outspoken in recent days about the need for a compromise that would help Greece and hold the eurozone together.
France’s posture has been a sharp contrast to that of Germany, whose chancellor, Angela Merkel, has shown little inclination to compromise on demands that Greece take actions to show that it can be fiscally responsible before even considering new bailout aid. By contrast, Germany’s chancellor, Angela Merkel, has shown little inclination to compromise on demands that Greece take actions to show that it can be fiscally responsible before even considering new bailout aid.
Neither French nor German officials would discuss France’s involvement in the Greek proposal in any depth. But the development raised questions about whether France and Germany have split heading into the final negotiations or whether there is a back-room understanding between Paris and Berlin that Greece needed further encouragement to make substantive concessions if it was to retain the chance to stay in the euro. Neither French nor German officials would discuss France’s involvement in the Greek proposal in any depth. But the development raised questions about whether France and Germany have split heading into the final negotiations or whether there is a back-room understanding between Paris and Berlin.
Mr. Tsipras and his team spent the day in meetings as they put together a proposal and sought to ensure domestic political support for it.Mr. Tsipras and his team spent the day in meetings as they put together a proposal and sought to ensure domestic political support for it.
In one indication that European officials are trying to create a more positive atmosphere for the end game of the negotiations, Donald Tusk, the president of the European Council, the body that represents European Union leaders, said on Twitter that both the eurozone and Athens needed to make concessions.
Any “realistic proposal from Athens needs to be matched by realistic proposal from creditors on debt sustainability to create win-win situation,” Mr. Tusk wrote after speaking with Mr. Tsipras.
Ms. Merkel, speaking later in Sarajevo, reiterated her opposition to actually writing off some of Greece’s debt, though she was less definitive about steps like reducing interest rates or extending the payment period as ways of helping Greece manage its indebtedness.Ms. Merkel, speaking later in Sarajevo, reiterated her opposition to actually writing off some of Greece’s debt, though she was less definitive about steps like reducing interest rates or extending the payment period as ways of helping Greece manage its indebtedness.
Germany has taken an increasingly hard line toward Greece since the nation voted no on Sunday to an earlier bailout program in a referendum that sent political shivers across Europe. In the wake of the chaos sparked by the vote, Ms. Merkel flew Monday to Paris to join President François Hollande of France to discuss what to do next with Greece.Germany has taken an increasingly hard line toward Greece since the nation voted no on Sunday to an earlier bailout program in a referendum that sent political shivers across Europe. In the wake of the chaos sparked by the vote, Ms. Merkel flew Monday to Paris to join President François Hollande of France to discuss what to do next with Greece.
The vote angered Mr. Hollande and another Greek ally, Finance Minister Michel Sapin of France, both of whom issued stern warnings that the ball was now in Mr. Tsipras’s court. On Thursday, Mr. Sapin took a harder tone than he has in recent months, saying that while Europe should show solidarity toward Greece, that would not be forthcoming if Greece did not show responsibility. The situation has put Mrs. Merkel into the toughest position of her career. She has been forced to balance an angry German public, which sees no reason to give Greece billions of additional bailout money or write down its debt, against the danger of a Greek exit from the eurozone.
The eurozone’s credibility might suffer if Greece leaves the common currency, Mr. Sapin added, but it might also suffer if Greece is allowed to stay despite flouting the rules of membership. But Greece is a tiny country with limited economic impact on Europe but sonsiderable strategic value. European political experts had wondered throughout the week whether Ms. Merkel, as the leader of the most powerful country in Europe, would stand for becoming the first postwar European leader to countenance the first step back in Europe’s march toward greater integration.
But unlike a number of German officials, no politician in France has agitated to get Greece thrown out from the eurozone. They also wondered if she was willing to risk the prospect of a failed, embittered state within the European Union and NATO, an open wound in Europe’s southern and eastern flank that would be an open invitation to Moscow to exploit already inflamed division within the European Union.
When Greece in 2012 was the epicenter of the last flare-up in Europe’s long-running debt crisis, many French officials steadfastly maintained that the euro currency union was fundamentally a historic project, and that it should not risk being broken up by the departure of Greece, nor of any other euro member country. When Greece in 2012 was the epicenter of the last flare-up in Europe’s long-running debt crisis, many French officials steadfastly maintained that the eurozone was fundamentally a historic project, and that it should not risk being broken up by the departure of Greece, nor of any other euro member country.
That sentiment was renewed by Prime Minister Manuel Valls of France on Wednesday. “France refuses that Greece leaves the eurozone in the name of our position and our commitments,” he told lawmakers in the National Assembly on Wednesday in a speech that was broadcast live on Greek television. To secure a deal, though, he said Greece needed to pledge to modernize its economy and overhaul pensions.That sentiment was renewed by Prime Minister Manuel Valls of France on Wednesday. “France refuses that Greece leaves the eurozone in the name of our position and our commitments,” he told lawmakers in the National Assembly on Wednesday in a speech that was broadcast live on Greek television. To secure a deal, though, he said Greece needed to pledge to modernize its economy and overhaul pensions.
He also suggested that Mr. Tsipras’s most pivotal request — a program to make Greece’s mountainous debt more sustainable — be taken seriously by other European countries as part of any deal. Until recently, that has been nearly a taboo idea in Europe’s halls of power, since European taxpayers are currently on the hook if Greece defaults on its debts.He also suggested that Mr. Tsipras’s most pivotal request — a program to make Greece’s mountainous debt more sustainable — be taken seriously by other European countries as part of any deal. Until recently, that has been nearly a taboo idea in Europe’s halls of power, since European taxpayers are currently on the hook if Greece defaults on its debts.
“There can be no taboos. It is essential to establish a sustainable trajectory for Greek debt in the coming years,” Mr. Valls said. “That is obligatory to advance towards a long-lasting solution.”“There can be no taboos. It is essential to establish a sustainable trajectory for Greek debt in the coming years,” Mr. Valls said. “That is obligatory to advance towards a long-lasting solution.”
The United States has also urged a solution. In a flurry of recent phone calls with the French, German and Greek leaders, President Obama and Treasury Secretary Jack Lew have pressed all sides to come to a deal that would avoid a breakup of the eurozone.The United States has also urged a solution. In a flurry of recent phone calls with the French, German and Greek leaders, President Obama and Treasury Secretary Jack Lew have pressed all sides to come to a deal that would avoid a breakup of the eurozone.
A departure by Greece would hold not just financial and economic implications for Europe and global financial markets, but geopolitical significance at a time when the United States is grappling with conflicts between Russia and Ukraine and a widening problem in the Middle East.
The situation has put Mrs. Merkel into the toughest position of her career. She must balance between an angry German public, which sees no reason to give Greece billions of additional bailout money or write down its debt, when Athens for five years has made relatively scant progress in reforming its economy.
Although Greece has paid the price for austerity measures that have been pressed upon the country to make up for politicians’ failure to make structural changes that would get the economy growing again, Mrs. Merkel also does not want her legacy to include a decision that weakened Europe, rather than shoring it up as a great global power.
On Thursday, as Mr. Sapin appeared alongside his German counterpart, Wolfgang Schäuble, at a conference in Berlin, it was not clear that the two sides were any closer to an agreement about the Greece problem.
Mr. Schäuble said he would consider a proposal to restructure Greece’s debt, but he expressed doubt that such a proposal would solve the country’s underlying problems.
“In the days to come we will discuss whether there is an option, but I am skeptical,” he said.
He called on the Greek government to demonstrate its good will by taking concrete action in its Parliament to address calls by other eurozone countries to improve the shattered Greek economy’s ability to grow.
“If you really want to regain trust, why don’t you just do something,” Mr. Schäuble asked rhetorically during the conference in Frankfurt organized by the German central bank, the Bundesbank. “Go in front of Parliament and just do it, implement a measure.”
Vice Chancellor Sigmar Gabriel, leader of the Social Democrats, Ms. Merkel’s coalition partners, expressed hope that a compromise would be found now, but stressed that European interests are paramount. “It’s not a case of bringing Alexis Tsipras to his knees,” Mr. Gabriel said. “But it is certainly not that Europe should be brought to its knees.”Vice Chancellor Sigmar Gabriel, leader of the Social Democrats, Ms. Merkel’s coalition partners, expressed hope that a compromise would be found now, but stressed that European interests are paramount. “It’s not a case of bringing Alexis Tsipras to his knees,” Mr. Gabriel said. “But it is certainly not that Europe should be brought to its knees.”