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Meeting on Greece Debt Breaks Up With No Deal Meeting on Greece Debt Breaks Up With No Deal
(about 3 hours later)
BRUSSELS — A meeting of European finance ministers broke up late Saturday with no agreement on whether Greece should be granted its third bailout since 2010, reflecting deep divides over whether the Athens government can be trusted to repay huge new loans and leaving the Continent hours from what could be a historic rupture.BRUSSELS — A meeting of European finance ministers broke up late Saturday with no agreement on whether Greece should be granted its third bailout since 2010, reflecting deep divides over whether the Athens government can be trusted to repay huge new loans and leaving the Continent hours from what could be a historic rupture.
The finance ministers planned to reconvene later on Sunday, just before European national leaders are scheduled to gather in Brussels for what they have said would be a final decision on whether Greece should qualify for a new aid package, a step likely to determine whether the country can remain in the euro currency union. The finance ministers planned to reconvene on Sunday, just before European national leaders are scheduled to meet in Brussels for what they have said would be a final decision on whether Greece should qualify for a new aid package, a step aimed at determining whether the country can remain in the euro currency union.
The failure to reach an agreement, after nearly nine hours of talks, belied the optimism that followed the approval early Saturday by the Greek Parliament of a package of pension cuts, higher taxes and other policy changes long sought by Greece’s international creditors. In a remarkable turnabout, Prime Minister Alexis Tsipras had pushed the package through the legislature despite having led his country into a referendum six days earlier that overwhelmingly rejected much the same terms. The failure by the finance ministers to reach an agreement, after nearly nine hours of talks, belied the optimism that followed the approval early Saturday by the Greek Parliament of a package of pension cuts, higher taxes and other policy changes long sought by Greece’s international creditors. In a remarkable turnabout, Prime Minister Alexis Tsipras had pushed the package through the legislature despite having led his country into a referendum six days earlier that overwhelmingly rejected much the same terms.
But despite Greece’s capitulation on those terms, many countries came into this weekend’s final round of negotiations skeptical of the Tsipras government’s commitment to seeing through the changes and putting his country on firmer financial footing — and weary of the constant brinkmanship that has characterized the months of negotiations over Greece’s latest crisis. Despite Greece’s capitulation on those terms, many countries came into this weekend’s final round of negotiations skeptical of the Tsipras government’s commitment to seeing through the changes and putting his country on firmer financial footing — and weary of the constant brinkmanship that has characterized the months of negotiations over Greece’s latest crisis.
Alexander Stubb, the Finnish finance minister, told journalists as he left the meeting, which ended shortly before midnight, “We will continue the discussions tomorrow.” Instead of working through the night to hammer out a statement on requirements for Greece, as had been expected, the meeting was suddenly called off shortly before midnight, and ministers left without even holding a formal news conference.
From the start, it was clear that Mr. Tsipras’s gambit had not entirely won over Germany and other countries that have been skeptical about giving a new round of loans to Greece after years in which successive governments in Athens have struggled to carry out changes that its creditors have demanded as a condition of the bailouts. “The issue of credibility and trust was discussed, and also of course the financial issues involved,” Jeroen Dijsselbloem of the Netherlands, the head of the so-called Eurogroup of ministers, told reporters. “It is still very difficult. but work is still in progress,” he said, adding that discussions would continue later Sunday morning.
“We will have exceptionally difficult negotiations,” Wolfgang Schäuble, the hard-nosed German finance minister, said on Saturday before the meeting. “We won’t be able to rely on promises.” From the start, it was clear that Mr. Tsipras’s gambit had not entirely won over Germany and other countries that have been skeptical about giving a new round of loans to Greece after years in which successive governments in Athens have struggled to carry out changes that creditors have demanded as a condition of the bailouts.
His prediction proved accurate, as he and fellow ministers wrangled for hours with little apparent progress, seeking more assurances from Greece that it was committed to changing its way, and weighing the desires of France and Italy for a deal against the more skeptical stance of Germany and the possibility of outright opposition from Finland. “We will have exceptionally difficult negotiations,” Wolfgang Schäuble, the hard-nosed German finance minister, said on Saturday before the meeting. “We won’t be able to rely on promises.”
His prediction proved accurate, as he and fellow ministers wrangled with little apparent progress, seeking more assurances from Greece that it was committed to changing its ways, and weighing the desires of France and Italy for a deal against the more skeptical stance of Germany and the possibility of outright opposition from Finland.
During their talks, the finance ministers called on their Greek counterpart, Euclid Tsakalotos, to put the package proposed by his government into swift effect to prove its willingness to make deep and lasting changes to the nation’s faltering economy. Greece, in turn, continued to seek some assurance that it would win the right to renegotiate the terms of its debt repayment.During their talks, the finance ministers called on their Greek counterpart, Euclid Tsakalotos, to put the package proposed by his government into swift effect to prove its willingness to make deep and lasting changes to the nation’s faltering economy. Greece, in turn, continued to seek some assurance that it would win the right to renegotiate the terms of its debt repayment.
It was not clear that the meeting would yield a consensus about how to proceed, raising the possibility that the finance ministers would leave final decisions to their national leaders, who are to gather in Brussels on Sunday. It was not clear that the finance ministers’ meeting on Sunday morning would yield a consensus about how to proceed, increasing the possibility that they would leave final decisions to their national leaders, who are to gather in Brussels in the afternoon.
“I am still hopeful,” Pierre Moscovici, the European commissioner for economic affairs, told reporters as he left the Eurogroup meeting.“I am still hopeful,” Pierre Moscovici, the European commissioner for economic affairs, told reporters as he left the Eurogroup meeting.
In an apparent effort to raise the pressure on Greece, some German and Finnish officials were informally passing around an one-page position paper, reportedly drawn up by the German finance ministry as a possible option for the negotiations, saying the Greek proposal fell short and suggesting options that included ideas like having the country leave the eurozone for five years and then reapply for membership. In an apparent effort to raise the pressure on Greece, some officials earlier in the day were informally passing around a one-page position paper, reportedly drawn up by the German finance ministry as a possible option for the negotiations, saying the Greek proposal fell short and suggesting options that included ideas like having the country leave the eurozone for five years and reapply for membership.
The idea of a five-year break from the euro was not openly discussed at the finance ministers’ meeting on Saturday afternoon, according to an official with direct knowledge of the talks. The official spoke on the condition of anonymity because the discussions were still underway. The idea of a break from the euro was not openly discussed at the meeting, according to one of the officials with direct knowledge of the talks, who like others spoke on the condition of anonymity because the discussions were private.
The European leaders have set this weekend as a deadline for settling the issue of whether to keep Greece solvent or cut off further aid, a step that would almost certainly result in Athens being forced to abandon the euro as its currency. Mr. Schäuble, however, referred repeatedly to a plan drafted by German officials that would require Athens to transfer state assets into a trust fund to pay down its debt in order to stay in the eurozone, according to two people with direct knowledge of the discussions. Mr. Schäuble did not refer explicitly to the idea of a temporary Greek departure from the eurozone, these people said. But the tough approach by the German minister, they said, appeared designed to make clear that he now favors a Greek exit.
The European leaders have set this weekend as a deadline for settling the issue of whether to keep Greece solvent or cut off further aid, a step that would almost certainly result in forcing Athens to abandon the euro.
An exit by Greece would be a blow to Europe’s goal of ever-closer integration.An exit by Greece would be a blow to Europe’s goal of ever-closer integration.
Greece’s banks are teetering on insolvency, the government is running out of cash to meet its day-to-day obligations, and without an infusion of aid, additional payments to international creditors will be missed in coming weeks. Greece’s banks are teetering on insolvency, the government is running out of cash to meet day-to-day obligations, and without an infusion, additional payments to international creditors will be missed in coming weeks.
Experts who reviewed Greece’s request for third bailout program informed Eurogroup ministers that about €74 billion are needed to cover its financing needs for the next three years, according to a person with direct knowledge of the experts’ findings. That is far more than the €53.5 billion, or about $59 billion, that Athens has requested. Experts who reviewed Greece’s request for a third bailout program informed Eurogroup ministers that about €74 billion is needed to cover its financing needs for the next three years, according to a person with direct knowledge of the experts’ findings. That is far more than the €53.5 billion, or about $59 billion, that Athens has requested.
If loans for Greece are eventually approved, the majority will probably be covered by a new loan from the European Stability Mechanism, the European bailout fund. Other sources could include loans from the International Monetary Fund, funds raised through Greek government revenues and, eventually, new debt issued by Greece. If loans for Greece are eventually approved, the majority will probably be covered by a new loan from the European Stability Mechanism, the European bailout fund. Other sources could include loans from the International Monetary Fund, funds raised through Greek government revenue and, eventually, new debt issued by Greece.
That discrepancy between what Greece had requested and the new estimate of its bailout needs may further reinforce the doubts of those who wonder if the Greek government has a handle on its finances and will be able to carry out promised changes. That discrepancy between what Greece had requested and the new estimate of its bailout needs may have further reinforced the doubts of those who wonder if the Greek government has a handle on its finances and will be able to carry out promised changes.
“Many governments — mine, too — have serious concerns about the commitment of the Greek government,” the Dutch state secretary for finance, Eric Wiebes, told reporters in Brussels before Saturday’s meeting. “After all, we are discussing a proposal from the Greek government that was fiercely rejected less than a week ago, and that is a serious concern.”“Many governments — mine, too — have serious concerns about the commitment of the Greek government,” the Dutch state secretary for finance, Eric Wiebes, told reporters in Brussels before Saturday’s meeting. “After all, we are discussing a proposal from the Greek government that was fiercely rejected less than a week ago, and that is a serious concern.”
While no signed bailout deal is expected this weekend, the question is whether Europe will decide to continue negotiating a rescue with Greece, or leave its banks to collapse and its virtually bankrupt government to default on its loans. European leaders, who have tentatively agreed to meet here to discuss the matter on Sunday evening, have said their gathering should be used to reach that decision. While no signed bailout deal was expected this weekend, the question is whether Europe will decide to continue negotiating a rescue with Greece, or leave its banks to collapse and its virtually bankrupt government to default. European leaders have said their Sunday evening meeting could be used to reach that decision.
The fear of Greece and its supporters, which include the French government, is that without an agreement to continue negotiations, Greek banks could collapse as soon as Monday, raising the prospect that the country would quickly have to abandon the euro. The fear of Greece and its supporters, which include the French government, is that without an agreement to continue negotiations, Greek banks could collapse next week, raising the prospect that the country would quickly have to abandon the euro.
Pierre Moscovici, the European economic affairs commissioner and former finance minister of France, said as he entered Saturday’s meeting that the “Greek government has made significant gestures.” He said the Greek proposals form “a basis for a new program” of loans. Mr. Moscovici, the European economic affairs commissioner who is a former finance minister of France, said as he entered Saturday’s meeting that the “Greek government has made significant gestures.” He said the Greek proposals form “a basis for a new program” of loans.
Before the meeting, the finance ministers received assessments of the Tsipras plan by experts representing the country’s creditors. Before the meeting, the finance ministers received assessments of the Tsipras plan by experts representing the creditors.
“The papers of the Greek authorities contain positive elements, issues where clarification is needed, and some issues where the institutions wish to see stronger commitment to reform,” said a person with direct knowledge of experts’ findings who spoke on Saturday morning on the condition of anonymity because of the sensitivity of the discussions. “The papers of the Greek authorities contain positive elements, issues where clarification is needed, and some issues where the institutions wish to see stronger commitment to reform,” said a person with direct knowledge of experts’ findings. But this person also warned: “Negotiations will be tough. The chances for a deal are 50-50.”
But this person also warned: “Negotiations will be tough. The chances for a deal are 50-50.”
The Eurogroup, with its 19 eurozone finance ministers, has some outspoken critics of Greece, irritated by the Tsipras government’s negotiating style and Mr. Tsipras’s decision the week before last to break off negotiations and call for the referendum. Mr. Tsipras surprised many in his own country and party on Thursday when he presented a plan containing many of the elements — including austerity measures — that the voters had just rejected by a wide margin.The Eurogroup, with its 19 eurozone finance ministers, has some outspoken critics of Greece, irritated by the Tsipras government’s negotiating style and Mr. Tsipras’s decision the week before last to break off negotiations and call for the referendum. Mr. Tsipras surprised many in his own country and party on Thursday when he presented a plan containing many of the elements — including austerity measures — that the voters had just rejected by a wide margin.
The creditors now want strong evidence that Greece will live up to its latest set of economic promises if it gets the new loans it is seeking, and an agreement to ease the burden of its current staggering debt, which at €317 billion is equivalent to 177 percent of the country’s gross domestic product. By that measure, only Japan’s debt, at 245 percent, is higher among the world’s economies. The creditors now want strong evidence that Greece will honor its latest set of economic promises if it gets the new loans it is seeking, and an agreement to ease the burden of its current debt, which at €317 billion is equivalent to 177 percent of the country’s gross domestic product. By that measure, only Japan’s debt, at 245 percent, is higher among the world’s economies.
A copy of the one-page paper proposing that Greece take a timeout from the currency union, was made public by Sven Giegold a lawmaker for Germany’s opposition Greens party, which opposes Berlin’s hard line against Athens. German government officials declined to comment on the document.
The paper said the Greek plan fell short in proposing areas to “modernize the country,” and cited efforts to streamline the labor market as among areas that “are not sufficient.”