Hopes that some progress has been made in ongoing negotiations between Greece and its creditors were mitigated on Tuesday as Athens indicated that differences between the International Monetary Fund and the European Commission were obstructing progress.
Government officials pointed to the divisions within the so-called institutions, following a report in the Financial Times according to which the IMF has pushed for Greek debt relief. In a strongly worded statement, a government source highlighted “serious disagreements and contrasting opinions between the IMF and the EC which create obstacles in negotiations and high risks.”
The official emphasised that the so-called “red lines” set by the IMF and EC are contradictory – with the Fund holding a hard line as regards pension and labour sector reforms while the EC is tougher on the matter of Greece’s primary surplus target. “Against this backdrop, there cannot be a compromise,” the official said, adding that “the responsibility is exclusively that of the institutions and their inability to agree with each other.”
He added that this “blatant inconsistency” is the reason the government has not brought its proposed reforms to parliament and is seeking discussions on “the day after,” referring to a return to financial markets as well as funding and growth prospects for Greece after June.
The apparent attempt by the government to shift the ball into the creditors’ court came as sources suggested that technical-level negotiations in Brussels between Greek and European officials had made some headway.
It also came just a few hours ahead of a meeting between Deputy Prime Minister Yiannis Dragasakis and Euclid Tsakalotos, the coordinator of Greece’s negotiating team, and European Central Bank President Mario Draghi in Frankfurt. There were no substantial statements after the talks, with officials noting simply that the conversation had been constructive. Dragasakis said the Greek side “expressed the view to Mr Draghi that achieving a solution is a realistic and tangible target as long as all the institutions act constructively.”
It remained unclear what decision the ECB’s governing council will take on Wednesday as regards Greece. It is not expected to increase the haircut on collateral provided by Greek banks in exchange for liquidity, which would be a further burden on Greece’s cash-strapped lenders. It is also virtually certain not to increase the ceiling on the treasury bills that Greece can issue, as Athens would like. It is thought likely that it will slightly increase the amount of emergency liquidity being meted out to Greek banks.
All options appeared possible, however, particularly in view of Greece’s strong-worded intervention on Tuesday evening.
Any slim hopes that had lingered for a possible deal at next Monday’s Eurogroup summit appeared to have been abandoned, with Finance Minister Yanis Varoufakis also admitting that an agreement is not expected then though progress is being made. Varoufakis, who visited Paris and Brussels on Tuesday, is due in Rome on Wednesday and Madrid on Friday for talks with his counterparts as Greek officials stage a last-ditch diplomatic offensive in a bid to secure political, and financial, support.
Source: Kathimerini