Greece said yesterday it was moving swiftly to meet creditors’ demands for a detailed economic reform plan after Prime Minister Alexis Tsipras assured eurozone leaders his leftist-led coalition would speed up work to avert bankruptcy.
After two months of mounting frustration on both sides since Tsipras was elected with a mandate to end years of austerity, he held three hours of late night talks to try to break an impasse that risks sending Athens stumbling of the eurozone.
But while a joint statement by the EU institutions spoke of a “spirit of mutual trust” and Tsipras said he left feeling more optimistic, German Chancellor Angela Merkel stressed no money would be released before Athens implements budget measures and other reforms that it has so far been reluctant to accept.
The risk of a continued standoff, exactly a month after Greece secured a last-gasp four-month extension of an EU/IMF bailout, was highlighted by different descriptions by Tsipras and Merkel about what reforms Athens would need to launch.
“It is clear that Greece is not obliged to implement recessionary measures,” the 40-year-old leftist premier told reporters, referring to previously agreed reforms. “Greece will submit its own structural reforms, which it will implement.”
But Merkel, facing mounting resistance in Europe’s richest state to continued lending to keep an erratic partner in the common currency area, insisted that only the full completion of already approved measures would satisfy the creditors.
“The reference point is the agreement of February 20,” she said. “We have not changed one iota. You may have heard some of this before. But then not much has happened in the last few weeks.”
Tsipras will make a much anticipated visit to Merkel in Berlin on Monday. EU officials said that if Greece did come up with a convincing plan to get its debts under control, eurozone finance ministers could meet soon to release at least some funds to help it meet pressing commitments in the coming weeks.
In Athens yesterday, government spokesman Gabriel Sakellaridis said: “Once the reforms are submitted, and in a detailed manner, to the Euro Group when that happens... then the funding will be unlocked towards the Greek economy.”
The Finance Ministry said it would respond in a “constructive spirit” to a list of requirements on reforms being drawn up by a team of technical experts from the creditors – a contrast to an atmosphere of mutual mistrust which marked encounters with EU officials in Athens this week.
Finance Minister Yanis Varoufakis, who has offended many of Greece’s partners, especially in Germany, with incendiary comments and undiplomatic behaviour, joined the call for immediate implementation of the February 20 agreement.
“First, we should work towards ending the toxic ‘blame game’ and the moralising finger-pointing which benefit only the enemies of Europe,” he said in a blog post yesterday.
The meeting involved Tsipras, Merkel, summit chairman Donald Tusk, European Commission president Jean-Claude Juncker, Jeroen Dijsselbloem, the chair of the Eurogroup of finance ministers, European Central Bank (ECB) president Mario Draghi and French President François Hollande.
Juncker, Tusk and Dijsselbloem issued a brief joint statement on the outcome, intended partly to reassure eurozone minnows upset at being left out of the talks.
“We fully adhere to the agreement of the Eurogroup of February 20. In the spirit of mutual trust, we are all committed to speed up the work and conclude it as fast as possible,” they said. “The Greek authorities will have the ownership of the reforms and will present a full list of specific reforms in the next days.”
Juncker said he was rather more optimistic about resolving the crisis because “I hadn’t observed any convergence of views over the past weeks but noticed it yesterday”.
Merkel’s centre-left coalition partner Sigmar Gabriel, the German Economy Minister, said he too was “a bit more hopeful”.
Those were hardly euphoric sentiments and were reflected in only cautious gains for Greek financial assets on the markets.
Greece’s main stocks index rose 3.2 per cent. Two-year government bond yields fell 89 basis points to 23.85 per cent, while 10-year yields were down 18 bps at 12.10 per cent. But two-year yields were still much higher than before, having doubled in a month and risen over 3 percentage points on Thursday.
EU officials said the talks were conducted in a business-like manner – a contrast with some of the ructions over recent weeks that have seen increasingly bitter confrontation between Greek and German ministers. That has fuelled speculation that some creditor states might prefer to see Greece quit the euro.
Athens has been kept from bankruptcy by two bailouts since the global financial crisis, but now risks running out of money within weeks. On Thursday, Greek banks reported the largest deposit withdrawals in a month, a sign savers are worried about the outlook for the country’s finances and institutions.
A person familiar with ECB thinking said Draghi would make clear the bank would not lift its limit on Greek short-term debt issuance, which Greece’s Marxist Finance Minister has said is “asphyxiating” his country. “It’s up to Greece to meet its commitments in order to get money from its creditors,” said the person. “The ECB doesn’t do bridge finance.”
Two EU/IMF bailouts totalling €240 billion have kept Greece from bankruptcy since 2010 but its economy has shrunk by25 per cent, partly due to austerity measures imposed by the lenders. It risks running out of cash without more aid or permission to issue more short-term debt.
A Greek official said Athens had enough cash to pay a final €350 million instalment of a loan repayment to the International Monetary Fund yesterday. EU officials said Greece had enough money to last until at least mid-April.