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EU, Greece to Start Technical Loan Talks Wednesday

  • Reuters

Dutch Finance Minister Jeroen Dijsselbloem, right, talks with European Central Bank Governor Mario Draghi during a meeting of eurogroup finance ministers at the European Council building in Brussels, March 9, 2015.

Dutch Finance Minister Jeroen Dijsselbloem, right, talks with European Central Bank Governor Mario Draghi during a meeting of eurogroup finance ministers at the European Council building in Brussels, March 9, 2015.

Warning Greece it had “no time to lose”, eurozone ministers agreed technical talks between finance experts from Athens and its international creditors would start on Wednesday with the aim of unlocking further funding.

“We've talked about this long enough now,” an impatient-sounding Dutch Finance Minister Jeroen Dijsselbloem said after chairing Monday's meeting of eurozone colleagues, their first since Feb. 20, when they extended Greece's bailout deal to June.

“We only have four months,” he said. “Let's get it done.”

The new left-wing Greek government, keen to show voters it is keeping election promises to break with EU-imposed austerity, has tried patience among its EU peers by arguing over the form and venue for detailed talks required to establish its needs and whether it has met conditions the creditors have set on reforms.

In a compromise, Dijsselbloem said the negotiations among financial experts from Greece and the creditor institutions --the European Commission, European Central Bank and International Monetary Fund -- would start in Brussels on Wednesday, not in Athens as has been normal for EU bailout programs so far.

Those talks, however, would be “supported” by international teams working in Athens to obtain and check information.

The Greek government has insisted it will no longer deal with the “troika”, as the three institutions have been called in a term that is now anathema for many Greeks who associate it with massive cuts in public spending. It has also said it will not tolerate irksome foreign inspection visits to Athens.

The Eurogroup now calls the troika “the institutions” and the talks will, formally at least, be based in Brussels. EU ministers say they do not want “semantics” to get in the way of negotiations intended to prevent Greece going bankrupt and potentially being forced to abandon the single currency.

How rapidly negotiations will proceed remains to be seen. The Eurogroup agreement last month made disbursement of further funds before the current EU program expires at the end of June conditional on Greece passing a final set of tests that it is reforming its economy to cope with its massive debts.

Cash Crunch

Dijsselbloem acknowledged Greece was under severe pressure to find the cash to pay looming debt service commitments, but said that pressure ought to serve as an incentive to reach a deal with the creditors. However, he added that if Greece showed it was implementing some of the measures, then some funds could be released before the planned review concludes next month.

Greek Finance Minister Yanis Varoufakis, who attended the Brussels meeting, has submitted a list of reforms the government is prepared to take. A Greek official said Athens was ready to propose more measures immediately to the technical experts.

The government has put an emphasis on raising more taxes by clamping down on widespread cheating. But eurozone peers, notably including the bloc's German paymaster, say that is far from enough. Revenues have in fact dropped since the election in January as taxpayers hold off, hoping the government cuts rates.

One new proposal, the Greek official said, was to encourage consumers to demand tax-compliant receipts for goods and services by letting them use such receipts to enter a lottery.

Ministers spent barely 30 minutes discussing Greece at what was scheduled as a routine monthly meeting, an EU official said, stressing to Varoufakis that it was time to engage in serious, detailed discussions with experts from the creditors.

Varoufakis had irritated EU partners by dangling the prospect of a referendum in a weekend newspaper interview. He kept a low profile on Monday, avoiding reporters on arrival.

Shut out of capital markets, with international loans frozen and tax revenues falling, Greece could run out of cash later this month. However, a Greek official said Athens had enough to pay the second of four 310 million-euro loan installments due to the IMF on March 13. Two more are due on March 16 and 20.

Eurozone governments assume that Greece will need further financial support after the current program expires, although they and Athens will not discuss that in public at the moment.

Varoufakis, who wants a restructuring of Greece's debt to official lenders, was quoted by Italy's Corriere della Sera on Sunday as saying the government could call a referendum or early elections if its partners rejected its debt and growth plans.

The finance ministry later clarified that the Marxist former academic had been replying to a hypothetical question and that any referendum would “obviously regard the content of reforms and fiscal policy” and not whether to stay in the euro.

An ECB source said the cash position of Greek banks, on a drip-feed of emergency lending, appeared to be stabilizing after heavy deposit outflows from December to late February.

The ECB's Governing Council is set to hold a teleconference on Thursday to discuss extending that emergency liquidity assistance (ELA), a person familiar with the matter said.

Better Off Out?

A senior ally of German Chancellor Angela Merkel said Greece would be better off outside the eurozone, suggesting that Finance Minister Wolfgang Schaeuble privately agreed.

“By leaving the eurozone, as Schaeuble has suggested, the country could make itself competitive again from a currency perspective with a new drachma,” Peter Ramsauer of the Bavarian Christian Social Union (CSU) wrote in Bild newspaper.

Merkel and Schaeuble have both said publicly they want to keep Greece in. But in a sign that German views may be shifting, Ramsauer said a temporary “Grexit” would be a “great opportunity” to boost its economy and administration, “making it fit to return to the euro area from a position of strength”.

Seeking European support, Greek Prime Minister Alexis Tsipras will meet European Commission President Jean-Claude Juncker in Brussels on Friday. Juncker has been trying to mediate between the new Athens government and its EU creditors, notably Germany, but his efforts have irritated Berlin.

An opinion poll on Monday showed a large majority of Greeks want Athens to compromise to avoid having to leave the euro.