European finance chiefs say a last-minute Greek proposal could break the deadlock in debt relief negotiations, and enable the country to avoid going into default at the end of the month. The announcement came as euro zone presidents and prime ministers were set to meet late Monday.
The chairman of the finance ministers’ committee for countries that use the euro, Dutch Finance Minister Jeroen Dijsselbloem, said the proposal presented by Greek Prime Minister Alexis Tsipras is “broad and comprehensive” and could result in an agreement by the end of the week.
Dijsselbloem said work would begin immediately to vet the Greek plan through European Union institutions.
“They really need to look at the specifics to see whether it adds up in fiscal terms,” he said. “But in general terms, the institutions have said it is a basis to really restart the talks now, and in the next couple of days to get a result.”
Dijsselbloem said a key question is whether the Greek plan is “comprehensive enough for the economic recovery to take off again.”
Evening meeting planned
He said the top eurozone leaders would discuss the plan Monday evening, and finance ministers would meet later this week to review the plan and potentially negotiate any remaining issues.
The top leaders are expected in Brussels again on Thursday for a broader summit, and could finalize a deal with Greece at that time.
Painful Greek economic reforms during the past five years have not met euro group requirements for the release of a further $8.17 billion (7.2 billion euros) in bailout money so Greece can meet its obligations. But Prime Minister Tsipras was elected in January on an anti-austerity platform, and he has refused to accept additional cuts in pensions and increases in taxes.
The new proposal reportedly raises the retirement age and increases value added tax on some items.
Arriving Monday in Brussels, Tsipras indicated the political balance he is trying to strike.
“This is time for a substantial and viable solution that would allow Greeks to come back to growth, within the euro zone, with social justice and cohesion,” he said.
The prime minister and his European counterparts agree that Greece should stay in the euro system, which experts say provides incentive for both sides to reach an agreement.
Greek leaders do not want to plunge the country into an economic depression if they leave the euro. And other European leaders do not want to set the precedent of countries leaving the currency, which would create uncertainty in financial markets.
“This is about a bigger European project that’s at stake here,” said associate professor of Economics at Britain’s University of Warwick, Dennis Novy. “And I very much doubt that the main European leaders, certainly not the German Chancellor, Mrs. Merkel, would want to risk a Greek exit.”
Novy also notes that even if there is no agreement this week and Greece defaults on its next payment to the International Monetary Fund, that would not necessarily trigger an immediate crisis and the end of Greek use of the euro.
Novi and other experts say these talks are essentially about the international community lending Greece more money to pay back to the international community. So, one or even several missed payments could be folded into future talks about a long-term solution to Greece’s debt crisis.