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Greece and lenders discuss new way to reach agreement I Kathimerini, Athens, June 14 http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_14/06/2015_551030 Greek officials were locked in talks with the country’s lenders over the weekend, with both sides having proposals on how a deal to unlock further bailout funding could be reached. Deputy Prime Minister Yiannis Dragasakis, State Minister Nikos Pappas and Alternate Minister for International Economic Relations Euclid Tsakalotos traveled to Brussels, where they met with a representative of European Commission President Jean-Claude Juncker on Saturday. Greece is thought to be proposing a nine-month extension of its program and for the European Stability Mechanism to provide up to 27 billion euros for Athens to buy back the Greek bonds held by the European Central Bank so it could withdraw them and reduce its short-term funding needs. However, the institutions do not appear interested in such a deal. Instead, they are believed to favor an extension of the bailout program until September, with money Greece has already borrowed for bank recapitalization being used to cover its funding needs over the summer. Athens had some 11 billion euros left over for this purpose but had to return it in February, when it signed the agreement for the current extension, which runs until the end of the month. Creditors see some of this 11 billion euros (but not all, as banks could need further recapitalization) being used to cover its immediate needs, which include paying the International Monetary Fund 1.6 billion euros by the end of the month and covering two bonds worth 6.7 billion euros, which are held by the ECB and mature in July and August. Government sources told Kathimerini that the delegation sent to Brussels was prepared to commit to cuts to higher pensions and public sector salaries, to introduce debt and deficit “brakes” through legislation and to create escrow accounts into which it will pay funds that can only be used to pay off public debt so there can be no doubts in the future about whether Greece has the money to pay its creditors. Sources said the Greek government was also close to agreeing with its lenders on the primary surplus targets for the next years. The institutions are asking for 1 percent of GDP this year, 2 percent in 2016, 3 percent in 2017 and 3.5 percent from 2018 onwards. Athens is also said to be prepared to increase revenue from value-added tax to the lenders’ target of 1 percent of GDP. Greece locked in ‘last try’ talks with bailout negotiators by Peter Spiegel in Brussels and Kerin Hope in Athens Financial Times, June 14 [full text] <http://www.ft.com/cms/s/0/5530f788-1288-11e5-bcc2-00144feabdc0.html> Talks between Athens and its international bailout creditors were expected to resume late on Sunday after Greek government officials were told to submit a final list of economic reforms in order to secure €7.2bn in desperately needed rescue aid. The request came in a meeting in Brussels on Saturday between Nikos Pappas, aide-de-camp to Alexis Tsipras, Greek prime minister, and Martin Selmayr, chief of staff to Jean-Claude Juncker, the European Commission president who has played a central role in trying to broker an 11th-hour deal. A spokesman for Mr Juncker would only say that talks would continue on Sunday. But others briefed on the talks said the meeting had been “difficult” and that senior eurozone officials were concerned whether a deal could be reached in time for Greece to access the aid before its bailout expires at the end of the month. “Positions are still far apart,” said one EU diplomat. “It’s not certain there will be an outcome.” Another senior eurozone official said the Greek team returned to Brussels on Saturday without new proposals and that Sunday’s evening session would be a “last try.” “Greek movement [is] not discernible,” said the official. “I think they do not want a solution.” Mr Pappas, the Greek minister of state and a longtime political ally of Mr Tsipras’, took to Twitter to push for politicians to become engaged in the negotiations rather than technocrats who normally hammer out such agreements. “A political solution is needed to permanently exit from the crisis,” Mr Pappas wrote. Eurozone officials are pressing for a deal on a full list of economic reforms to be reached early this week so that it can be presented to a meeting of eurozone finance ministers at their regularly scheduled monthly gathering on Thursday. Without approval of the eurogroup at that meeting, officials believe there will not be enough time for national parliaments to approve the bailout aid before the programme expires on June 30. “A credible proposal needs to be tabled by the Greeks in the next 24 or so hours,” said Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy. “Otherwise it’s looking like game over for Athens.” Already, officials believe any deal will have to be accompanied by an extension of the current programme, since there is no longer enough time for Greece to legislate and implement the agreed reforms before the end of the EU bailout. Under an extension, subtranches would likely be paid out over the course of July in order for Athens to meet a €3.5bn bond redemption due on July 20. In a sign Athens is aware it will not get additional funding before the end of the month, the government last week ordered all local and municipal governments to deposit surplus funds to the Greek central bank. Greece owes €1.5bn to the International Monetary Fund on June 30 and it remains unclear whether Athens has the funds to make the payment. Before sending his negotiating team back to Brussels, Mr Tsipras told his close advisers on Friday that he needed a deal that could be accepted by comfortable majority in parliament with the backing of the Greek people. “If we get a viable agreement, no matter how tough the compromise, we will put up with it since our only aim is to get out of the crisis and the humiliating [bailout],” Mr Tsipras was quoted as saying. “But if Europe wants a split and the humiliation to continue, we’ll take the decision to say no, a big no, and we’ll fight for the dignity of our people and our national sovereignty.” For nearly two weeks, creditors have been asking Athens to come back with a counterproposal that would fit within a broad programme outline that sets a gradually increasing series of budget surpluses. Under the creditors’ plan, Athens would need to find measures to hit a primary budget surplus — revenues less expenses when interest on sovereign debt is not counted — of 1 per cent of gross domestic product this year, rising to 2 per cent next year and 3 per cent in 2017. By 2018, the primary surplus would need to hit 3.5 per cent. Athens has objected to pension cuts and energy tax increases to hit those targets, and has countered with a slower path to the 3.5 per cent target in 2018: with 0.75 per cent this year, 1.75 per cent next year, and 2.5 per cent in 2017. “1.2 per cent was utterly feasible in late March,” Yanis Varoufakis, the Greek finance minister, wrote on Twitter over the weekend of this year’s target. “1 per cent infeasible after three more months of induced asphyxiation.” Greece’s Last-Ditch Talks Aim at Agreement Before Monday by Marcus Bensasson and Jonathan Stearns BloombergBusiness, June 13 <http://www.bloomberg.com/news/articles/2015-06-13/greece-s-last-ditch-talks-aim-at-agreement-before-monday> . . . An attempt by Juncker to broker a compromise allowing Greece to defer 400 million euros ($451 million) of cuts in small pensions if it reduced military spending by same amount was spiked by the IMF, Frankfurter Allgemeine Sonntagszeitung reported, citing unidentified people with knowledge of the negotiations. The EU declined to comment on the report. . . . _________________________________________________________ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
