VIDEO – Contrarian Francois Hollande’s efforts to maintain in Athens Euro zone, Merkel and her allies require acts of Alexis Tsipras before discussing a third European aid plan.
If there was to be only one point of agreement between all participants of this new weekend of intense negotiations in Brussels on the fate of Greece is that the exchanges have been “extremely hard or extremely violent” according to a participant in the closed ministerial session on Saturday. The Heads of State and Government of the nineteen member countries of the euro area continued their discussions late Sunday night after taking over from their finance ministers. They had played a marathon Eurogroup of fourteen hours, suspended by night. Almost six months after the election victory of the leader of the radical left Syriza Greek, Alexis Tsipras, the confrontation between Athens and its creditors should reach an epilogue. The challenge was to save Greece from imminent bankruptcy or let out of the euro zone – the famous Grexit – and dive into the unknown.
Francois Hollande warned on arrival in Brussels. ” At stake is not only Greece, the issue is Europe. “” France will do everything to reach an agreement tonight, “pledged the head of state. In front, Angela Merkel issued a different story: “There will be tough discussions, and there will be no agreement at all costs.”
The sequence had however started auspiciously . After the adoption of the latest proposals of Greek reforms by Parliament in Athens, Friday, the institutions (the European Union, the European Central Bank and International Monetary Fund) had welcomed them so “positive”. Logically, since these reforms to clean up the Greek budget (VAT hike, retirement elongation, establishing an independent fiscal authority, among others) resumed largely European applications of 25 June, austere prescription specifically rejected by 61 3% of Greek voters on 5 July.
But on Saturday, the Eurogroup has turned to “confrontation” to use the term Martin Schulz, President of the European Parliament, invited to the summit. On the front line on the forehead hard, Germany and Finland. Berlin considered insufficient the Athens measures, arguing in particular that the economic situation of Greece has “significantly deteriorated for several months.” As for the Finnish Government, he opposed a new financial aid plan, which would not pass the dam parliament. In fact, “some of the Ministers clearly had in mind the idea that the best solution was an exit from the euro,” says a participant of this confrontation. Mario Draghi has, the source said, not like the opinions of the institutions being walked.
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Led by the new Minister of Finance, very civilized Tsakalotos Euclid, the Greek delegation to the Eurogroup has worked hard to give serious pledges. It was to restore confidence and credibility, damaged durably between partners. Greece has pledged to pass laws in record time – before 15 July! -. Imposed by creditors, on key reforms (VAT, retirement, tax collection)
The Eurogroup finally produced a text that the heads of state were to decide the final points of divergence. A measure of the offers on the table, is now considered necessary by Germany. This is a fund that would manage Greek assets to be privatized. The draft agreement mentions 50 billion euros. A very exaggerated figure by Martin Schulz, saw the value of goods likely to be privatized. These assets were impounded by creditors to bail out the debt. A humiliating prospect for the government Tsipras, who was elected on a promise to escape the supervision of the Troika. Around 22 am Sunday, a Greek delegate described as “very bad” actions of the Eurogroup. The heads of state tried to find a compromise, including on the sensitive issue of this fund.
In exchange for these tangible pledges, the Heads of State hoped to give a mandate to the Commission and the Eurogroup before negotiations are opened on a third aid package. This strong political signal would allow the ECB to increase its financial infusion to Greek banks on Monday. Greece battled so as to refer a debt restructuring in the final document.
The negotiation of the new aid plan, the amount of which is encrypted by the Eurogroup between 74 and 86 billion euros (partly to bail out banks), could last until late July, says a source close to the negotiations. Several parliaments, including those of Germany and Finland, will give the green light to the negotiations. Too long a delay, said a Greek source, given the critical situation of the banks and the Treasury. ‘Bridge’ was in the financial study to allow Greece to escape default vis-à-vis the ECB payment on 20 July.
Sunday late evening, the possibility of a failure was still not ruled out. The Eurogroup document explicitly for the “wrong end”, ie Grexit.