‘Paperology’ continues, but mood darkens in Greece talks

9/6/2015

Peter Spiegel in Brussels

Greece has submitted yet another last-minute economic reform proposal to its bailout creditors — and its creditors have once again dismissed it as lacking.

The back-and-forth was the latest document exchange between Athens and Brussels as Greece tries to break a months-long impasse and gain access to desperately needed bailout cash. The process has become numbingly familiar in recent weeks — so much so that the European Commission has even given it a name: “paperology”.

But the most recent exchange differed in one vital respect: the mood of cautious optimism that has surrounded the talks in recent weeks is rapidly giving way to fear and suspicion. Gone this time were the private reassurances that a deal would ultimately be concluded, allowing the Greek government to receive an infusion of euros before its bailout expires at the end of the month.

Instead, officials from various institutions involved in the talks now worry that Greece’s hard-left government is dangerously miscalculating. Athens, they believe, is intentionally prolonging the negotiations to the last minute in a belief that its creditors will eventually “blink” and agree to grant wholesale debt relief and new bailout cash with few strings attached.

“They do not want a deal with us; they just want debt relief,” a senior official with one of Athens’ bailout monitors said after reviewing Greece’s latest offer.

“I don’t think they will move. I think they’re waiting for us to blink, and we won’t,” the official added. “They don’t understand we’re not back in 2012 where the Europeans were willing to just throw money at the problem.”

The darkening mood was evident at the European Commission, which has long been viewed as Athens’ best ally in the stand-off. According to officials briefed on Tuesday’s meeting of 29 commissioners in Strasbourg, Jean-Claude Juncker lit into the Greek government, saying Athens had “lost the European Commission”.

“They failed to see the best friend of the small and medium-sized member states is the European Commission,” said one official, recounting the EU president’s remarks to his fellow commissioners.

Greek officials insist that is not the case. One senior official said the proposal they submitted on Monday night had halved the difference between the budget surplus targets laid out by creditors in a proposal last week, and a counterproposal made by Athens. “The creditors should do the same,” the Greek official said.

But creditor officials who have seen the document said that while there was a narrowing of the gap on the surplus targets, there was no discussion of how Athens intended to make up the difference — particularly in the disputed areas of raising value added tax on energy or on pension cuts.

Instead, Athens submitted a second paper on debt relief. Creditors have repeatedly insisted the matter was off the table until an agreement on economic reforms that Greece would adopt to release the remaining €7.2bn in the bailout programme.

In one sign of the pessimism surrounding the negotiations, several officials suggested that a meeting due to be held on Wednesday between Alexis Tsipras, the Greek prime minister, and his German and French counterparts — all of whom are scheduled to be in Brussels for a gathering of EU and Latin American leaders — might not take place.

Mr Juncker told the commission he would not attend if Mr Tsipras “came with the same kind of attitude as he had last week”, officials said, and Jeroen Dijsselbloem, the Dutch finance minister who heads Greek negotiations on behalf of his fellow eurozone finance ministers, also suggested the meeting might be scrapped.

Greek officials insisted they, too, did not want Mr Tsipras to participate in a meeting unless there were signs creditors were compromising.

“My take is that [the Greeks] are marking time until the drop dead moment has arrived, and then [they believe] we should blink,” said another senior eurozone official involved in the talks. “I am worried that they have still not understood [when] the real drop dead moment is.”

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