Eurozone finance ministers split over Greece

11/7/2015

By Duncan Robinson and Stefan Wagstyl

Eurozone finance ministers were split over the latest economic reforms proposed by Greece ahead of a make-or-break meeting on Saturday on negotiating a possible third €53.5bn bailout of the near-bankrupt country.

While France praised the radical Greek government’s latest bid to secure a deal, Germany led a chorus of sceptics, raising doubts about Greek premier Alexis Tsipras’s ability to deliver the tough measures he is now promising. “We are going to have extraordinarily difficult negotiations,” said German finance minister Wolfgang Schäuble on his arrival in Brussels. α

Greece had earlier cleared the first hurdle in its attempt to stay in the eurozone after the European Commission, European Central Bank and IMF gave the go-ahead for negotiations over a future rescue programme.

Michel Sapin, French finance minister, welcomed the “courage” and “political determination” of the Greek government in winning parliamentary backing for negotiating a deal. Together with the positive assessment of the bailout monitors, this formed a “good basis” for negotiations, he said.

But Mr Schäuble warned that debt relief, a major demand of the Greeks, was not possible under EU law and insisted that Athens’s third bailout programme would have to be watertight in terms of the promised reforms and underlying forecasts. “We are determined not to put up numbers that everybody knows no one can believe,” said Mr Schäuble.

Piling the pressure on Athens, Hans Jörg Schelling, Austria’s finance minister, said Greece had to start work on reform legislation and pass the relevant laws within two weeks.

The bailout monitors said the Greek proposals could be a “basis” for a new rescue programme under “certain conditions”, according to two officials.

Although the institutions approved the plans as a “basis” for negotiations, they also called for clearer and more detailed targets from Greek negotiators on things such as opening up professions in the country, according to EU officials.

An EU diplomat said: “Under certain conditions, they jointly see the proposals as a basis for negotiating an ESM programme.”

Mr Sapin’s optimism reflects the role Paris has played in recent weeks in trying to build bridges to Athens even after Greeks voted in last Sunday’s referendum against a rescue package very similar to the one Greece has now proposed.

France, and the European Commission, have attempted to rally support, in the face of scepticism from hardline countries, led by Germany.

Speaking to reporters ahead of the meeting, Pierre Moscovici, the EU’s French economy commissioner, said: “It is difficult to overstate the importance of the decisions that are before us: for ten million Greek citizens who have sacrificed so much and want to stay in the euro; for the entire eurozone, which starts coming out of a terrible crisis and is in need of stability and confidence; for the global economy, too, which is facing enough uncertainties without adding another.”

Greece put forward a host of reforms earlier this week as part of a bid to win a third bailout worth €53.5bn over three years. Greek lawmakers overwhelmingly backed the proposals in a late-night session in Athens on Saturday morning, with pro-EU opposition parties coming to the government’s aid after a rebellion.

EU officials warned on Friday that the Greek proposals did not include the cash needed to recapitalise the country’s struggling banking sector, meaning that the total bill could reach more than €80bn.

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