Greece’s radical new prime minister was yesterday scheduled to meet with the head of the Organisation for Economic Co-operation and Development (OECD) over reforms he is seeking to replace the “toxic” terms of his huge bailout, with Athens still at loggerheads with its international creditors.
The meeting between Greek Prime Minister Alexis Tsipras and OECD chairman Angel Gurria comes ahead of an emergency meeting of eurozone finance ministers today.
In those talks, Greece is expected to plead its case for stop-gap financing, with a view to clinching an austerity-free reform deal to run from Sept. 1.
Tsipras is pushing for creditors to loosen the tough conditions of the 240 billion euro (US$271.8 billion) bailout Greece was forced to accept in the aftermath of the 2007 financial crisis, to allow it to spend more in order to give its economy a boost.
Athens is expected to propose that the “toxic” fiscal obligations of its present EU-IMF bailout deal — which has seen it saddled with debt worth 1.75 times the country’s entire annual economic output — be replaced by a 10-step reform blueprint drawn up in cooperation with the OECD, a Greek finance ministry source said on Monday.
However, Germany and the EU have led calls for Tsipras, whose radical left SYRIZA party stormed to victory in elections last month, to be more realistic.
European Commission President Jean-Claude Juncker told Greece it “must not assume that the overall mood in Europe has changed so much that the eurozone will unconditionally adopt” Tsipras’ proposals.
Juncker also said he did not expect any new deal to be reached at a full EU summit in Brussels tomorrow, a day after the emergency finance ministers’ meeting, despite Tsipras saying he was “optimistic that we can reach a compromise.”
German Chancellor Angela Merkel on Monday pressed Greece to present a “sustainable” finance plan that respects the “basic rules” of the bailout program, as Athens’ insistence sparked fresh fears of a euro exit.
Greece is under pressure to woo its international creditors as quickly as possible, because the European portion of the EU-IMF bailout is due to expire at the end of the month.
Tsipras and Gurria were scheduled to meet in Athens yesterday to confer on the reforms to be discussed.
The new government is only ready to deliver a budget surplus of 1.5 percent of GDP, rather than the 3 percent forecast for this year under the previous conservative administration, a finance ministry source said.
And Greece continues to request its share of European Central Bank profits from Greek state bonds.
So far, the suggestions have left the European Commission and main paymaster Germany cold. The Greek approach appeared to baffle German Finance Minister Wolfgang Schaeuble, who said: “I still don’t understand how they want to do it.”
“If they want our help, there needs to be a program” agreed to with creditors, rather than emergency assistance, he said.
British Prime Minister David Cameron on Monday moved to draw up contingency plans for “Grexit.”
A follow-up meeting of eurozone finance ministers on Monday is seen as the last chance for Greece to back down and request an extension to the current bailout or reach an interim deal.
Greek Minister of Finance Yanis Varoufakis had earlier warned of the damage a Greek exit could inflict on the eurozone, comparing the single currency bloc to a house of cards.
“If you take out the Greek card, the others will collapse,” he told Italian state television.
Swiss global financial services firm UBS AG said “crunch time” was approaching, but thought a compromise was possible through an extension of debt maturities and reduction in Greece’s primary surplus.
In comments likely to fuel the flames, Germany’s economy minister rejected calls by Greece for Berlin to pay reparations for World War II damage by the Nazis, insisting the issue was concluded 25 years ago.
“The likelihood is zero,” German Minister for Economic Affairs and Energy Sigmar Gabriel said.
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