We won’t blackmail EU says Greek PM

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Published: Friday 13th February 2015 by The News Editor

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Greece and its eurozone creditors have taken visible, if modest, steps to bridge their differences over Athens’ demands to lighten the load of its bail-out – but an imminent deal still appears to be still some way off.

Following weeks of haggling, the two sides made a series of encouraging noises at a summit of European Union leaders and even agreed to start technical discussions to inform a meeting of the eurozone’s finance ministers on Monday.

Investors are hopeful that a deal will be reached to avoid Greece’s exit from the euro and Greece’s main stock market closed around 5.5% higher yesterday.

“Europe always has been geared towards finding compromises,” said German chancellor Angela Merkel. “Compromises are agreed when the advantages outweigh the disadvantages. Germany is ready for this.”

Mrs Merkel has faced a barrage of criticism in Greece for being the key cheerleader of the austerity policies that prime minister Alexis Tsipras wants to consign to history.

The Greek leader came to power last month on a promise to scrap the country’s bail-out in favor of a new, lighter programme. Despite the tensions surrounding their meeting, the two leaders exchanged warm greetings, holding each other by their elbows, and chatting amiably, if briefly.

Mr Tsipras expressed his hope that a “mutually acceptable” debt deal could be secured next week at the euro-group meeting and spoke in language that would probably cheer many of the sceptics in the 19-nation eurozone.

“The Greek delegation will take part in these meetings with crystal clear proposals and we will try and convince, not blackmail, our partners about our proposals,” he said.

“Our programme will respect European rules …. we will keep balanced budget, respect the fiscal rules of the EU. We don’t want to go back to era of deficits.”

Mr Tsipras also said his government would propose a set of reforms particularly dealing with the “shortcomings of the Greek state” such as corruption and tax evasion.

“The spirit that prevails in the European Union is a spirit of compromise to the benefit of all the parties,” he said.

In essence, the Greek government has said it will not extend the current bail-out package and its associated austerity and wants to negotiate a new bridge programme that will tide Greece over during the coming months and prevent a damaging exit from the euro.

Mr Tsipras and his radical-left Syriza party blame the current policies of budget austerity for choking Greece’s economy.

Despite a recent modest return to growth, the Greek economy is around 25% smaller than it was before the crisis and poverty and unemployment have swelled. Greece is lumbered by huge debts which stand at around 175% of GDP and it has repayments this year that it will have trouble meeting without outside help.

“The transition to a new programme is the main subject of our negotiation,” Mr Tsipras said. “The medicine that Greece has taken with this fiscal consolidation has devastated this country. This (the bail-out) is over, forget it, it no longer exists.”

Without an agreed new programme, Greece faces bankruptcy – and a possible exit from the eurozone, a development that would damage Greece’s economy, at least in the short term, and throw global financial markets into turmoil.

Earlier, following a conversation with Jeroen Dijsselbloem, the head of the euro-group of finance ministers, Mr Tsipras agreed to allow representatives from his government to meet those from the European Commission, European Central Bank and International Monetary Fund to discuss technical matters regarding Greece’s current bail-out.

The findings will inform Monday’s euro-group meeting, the last scheduled one before Greece’s bail-out programme expires after February 28.

Mr Dijsselbloem said he hoped, at the very least, that the discussions would clearly illustrate the issues, the extent of the differences between the two sides and “whether we could adjust the current programme, put in the new ambitions and ideas of the Greek government, and still have a viable programme to work on over the next months”.

But he sought to downplay expectations that a deal on Monday would be ready to be signed.

“Let me seriously douse your expectations on that point,” he said. “It really will be difficult. We are politically far apart.”

It seems that Europe’s leaders are open to tweaking the policy requirements of the bail-out to deal with the new Greek government’s priorities. But they will want to see off-setting measures to increases in the minimum wage, for example.

“A measure that is annulled must be replaced with another that has the same budgetary, fiscal impact,” said Jean-Claude Juncker, the president of the EU’s executive branch, the Commission. “It is on that basis that we will try to find an agreement over the coming days.”

Many of Greece’s European creditors, particularly Germany, are hesitant to give in to Greece too easily for fear of setting a precedent for countries that run up excessive debts. The 240 billion euros (£178bn) in rescue loans Greece is getting come from taxpayers in other countries.

Many analysts think Europe will once again achieve a deal at the last minute, with Greece agreeing to a bail-out extension provided the required budget austerity measures are eased and Greece implements reforms.

Published: Friday 13th February 2015 by The News Editor

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