18 June 2015

 20.21 – End to a tense day: No deal in sight

With no deal in sight, it is clear that now Greece is expected to come up with new proposals. This seems to be the only way to break the deadlock and move the negotiations forward. Eurozone leaders will meet on Monday evening. If Greece doesn’t bring anything new to the table, they may have little to talk about.

That’s it from me and my colleague Vincenzo: We’ll be back tomorrow with more analysis and comment.

20.11 – Varoufakis: I had radical new proposals to “end crisis today”

Greek Finance Minister Yanis Varoufakis is still taking questions at his press conference. Here are the key bits of what he had to say.

  • Claimed he had presented “a radical new plan” to the Eurogroup, including an automatic deficit brake and an independent fiscal body in charge of monitoring the Greek budget. Said the package he presented today has the capacity to end the Greek crisis for once and all.
  • Said an ‘intra-Troika’ ESM-ECB debt swap would solve Greece’s immediate funding problems, by buying Greece more time.
  • Greece has consulted with the OECD for a reform programme independant of the Institutions.
  • Refused to speculate on a possible Grexit – but said we “are dangerously approaching a state of mind that accepts an accident.”
  • Said that capital outflows started before SYRIZA came to power, and are a result of the previous government “instilling fear” in order to hang on to power.

20.00 – “Tomorrow, yes. Monday, I don’t know”

According to officials quoted by Reuters, at today’s meeting Dijsselbloem asked ECB Executive Board Member Benoît Cœuré whether Greek banks would be able to open tomorrow in light of the huge deposit outflows they suffered over the past few days.

And Cœuré’s answer reportedly was,

Tomorrow, yes. Monday, I don’t know.

If true, this would be the clearest hint to capital controls in Greece that the ECB has made to date.

19.35 – Lagarde: Key emergency is to restore dialogue “with adults in the room”

The joint press conference of Eurogroup Chairman Jeroen Dijsselbloem, EU Economic and Monetary Affairs Commissioner Pierre Moscovici and IMF Director Christine Lagarde has just come to an end. The language was quite strong. Lagarde urged to “restore dialogue with adults in the room”, while Dijsselbloem said that reaching an agreement requires “politicians who’re prepared to tell the truth to the people”. The bottom line was: there can be no agreement unless the Greek government comes up with new credible proposals.

Importantly, Lagarde reiterated that Greece will be considered “in default vis-à-vis the IMF” if it misses the €1.6bn payment that falls due on 30 June. Our Raoul Ruparel did a great job explaining what that would mean (see here). One key consequence would be that, as Lagarde herself explained during the presser, the IMF would not be allowed to make further disbursements until all the arrears are paid.

Dijsselbloem acknowledged that it is now “unthinkable” to successfully conclude the review of the Greek bailout programme and therefore disburse any bailout money before 30 June – meaning that an extension of the current programme will have to be considered.

Even Moscovici, traditionally the most optimistic of the trio, had to admit that talks have stalled for at least two weeks. He called on the Greek government to return to the table “seriously” in order to avoid a “catastrophe”.

There will be an emergency summit of Eurozone leaders on Monday. The risk is that it will make little difference unless the Greek government puts forward a revamped set of proposals so that discussions at the technical level can also move forward.

19.06 – Message to the Greek people: “There are no easy answers”

Questioned on his message to the Greek people, Eurogroup head Dijsselbloem says, Greece’s creditors’ are committed to the Greek people and to keeping Greece in the Euro. He urges politicians to “tell the truth to their people,” (a barb at Syriza’s election promises) there are no “easy answers,” he adds.

18.50 – Emergency meeting of Eurozone heads of state and government

European Council President Donald Tusk has confirmed via twitter that there will be an emergency meeting of Eurozone heads of state and government on Monday. Things must be bad. While the leaders can hold an political discussion, if there is no progress on the technical level between today and Monday – there is not much they can do to edge closer to an agreement.

Tusk announced in a statement:

In light of the outcome of the Eurogroup meeting today, I have decided to convene a Euro Summit on Monday 22 June at 19h00. It is time to urgently discuss the situation of Greece at the highest political level.

Donald Tusk, European Council President, 18 June 2015

This also means that the Eurogroup will have to have another meeting before Monday, according to Dijsselbloem. No word on when yet:

18.30 – Press Conferences begin: “No deal in sight”

The first press conference is now underway with Jeroen Dijsselbloem, Pierre Moscovici,  Klaus Regling and Christine Lagarde. Dijsselbloem opens saying the talks did not go well. We are probably exactly where we were two weeks ago – there’s barely been any progress.

Dijsselbloem’s statement:

  • Talks have not progressed in the last week – or weeks. “Time is running out.” At this point in time there is still time to find an agreement, but not much as there are parliamentary procedures to consider.
  • Ball clearly in Greece’s court to seize the last opportunity.
  • Any agreement needs to be credible. No serious proposals have been put forward by Greece.

Moscovici statement:

  • We knew today would be difficult. We’ve been negotiating with the Greek government for close to five months to find stability for Greece, and with the aim of keeping it the Eurozone.
  • For the past two weeks Greece and its creditors have been at an impasse.
  • It’s time to take decisions – preferably we should have taken them today. Unfortunately, it was not possible.
  • It’s time for the Greece government to seriously reengage in this process. Moscovici, Juncker and Dombrovskis are ready to work around the clock to make this deal possible. This deal is not only possible – but it is also absolutely necessary.

Largarde’s statement:

  • We are waiting. The Institutions have put together some very sensible solutions that are a “clear easing” from what was previously on the table. It cannot be about smoke and mirrors, they have to be tangible proposals. Greece has to make credible proposals – the IMF lends money from 188 countries. We are accountable to all of them.
  • In each review we’ve done of Greece, we’ve always been flexible.

Regling’s statement:

  • Reminds the room that EFSF is holding around 45% of Greek debt. Another €10bn in financial available for the recapitalisation of Greek banks.

18.12 – First sign talks did not go well

It’s looking like the talks did not go well. Commission Vice President Valdis Dombrovskis has just tweeted:

The press conferences are due to start shortly. Stay tuned – we will bring you rolling coverage and analysis. We are shortly expecting the head of the Eurogroup, Jeroen Dijsselbloem, who looked anything but optimistic heading into talks earlier this afternoon.

18.05 – Varoufakis presented “ideas,” Eurogroup now over

Stefan Leifert, a journalist for German broadcaster ZDF says that Varoufakis presented the “ideas” he mentioned on the doorstep “for thirty minutes” at today’s meeting. A debt-write down for Greece was reportedly amongst them. The Eurogroup meeting is now over. As we noted earlier – that probably means not much (if any) progress has been made.

17.50 – Die Zeit: Greece receives “Last offer”

The online edition of German weekly Die Zeit is reporting that Greece is to be made a “last offer”:

  • The current bailout programme would be extended until the end of the year.
  • Greece would get €10bn in financing that would come from funds originally earmarked for banking recapitalisation.
  • The ECB would allow the Greek government to issue an extra €2bn of short-term debt (T-bills). Greek banks would then buy the extra T-bills and post them as collateral in return for ECB liquidity.
  • The IMF would not be involved. It could join at a later stage, but only if Eurozone countries agree to a debt write-down for Greece.
  • In return, Greece would be expected to implement the reforms agreed two weeks ago at a crisis meeting in the German Chancellery (the one featuring Merkel, Hollande, Draghi, Lagarde and Juncker).

Let’s wait for reactions to this report. Our first impression is that the absence of the IMF would very likely to meet with scepticism in Germany and other Eurozone countries.

17.30 – German public think Grexit within six months likely

A new YouGov Deutschland poll released yesterday suggests that almost half of the German public (49%) think Grexit within the next six months is likely. 41% said they think it’s unlikely. The figures have flipped from a poll last month when only 39% considered a Greek Eurozone exit likely and 50% did not.

Likely 39%
Not Likely 50%
Not sure 11%
Likely 49%
Not Likely 41%
Not sure 10%

16.30 – Greek Parliament’s ‘Debt Truth Committee’ concludes Greece under illegal attack by Troika

Some interesting reading in a release yesterday from from the Greek Parliament’s, ‘Hellenic Debt Truth Committee,’ which gives an insight into the mood of Greece’s governing Syriza party. Though the report has a point on the restructuring of Greek debt (more on that here from our Raoul Ruparel) other findings are calibrated to fit the view that Greece’s debt crisis is the result of illegal activities, orchestrated by ‘the Institutions’ (aka the Troika aka the Brussels Group.)

“Until now no authority, Greek or international, has sought to bring to light the truth about how and why Greece was subjected to Troika regime,” says Truth Committee. “[We have] a mandate to raise awareness of issues pertaining to the Greek debt, both domestically and internationally, and to formulate arguments and options concerning the cancellation of the debt.”

Amongst other findings, the report stipulates that:

  • The increase in Greek debt was not due to excessive public spending; but rather due to “extremely high interest rates to creditors”, excessive military spending [but doesn’t count military spending as public spending], illegal capital outflows, state recapitalisation of banks and “the imbalances created by the structural flaws in the monetary union.”
  • The Greek bailout programmes have violated human rights, which the Greek government is obliged to protect under international law.
  • The Creditors’ have stripped Greece of its sovereignty by “coercing” the Greek government to submit to their conditions. “Conflicts with human rights and customary obligations, several indications of contracting parties acting in bad faith, which together with the unconscionable character of the agreements, render these agreements invalid.”
  • Greek debt to the IMF and ECB should be considered illegal. It also finds the the loans Greece received from the Eurozone’s EFSF bailout fund, loans from private creditors and bilateral loans to be illegal.

It concludes:

People’s dignity is worth more than illegal, illegitimate, odious and unsustainable debt…Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector.

Hellenic Debt Truth Committee Press Release, 17 June 2015

Read the full press release from the Committee here.

16.00 – Podemos leader: Defeating the Greek government has become an instrument to pressure us

The Eurogroup meeting is under way. In the meantime, the Wall Street Journal has published an interview with Pablo Iglesias – the leader of Spain’s anti-establishment party Podemos. He says,

The rise of Podemos wasn’t beneficial for our friends of SYRIZA. Since Podemos has existed, defeating the government of Greece has been converted into another instrument for trying to pressure us.

Pablo Iglesias, leader of Podemos – 18 June 2015

Interesting remarks. There can be little doubt that the rise of Podemos and other anti-austerity parties across Europe has played a role in the negotiations with Greece. With a general election on the horizon, Spain’s centre-right government – which had to push through budget cuts and structural reforms during his four years in office – has taken a rather intransigent stance in the talks with Athens precisely to send a clear message to the domestic electorate: there’s no alternative to the recipe we have been implementing.

15.30 – What impact would Grexit have on the UK?


The UK does not contribute to the Eurozone’s bailout funds, but it has lent money to Greece via the IMF. According to Open Europe calculations, the UK has put up £1.72bn of the £37.8bn IMF aid package for Greece. However, even if there were a Grexit, we think that the UK would get this money back. As our colleague Raoul told the BBC today:

The IMF is the most senior creditor of all those who have lent to Greece, so would be the first to be paid back. I think the chances of the UK losing out are quite low.

Raoul Ruparel, BBC News

15.15 – Summary of doorsteps: Contagion risk low, say ministers – Progress dependent on Greece making new proposals

“The ball is in Greece’s camp”. This is the main message from Eurozone finance ministers’ doorstep declarations. Greek Finance Minister Yanis Varoufakis said he will be presenting “ideas” – which could mean that the Greek government will submit new proposals to its counterparts.

One thing seems certain: if the Greek government has nothing new to bring to the table, today’s meeting could be “quite short” (in the words of Austrian Finance Minister Hans Jörg Schelling). The proposals put forward by the three institutions – the European Commission, the IMF and the ECB – remain the basis for any possible agreement. Some flexibility may still be allowed, but the numbers need to add up.

Significantly, quite a few finance ministers – Italy’s Pier Carlo Padoan, Spain’s Luis de Guindos and Finland’s Alexander Stubb among others – have talked down the potential for contagion from Grexit and stressed that the Eurozone (and the respective countries) would be able to weather it.France’s Michel Sapin was probably the most optimistic, suggesting that the differences between the two sides aren’t as “monstrous” as some are saying. Asked about the prospects of a deal, Slovakia’s Peter Kažimír resorted to religion, saying: “I’m catholic, so I do believe in miracles.”

Everything seems to indicate that there will be no deal today. It will be interesting to see whether Greece will actually put new proposals on the table – and what these proposals are. That could be the key to any progress being made.

 13.25 -14.50 Eurogroup doorsteps set low expectations for talks

Contagion-risk in event of Grexit low, say Eurozone Ministers

Another theme emerging from the doorsteps was the insistence of several Eurozone Finance Ministers that if there were a Grexit, it would be a blow that the Eurozone could weather. It would be much worse for Greece, they say.

  • Luis De Guindos, Spanish Finance Minister, said that if Greece accepts the proposals from the three institutions then it will be possible to reach an agreement quickly. Contagion to the Spanish economy not the biggest problem, he adds, pointing out that Spain is the Eurozone’s fast growing economy.

Pressure for concrete measures from Athens

A visibly irate German Finance Minister, Wolfgang Schäuble, just fielded questions from reporters. He expects the Greek government to act responsibly in order to fulfill its obligations, he says. In order for the negotiations to move forward, Athens needs to put forward its own concrete measures – for which the partners have been waiting for. If Greece has nothing to present, it’s clear that today’s meeting will be over very quickly.

  • Michael Noonan, Irish Finance Minister, said much the same. Greek proposals have not been concrete enough, however, he doesn’t expect much more detail today.
  • Pierre Moscovici, EU Monetary Commission adds that “without new proposals there a cannot be an agreement.”
  • Christine Lagarde of the IMF said that if Greece puts forward credible measures, then the IMF will “of course” be prepared to examine them.

Varoufakis says he will propose new ideas:

Greek Finance Minister Yanis Varoufakis didn’t have much to say on his doorstep. He will present new ideas from the Greek government today, he says. Meanwhile, other Eurozone Finance Ministers say that unless Greece puts something new on the table, they cannot move forward.

Popular refrain: “Time is running out”

  • Pier Carlo Padoan, Italian Finance Minister, declined to comment on debt relief for Greece, and when pressed on a possible Grexit, said that as time gets tighter, new options are opening up.
  • Speaking to Info Radio this morning French Finance Minister Michel Sapin said that Grexit “would be a catastrophe,” and that France would “fight until the end” to find an agreement with Greece. Arriving at the Eurogroup meeting, he said that he thinks the gap is bluebird.
  • Peter Kazimir, Deputy Prime Minister and Finance Minister of Slovakia said that Greece has to “pay its bill,” there can be “no tricks,” and that the Eurozone is not only about one country – but 19. He added that as a Catholic, he believes “in miracles.

Eurogroup chief: “Too little progress made”

Eurogroup Chief Jereon Dijsselbloem is the first to arrive. He said that Greece has to honour its commitments to its creditors, refusing to speculate as to what would happen if Athens does not pay back the IMF. “Too little progress has been made,” he said, “time is running out.” Any deal, says Dijsselbloem will have to within the framework agreed by the Eurogroup on 20 February.

13.25 – Pensions: Sticking point in talks between Athens and creditors

As we’re still waiting for Eurozone finance ministers’ arrivals and doorsteps, a useful reminder of why pensions remain a big sticking point in the negotiations between Greece and its creditors.

150218GreeceGraph2 itemprop=Source: Eurostat (spr_exp_pens)

13.10 – German Vice Chancellor: Greece would still get aid after Grexit

150618 OE Blog Greece Eurogroup WIWO itemprop=

Some interesting comments from Sigmar Gabriel, the leader of the SPD and the German Economy Minister and Vice Chancellor. In an interview with Wirtschaftwoche published today he says that funds from Greece’s bailout programme would still go to Athens, even if there were a Grexit.

“Many people say: Better an end with terror than terror without an end. But even if Greece were to leave the euro, the aid programme would not end..We cannot allow a country in the middle of Europe to sink completely into poverty.

Sigmar Gabriel, Wirtschaftswoche, 18 June 2015

This is obviously a more conciliatory tone than that struck by his party colleague, Thomas Oppermann this morning (see update from 8.34 below). And it is somewhat of a departure from some of the more stringent comments he’s made on Greece in the past week.

The Vice Chancellor added, however,

If the Greek government prevails in its blackmail of Europe, this would be a beacon for all right-wing nationalists of Europe. It would provide proof: I only have to blackmail Europe, and then I will get my national interests pushed through whatever the cost may be.”

Sigmar Gabriel, Wirtschaftswoche, 18 June 2015

12.45 – Tsipras in Russia as Eurogroup Ministers due to arrive

The doorsteps of the Eurozone Finance Ministers are imminent (we will live tweet and translate their comments if they have anything to say), meanwhile, Greek Prime Minister Alexis Tsipras has arrived in Saint Petersburg to attend an economic forum – he is due to meet Russian President Vladimir Putin tomorrow.Tsipras isn’t doing himself any favours with Bild, which writes, “Euro partners rally to save Greece, and what is the Greek Chief doing? Tsipras flys to Putin!”

BIld Tsipras Berlin itemprop=

Incidentally, here is the op-ed Tsipras wrote for German daily Tagespiegel today, in which he “addresses the popular myth that the average German taxpayer has been led to believe. Namely, that he is paying for the wages and pensions of the Greek people. This is absolutely false,” writes Tsipras.

Read the full piece here in English:

And here in German:

12.20 – IMF: No grace period for Greece if it misses payment deadline

IMF Director Christine Lagarde has said that there would be no ‘grace period’ for Greece if Athens missed its €1.6bn payment to the IMF on 30 June. Lagarde is quoted by Reuters as saying,

 “[Greece] will be in default, it will be in arrears vis-a-vis the IMF on July 1 but I hope it is not the case, I really do.

Christine Lagarde, 18 June 2013, Reuters

Lagarde seems to have opted for a tough stance here. As we have explained on our blog, in principle, the IMF Managing Director has one month to notify the IMF Board of the existence of an outstanding payment – which could be seen as an implicit grace period. The notification to the IMF Board is the point where a country is officially considered to be overdue on the payment.Read more on what happens if Greece does not pay the IMF in time on a post published on our blog in April.

 12.00 – Difficult meeting ahead – closer to Grexit than before

Eurozone Ministers and Commission officials have been echoing Merkel’s remarks this morning. A deal is still possible, but the ball is in Greece’s court. EU Monetary Affairs Comissioner Pierre Moscovici said, “A solution is not only possible, but also absolutely necessary for the good of the Eurozone and for the future of Greece. I hope that all will come to the meeting today with a cool head and the political will [to agree]. I know that the meeting be difficult.”

8.34 – SPD’s Oppermann: We also have to answer to our electorates

Strong Bundestag statements today from Thomas Oppermann, the Parliamentary faction leader of the SPD: Merkel’s centre-left coalition partner. Although the SPD have always been somewhat more sympathetic towards Greece, the fundamental principle of ‘solidarity’ (cash) in return for ‘responsibility’ (structural reforms and budgetary consolidation) is not up for debate.

Oppermann pointed out that all Eurozone governments must also answer to their electorates – who’s taxpayers hold the majority of Greek debt – Greek Prime Minister Alexis Tsipras, cannot behave as though he is the only Eurozone leader acting on a democratic mandate from his people.

8.25 – Die Linke: Troika responsible for Greek mess

Gregor Gysi, the Parliamentary Faction Chief of Germany’s Die Linke, the party most sympathetic to Greece and critical of the  Federal Government’s Eurozone policy – launched a scathing attack after Merkel had spoken this morning, saying that the Greek drama is a direct result of the politics of the Troika, “behind which the Government is also hiding.” He told Merkel:

You are endangering the euro as a whole, and thus, also European integration.

Gregor Gysi, Parliamentary Faction Leader, Die Linke

He was backed by MPs from Die Linke MPs who on a colourful display of solidarity with Greece. Worth noting, however, that they were also defending Russian President Vladimir Putin. So their views are far from mainstream.

8.00 – Merkel in Bundestag: Deal with institutions “still possible”

As her Finance Minister, Wolfgang Schäuble, prepares to face his Greek counterpart in Luxembourg this afternoon, German Chancellor Angela Merkel this morning made a statement on Greece in the Bundestag. Speaking in typical “Merkel-ish” she reiterated that a deal is “still possible” and that Germany wants to keep Greece in the euro. She repeated what she’s now said a few times, “Where there’s a will, there’s a way.” However, there was no sign that the creditors’ will budge on the fundamental demands from Greece.

Bild Appeal to Merkel: Time for a clean break

Yesterday, German tabloid Bild – fiercely critical of the German government’s bailout policy – went even further, publishing a piece entitled, “Mrs Chancellor: This is the speech we want to hear from you!” Some choice quotes:

“I speak to you today, because we are at a crucial stage of European development. My oath obliges me to act for the benefit of the German peopleWe will not undertake any further rescue packages for Greece. We have no alternative. The current Greek Government has brought about this decision itself.

For five years we have worked for and fought for Greece to remain part of the euro family. For five years, we have fought to save Greece from national bankruptcy. For  five years, we were determined to help Greece in its distress. Germany alone has allocated87bn in direct guarantees and central bank loans. We have gone to the limits of what is affordable and sometimes beyond.”

I said: If the euro fails, then Europe fails. Today I have to tell you: Europe will fail if we are not brave enough to make a clean break now. Yes, it’s true: Where there’s a will, there‘s a way. But the will must come from all sides. And that’s not the case. Ever since the beginning of this year everything is different.

Bild: Mrs Chancellor: This is the speech we want to hear from you! 17 June 2015

150618 OE Blog Greece Eurogroup BILD itemprop=

Of course, we’re not even talking about a third bailout package for Greece yet. As we’ve noted repeatedly in the past, Greece will likely need some kind of debt relief at some point. It will be no small task for Angela Merkel to get it through the Bundestag and convince the German public. If we ever get there, that is.