Saturday, 11 March 2017

Towards agreement, gradually

What are Greece’s chances of clearing its current assessment with its creditors? It depends on whom you ask.

The most senior of those creditors, the International Monetary Fund, is typically cagey. “What I can say is there has been progress in some important areas and we welcome that. However, differences remain in important areas,” was the cryptic statement from IMF spokesman Gerry Rice on 9 March, when staff-level talks in Athens broke off.

The finance ministry issued an off-the-record statement from “a government official participating in the talks” – interpretable as finance minister Euclid Tsakalotos – saying that a staff level agreement would be achieved “fairly quickly”. Asked whether the agreement would be achieved by the march 20 Eurogroup, the official said “I think it will note the progress that has been made.”

Perhaps the most optimistic of all was Prime Minister Alexis Tsipras, as he briefed reporters after the conclusion of the European Summit on March 10. “I believe it’s feasible to have a technical agreement by the March 20 Eurogroup.”

“Chancellor [Angela] Merkel was exceptionally optimistic – maybe worryingly so,” Tsipras said. “Most people in Brussels are taking it as a given that the Greek issue will be settled in the next few days.”

Tsipras said that other EU leaders also felt it is entirely feasible to have a full agreement including mid-term debt measures by April.

Tsipras is pushing creditors, the IMF and the eurozone, to reschedule Greek debt repayment over a longer period. This is for three reasons: to make it sustainable, to free up more money for investment and to allow Greece to qualify for the European Central Bank’s quantitative easing programme, through which the ECB buys sovereign debt. Greece has been excluded because its debt is deemed un-repayable.

However, even Tsipras doesn’t foresee agreement on labour issues at the staff level, and expects a political agreement with his eurozone partners. These include allowing mass layoffs of more than five percent of a workforce per month – the current limit – and restricting the right to labour action.

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