BRUSSELS: Eurozone finance ministers will on Monday seek the outline of a deal to unblock bailout cash for Greece before fraught elections across Europe endanger a quick fix.
Greece’s eurozone and IMF creditors remain locked in a tense stalemate over debt relief and budget targets, spooking financial markets with fears of a return of the “Grexit” crisis.
Athens will soon need the latest tranche of the huge 86-billion-euro ($91 billion) bailout agreed in 2015 so it can afford to pay seven billion euros in debt in July, or else risk defaulting.
Greece said last week that it hoped for a “political agreement in principle” at the meeting of the Eurogroup of 19 eurozone finance ministers in Brussels.
A senior eurozone official involved in the talks said that the “best case scenario” on Monday was a bare bones outline of a deal, with the tough choices left out of the spotlight to negotiators who will return to Athens.
“It’s important to have a solution as soon as possible because the markets are starting to react,” the eurozone official said.
German Chancellor Angela Merkel meets with International Monetary Fund chief Christine Lagarde and European Commission head Jean-Claude Juncker in Berlin on Wednesday, in hopes of making further progress.
The Europeans remain at loggerheads with the IMF over the Washington-based lender’s demands for easier budget targets and for debt relief for Athens.
The IMF insists that budget targets demanded of Greece by the Europeans are too ambitious, and has demanded tax hikes and pension cuts to meet them as a condition to lend further to Athens.
Greece, led by leftist premier Alexis Tsipras, refuses the further tightening of the screws calling it an unfair addition to what was already delivered.
Meanwhile eurozone hardliners led by Germany refuse to backdown on the IMF’s call for debt relief, while insisting at the same time that the IMF stays on board the bailout.
“It’s a very tough negotiation,” said a negotiator on condition of anonymity.
The stakes could hardly be higher as the last such crisis, which followed Tsipras’s election, nearly saw Athens expelled from the euro.
A default by Athens is still some months off. Greece owes seven billion euros in July and can survive on short-term loans until then.
But fears are that a long series of elections, starting with the Netherlands in March and France in April, could delay matters dangerously.
Anti-EU candidates are leading polls in those elections and officials worry that Greece could get ensnared in the campaigning.
After Monday, eyes will be on Merkel’s meetings with Lagarde and Juncker. Juncker is considered an advocate of the government in Athens, frequently referring to Tsipras as a “friend”.
“Absent political agreement on Monday, a deal … is likely to drift until April or indeed May,” said Mujtaba Rahman, an analyst at the Eurasia group risk consultancy.
The delay would worry already jittery markets. Greece’s two-year borrowing rates have already leaped to as high as ten percent in recent weeks.
Over time, “this would jeopardise Greece’s fiscal performance, market access (for lending), and increase the odds of a fourth bailout,” Rahman said.