Optimism for new Greek bailout despite German misgivings

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ATHENS: Debt-ridden Greece and its creditors appeared on track Monday to finalize the terms of a third bailout agreement despite the misgivings of EU paymaster Germany.

After Sunday’s talks pushed on until 3 a.m. Monday, negotiators were back at the table seven hours later, fine-tuning the list of new reform commitments to be required of the radical left Greek government in exchange for the 86 billion euro ($94 billion) lifeline.

The talks between Greece’s finance and economy ministers, Euclid Tsakalotos and Giorgos Stathakis, and the ECB, the International Monetary Fund and the European Stability Mechanism resumed “with intensity but without friction,” a government source told Agence France-Presse.

The new funds will enable Athens to avoid yet another loan default, as it faces an August 20 deadline to repay 3.4 billion euros to the European Central Bank.


The ANA news agency said the negotiators hoped to clinch an accord by Tuesday at the latest, while Stathakis said ahead of Saturday’s negotiations that the talks were “in the final stretch.”

‘Thoroughness over speed’
But Germany may stand in the way of a full disbursement of the third bailout on top of two earlier packages totaling 240 billion euros.

Appearing to throw cold water on the optimism voiced by the two sides, German government spokesman Steffen Seibert told reporters: “The principle ‘thoroughness over speed’ applies here in particular.”

Berlin favours a stopgap solution such as the short-term EU bridging loan of seven billion euros that enabled Greece to meet debt payments to the IMF and ECB in June and July.

German lawmaker Ralph Brinkhaus, a top official of Chancellor Angela Merkel’s CDU party, said earlier Monday that such a solution would be “better than a bad agreement.”

Sticking points include a variety of seemingly minor issues such as raising a solidarity tax on large incomes and VAT (sales) taxes on private studies, petrol for farmers and beef.

Another decision concerns whether to create a “bad bank” to dispose of some 90 billion euros in bad loans encumbering many Greek banks.

Parliament may vote on the accord on Thursday, after which eurozone finance ministers could be asked to approve it on Friday.

Snap elections?
Greek Prime Minister Alexis Tsipras is meanwhile under pressure from many in his radical left Syriza party who say the new accord will pile further austerity on a weakened economy and goes against the party’s campaign pledges.

But with his popularity among Greeks still high, Tsipras has warned the dissidents of early elections in the autumn if they continue to resist the measures.

Former energy minister Panagiotis Lafazanis, who has voted against the new bailout agreement, has dismissed it as “a negotiating fiasco” and said Tsipras could not “avoid the outcry by resorting guiltily and hurriedly to elections.”

“Neither a Syriza-led government nor the country have a future if we accept a third memorandum,” he said in an interview with Avgi on Sunday.

Iskra, a website of the Lafazanis-led Left Platform, the anti-euro group inside Syriza, on Saturday raised the prospect of snap elections as soon as the first half of September.

Quoting anonymous government sources, the website said the plan was to rush the bailout accord through parliament and then immediately call for snap elections in order to “purge” MPs who oppose the new deal.

AFP

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