BRUSSELS: Divided Eurozone ministers halted “very difficult” talks on a Greek bailout deal overnight on Saturday (Jul 11), with just a day left before a final deadline for an agreement to stop Athens crashing out of the euro.
Sceptical nations such as Germany demanded more commitments to a reform plan, while Finland reportedly decided not to accept any new rescue plan for debt-laden Greece.
The meeting of the Eurogroup, comprising finance ministers from the 19-nation single currency area, in Brussels was supposed to pave the way for all 28 European Union leaders to sign a final agreement at an emergency summit on Sunday night billed as the last chance to keep Greece in the euro.
Eurogroup chief Jeroen Dijsselbloem said the “issue of credibility and trust was discussed” amid widespread suspicion of a Greek government that has offered new reforms just days after voters rejected similar terms in a surprise referendum.
“We haven’t concluded our discussions. It is still very difficult but work is still in progress,” said Dijsselbloem after nine hours of gruelling talks, adding that they would resume Sunday morning at 0900 GMT (5pm, Singapore time).
Maltese Prime Minister Joseph Muscat warned that Sunday “will be a long day” thanks to the “inconclusive” Eurozone talks.
Finnish Finance Minister Alexander Stubb was more upbeat, despite reports that Finland’s parliament has decided it will not allow the government to accept any new bailout deal for Greece. “We are making good progress,” he said.
EU Commissioner for economic affairs Pierre Moscovici, who has been among the most sympathetic to Greece’s plight, said: “I am always hopeful.”
‘CAN’T TRUST PROMISES’
The Eurozone was meant to give its verdict on leftist Greek Prime Minister Alexis Tsipras’s new reform plan for a third bailout worth more than 80 billion euros (US$89 billion, S$120 billion), after creditor institutions said it was a positive step forward.
The proposals, including pension cuts and tax hikes, were approved by the Greek parliament in the early hours of Saturday despite opposition within Tsipras’s ruling radical Syriza party.
But Germany’s hardline Finance Minister Wolfgang Schaeuble poured cold water on early optimism at the start of the talks, accusing Athens of repeatedly reneging on its commitments. “Definitely we cannot trust promises,” Schaeuble said. “In the last months hope has been destroyed in an incredible way, even up to just a few hours ago.”
A European source said the German finance ministry had even drawn up an “internal paper” for Greece to leave the Eurozone for five years if it fails to improve its bailout proposals, but added it was not distributed at the Eurogroup meeting.
Finance Minister Michel Sapin of France, which has been Greece’s biggest supporter in efforts to avoid a “Grexit”, said he hoped the talks would “go as far as possible to find a deal”.
A source close to the negotiations said the “climate is not easy” and Greek Finance Minister Euclid Tsakalotos was is in contact with Athens to see how to restore Eurozone confidence in Greece.
Tsipras won the backing of 251 out of 300 deputies in the Greek parliament for his reform plans, even though they are similar to the ones that Greeks rejected in the referendum.
Athens’s creditors fear it will not keep its promises after two previous bailouts worth 240 billion euros merely added to a debt mountain, now worth nearly 180 per cent of the country’s GDP. Greece dived deeper into the mire when it became the first developed economy to default on a huge payment to the International Monetary Fund (IMF) on June 30, the same day as its EU-IMF bailout expired.
In Greece, there is growing alarm at capital controls that have closed banks and rationed cash at ATMs for nearly two weeks. Queueing Saturday at a cash machine in Athens, Vassilis Papoutsoglou, 52, said: “We still don’t know what will happen tomorrow. Can we expect something better, or is it Armageddon?”
The Greek government hoped the vote would give it a mandate to continue the talks with the creditors – but it also revealed the depth of opposition to fresh austerity. Three senior government figures were among 10 MPs who abstained or voted against, and several others from the ruling leftist Syriza party stayed away, prompting commentators to predict a government shake-up.
Tsipras told parliament the plan was “marginally better” than the proposals put forward by the creditors last month and that Greeks would “succeed not only in staying in Europe but in living as equal peers with dignity and pride”.
European Union (EU) President Donald Tusk has said Sunday’s summit is a “last chance” for a deal.
Even if that happens, at least eight parliaments will have to weigh in on a final accord, with Germany’s Bundestag having to vote twice.