7th June 2015

Did Greece lose its last ally in eurozone talks?

Last week saw a number of developments regarding the Greek bailout negotiations. The extended bailout program expires on 30 June. By then, the Greek government of Alexis Tsipras and the international creditors (IMF, EC and ECB) must reach a deal on the disbursement of the last outstanding bailout tranche. This in fact means that Greece must present a credible reform plan in order to receive the very much needed €7.2 billion. But talks have been dragging on since February and there seems to be no tangible result. Mr Tsipras tried to blame the creditors, named “the institutions” in order to avoid the hated name “Troika”, for the impasse – he hinted that the EC and the IMF cannot reach a deal among themselves on what to actually ask from the Greeks. The creditors replied by sending their joint proposal for a list of reforms. The Greeks replied that the list was a bad joke and that it was totally unacceptable. The final problems seem to be labor market and, above all, pension cuts demanded by the creditors. Commission President Jean-Claude Juncker got himself personally involved – which was good news for the Greeks, since he is the most sympathetic to their demands. Angela Merkel held a meeting on the issue, too. The Greeks promised to send a counter-proposal for a reforms list. Also, Mr Tsipras hinted that the upcoming repayment on 5 June to the IMF of some €300 million would be made. But all seems to be different.

The Greek government officially asked to bundle all of its June repayments to the IMF to a single big repayment due on 30 June – a legal option which is very rarely used (last used in the 1970s by Zambia). More importantly, though, Jean-Claude Juncker got angered with the Greeks over the last couple of days. Speaking on Sunday 7 June at the G7 meeting in Germany, he angrily confirmed that he refused an incoming call from Mr Tsipras on Saturday. He further said that the Greek PM had promised him a reforms list on Thursday, but that he never got one. He strongly criticized Mr Tsipras for his speech in the Greek parliament on Friday and accused him of not telling the whole truth.

Nevertheless, all parties are ready to hold further talks. Some insiders even hint that the parties are converging and deal would be reached. Greece is clearly running out of money and the only alternative to the disbursed €7.2 billion is default, followed by a messy euro exit – which nobody, including the Greek population, really wants. According to a recent poll, over 50% of Greeks are in favor of a compromise with the creditors. Since the disbursement itself will take some time (e.g. the German Bundestag has to approve it), the next week or two (but not more) will be crucial.

For more, click here, here and here.

Members of the American Chamber of Commerce in the Czech Republic