Last week saw two summits and two Eurogroup meetings discussing Greece. After no substantial progress was made last week (ending 21 June), the European Council and Euro Summit President Donald Tusk called an extraordinary meeting of EU presidents and prime ministers for Monday 22 June. Since Greece did not submit any concrete proposals over the weekend, the summit ended very quickly. However, hope was renewed, because Greek PM Tsipras indicated that VAT reform and pension reform, which he previously saw as red lines, were negotiable. Renewed hope was, in turn, slashed by German finance minister Wolfgang Schauble before the Thursday Eurogroup meeting, which should have discussed the specifics of the Monday´s proposal. In what some called the “47-seconds reality check”, minister Schauble told the media outside the meeting room that nothing has changed. He only needed 47 seconds and the whole atmosphere reversed. The long-planned Thursday summit failed to resolve the Greek issue, too. A truly last-chance Eurogroup meeting was called for Saturday 27 June. Eurozone ministers made it clear that without a deal on Saturday, Sunday will be day 1 of Greek default talks. The atmosphere was quite pessimistic – PM Tsipras denounced blackmail from his peers´ part after the Thursday summit. The Greeks continued to withdraw money from banks during the week fearing default and messy Grexit, followed by devaluation of the new drachma. But hope was still there, nevertheless. EU leaders and prime ministers all said they are willing to compromise, if the Greeks agree to at least some of their terms. Although there would be no time after a Saturday deal to approve the last bailout tranche before Greek repayment deadline of €1.6 billion to the IMF on Tuesday, it was said there are options to overcome the formal problems and keep Greece afloat until the last bailout money arrives (for example the IMF repayment could be made using money prepared for the Greek banking sector which was never used). The ECB raised the emergency funding limits for Greek banks three times last week to keep the banking system alive.
6th May 2019