 |
| Greece's finance minister, Euclid Tsakalotos, left, with Christine Lagarde, the managing director of the International Monetary Fund, at a meeting of eurozone ministers on Saturday in Brussels. Credit Francois Lenoir/Reuters |
THE GUARDIAN
Greece’s final attempt to avoid being kicked out of the euro by securing a new three-year bailout worth up to €80bn ran into a wall of resistance from the eurozone’s fiscal hawks on Saturday.
The finance ministers planned to reconvene on Sunday, just before European national leaders are scheduled to meet in Brussels for what they have said would be a final decision on whether Greece should qualify for a new aid package, a step aimed at determining whether the country can remain in the euro currency union.
The failure by the finance ministers to reach an agreement, after nearly nine hours of talks, belied the optimism that followed the approval early Saturday by the Greek Parliament of a package of pension cuts, higher taxes and other policy changes long sought by Greece’s international creditors.
It was not clear that the finance ministers’ meeting on Sunday morning would yield a consensus about how to proceed, increasing the possibility that they would leave final decisions to their national leaders, who are to gather in Brussels in the afternoon.
The Eurogroup, with its 19 eurozone finance ministers, has some outspoken critics of Greece. ,Finland rejected any more funding for the country and [there are reports subsequently denied that] Germany called for Greece to be turfed out of the currency bloc for at least five years.
The last-chance talks between the 19 eurozone finance ministers in Brussels ended at midnight, as they struggled to draft a policy paper for national leaders at yet another emergency summit on Sunday that was billed as the decisive meeting.
With Greece on the edge of financial and social implosion, eurozone finance ministers met to decide on the country’s fate and on what to do about its debt crisis, after experts from the troika of creditors said that new fiscal rigour proposals from Athens were good enough to form “the basis for negotiations”.
But the German finance minister, Wolfgang Schäuble, dismissed that view, supported by a number of northern and eastern European states. “These proposals cannot build the basis for a completely new, three-year [bailout] programme, as requested by Greece,” said a German finance ministry paper. It called for Greece to be expelled from the eurozone for a minimum of five years and demanded that the Greek government transfer €50bn of state assets to an outside agency for sell-off.
Timo Soini, the nationalist True Finns leader, meanwhile, threatened to bring down the government in Helsinki if Alex Stubb, the finance minister, agreed to a new bailout for Greece. Stubb apparently came to the crunch meeting on a new bailout without a mandate to agree one.
“The hawks are very vocal,” said an EU diplomat. “It’s very tough.” Berlin also demanded stronger and more intrusive powers for outside monitors to police the economic and fiscal reforms that Alexis Tsipras, the leftist Greek prime minister, would need to commit to to secure the new bailout.
Saturday night’s talks were not to agree on a third bailout, but were negotiations on whether to launch more talks on Greece’s third rescue package in five years. The ministers faced formidable problems, said Schäuble, who argued debt relief for Greece, broadly seen as essential, was banned by the EU treaties: “Athens’s proposals are far from sufficient. The funding gaps are way beyond anything we’ve seen so far,” he said.
The hard line was echoed by Peter Kazimir, finance minister of Slovakia, who said that new austerity measures tabled by Athens were already past their sell-by date.
The eurozone has been united for five months in the negotiations with Tsipras, but with the stakes rising greatly in the last 10 days, major divisions have surfaced, with the French [and Italy] working tirelessly to save Greece and the hardliners now pushing Greece’s expulsion for the first time openly.
The European commission and the European Central Bank issued dire warnings that a failure to grant Greece new rescue funds of up to €78bn would put the country on a trajectory of complete banking and financial collapse.
The widening gulf between eurozone hawks and doves paves the way for an acrimonious summit on Sunday, with France and Italy lining up against Germany and the northern and eastern Europeans
Merkel is under intense pressure from the Americans not to “lose” Greece and is worried about her own legacy. But Greece fatigue is becoming endemic in Germany, and she faces growing unrest in her party ranks where Schäuble’s hard line is popular.
If the talks break down irretrievably and Greece is allowed to slide into even greater chaos, relations between Berlin and Paris will come under tremendous strain. Michel Sapin, the French finance minister, lauded Tsipras for putting his austerity proposals before parliament and saw the moves of the past few days as “positive”.
Tsipras won a sweeping majority with the support of opposition parties, but many in his Syriza movement defected, leading to speculation that he could either call new elections or ditch his hardliners and lead a new “national unity” government.