Talks stutter again and time is running out to secure a deal before the 30 June deadline
The Week
Another day, another round of Greek bailout talks which fail to produce a deal. Time is now running out to get an agreement which can be ratified by state legislatures on all sides, before the current €240bn bailout expires and a €1.6bn payment falls due to creditors on Tuesday.
Hopes had been high that the second round of negotiations between the so-called Eurogroup of finance ministers from across the single currency bloc would break the impasse last night, after “constructive” proposals were submitted by Greece on Monday. Instead a five-page rejoinder was issued by the International Monetary Fund and promptly leaked to the press, demanding, according to The Guardian, that Greece up its offer of €8bn in spending reductions to around €11bn.
An analysis of the document carried out by the Financial Times reveals the IMF has told Greece it must accelerate its pension reforms to achieve savings of €1.8bn, or 1 per cent of GDP, by bringing forward by three years a staged increase in state pension age to 67, and to remove the ‘solidarity grant’ top-up for poorer pensioners three years early in 2017. Greece had originally pledged to save 0.4 per cent of GDP from the pension bill next year and has repeatedly asserted that decreasing the amounts paid is a ‘red line’ it will not cross.
Elsewhere measures to raise funds through taxes, for example through a one-off 12 per cent tax on corporate profits of more than €500,000 and an increase in the corporation tax rate from 26 per cent to 29 per cent, have also either been removed or restricted to focus on government spending cuts in areas such as defence.
Talks with Eurogroup ministers are continuing from around lunchtime today ahead of a European Council meeting of country leaders, which will go on into Friday when any final deal will be agreed. But that is not the end of the story.
Greece, along with other Eurozone parliaments, most notably Germany, must get the deal approved in parliament, which The New York Times notes is ” not certain in either case”. The paper quotes Norbert Rottgen, a deputy for German premier Angela Merkel’s Christian Democrats, as saying that despite a “damaged mood” the German Parliament would vote for any new Greek deal.
The main issue is time, given that a deal reached on Friday would leave just three days before the current bailout expires. Some are confident, however. The Independent‘s Jim Armitage says the current intransigence shown by all is “crucial to convince electorates on all sides that their interests are being fought for” but “masks an overwhelming will to get a deal done”. He believes a compromise will inevitably be struck.
