Tsipras sees 'happy ending' for Greece in crisis talks as €750m repayment nears

Greece’s embattled Prime Minister, Alexis Tsipras, has insisted he is confident of a resolution to the country’s debt crisis, as his government struggles to meet a €750m (£545m) repayment to the International Monetary Fund next week and avoid default.

Greece is starved of cash but senior EU officials say there is no prospect of a deal releasing bailout money when the eurozone meets on Monday in Brussels.

Tsipras said on Friday: “I am confident that we will soon have a happy ending and that despite the difficulties ... we will carry out the agreement, which will be concluded soon in Europe.” He added that his government was “doing whatever it should in order to reach ... an honest and mutually beneficial agreement with our partners”.

Greece has to pay the €750m to the IMF next Tuesday and is desperate to free up the €7.2bn in bailout funds still sitting blocked from its creditors. But while the brinkmanship between Athens and the eurozone has given way to more substantive negotiations recently, both sides are nowhere near a pact that would trade rescue funds for fiscal and economic reforms, a senior EU official said.

The Eurogroup of finance ministers from the single currency zone meets in Brussels on Monday to wrestle with the Greek crisis. Stalemate has prevailed since the anti-austerity Tsipras government won power in January promising to defy the eurozone and reverse the terms of five years of austerity, prescribed mainly by Germany. But with time running out on a 30 June deadline for the bailout programme, neither side appears to be blinking.

“We are still quite some way away ... from a final agreement,” said the official. “There will be no final conclusion on Monday ... I don’t expect a lengthy or contentious debate.”

In several days of negotiations last week, the Greeks were said to have made concessions over reform of their complex and confused VAT system, but to have dug in their heels against European demands on wages policy, labour market changes and pension cuts. This week Athens announced it was rehiring civil servants fired as part of public spending cuts enacted by the previous centre-right government under the terms of the bailout.

While the Greek authorities are clearly running out of money, the contrasting narratives on both sides of the dispute and the non-stop propaganda make it difficult to determine when the country will run out of money. A failure to pay the IMF on Tuesday would be the start of a default. But Brussels appeared confident and sanguine that Athens would and could make the payment.

The eurozone and the IMF have committed to a €240bn bailout of Greece since 2010 in an attempt to save the single currency from unravelling, but the tail-end of the rescue programme has in effect been frozen since last summer. In February the new Tsipras government agreed to extend the bailout until the end of next month but the eurozone refuses to disburse the remaining funds until Tsipras delivers on a persuasive programme of economic reforms.

Non-stop negotiations over the past three months have brought only incremental progress and no release of money, while trust between the Greeks and their creditors has evaporated. Even if the current bailout was satisfactorily completed, the consensus is that Greece will still need a new arrangement with its creditors from July. The national debt has risen, and keeps rising under the bailout regime, to unsustainable levels.

The assumption in Brussels is that Tsipras is aiming to get to the end of June without any substantive concessions and then try to merge the status quo into a new agreement, which would be less rigorous, more generous and might include elements of a debt write-down.

The eurozone states bluntly, however, that this is not possible. Completion of the current programme review, said the official, was essential for starting negotiations on a gentler new arrangement. He emphasised that there had been no discussion within the Eurogroup about a New Greek programme and said that both sides would need to agree to conclude the current bailout by the end of the month. Otherwise things get “very, very tight”.

Despite the constant scares that Greece will default on its debt repayments and possibly crash out of the euro, there was little sign of nervousness in Brussels. “They are not flush, awash with cash, but I am confident they will make their upcoming payments,” said the official. “There has been a significant rapprochement on issues, but no agreement on anything.”

Economists at Morgan Stanley warned there was still a significant risk of Greece leaving the eurozone. “The Eurogroup of finance ministers and the Greek government are unlikely to find an agreement just yet. We think that the funding situation remains critical in Greece, and that the probability of mis-steps potentially leading to capital controls or even euro-exit is high,” they said in a research note.

(Πηγή: theguardian.com)