Wednesday 28 September 2016

Greece Crisis: Timeline to negotiation on new Greek bailout

Published 01/07/2015 | 15:03

Greek Prime Minister Alexis Tsipras delivers a speech during a parliamentary session in Athens
Greek Prime Minister Alexis Tsipras delivers a speech during a parliamentary session in Athens
Badly burnt: Greek Prime Minister Alexis Tsipras
Alexis Tsipras
Greek Finance Minister Yanis Varoufakis (C) and head negotiator with Greece's lenders Euclid Tsakalotos (L) make their way past parliament as they head to Prime Minister Alexis Tsipras' office in Athens, Greece June 28, 2015

Euro zone finance ministers in the Eurogroup will discuss a Greek application for a new conditional loan package on a conference call on Wednesday, EU officials said, although they may not take a decision until after Sunday's planned referendum.

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Two letters from Prime Minister Alexis Tsipras to creditors on Tuesday came too late to secure an extension to the previous bailout which expired at midnight (2200 GMT), just as Greece defaulted on a €1.6 billion debt repayment to the IMF.

Pensioners discuss politics while waiting at a national bank’s ATM to withdraw some money in the Greek capital Athens yesterday
Pensioners discuss politics while waiting at a national bank’s ATM to withdraw some money in the Greek capital Athens yesterday
People read newspaper headlines in central Athens
Greek Finance Minister Yanis Varoufakis and Interior Minister Nikos Voutsis greet each other as they arrive at Prime Minister Alexis Tsipras’s office at Maximos Mansion in Athens yesterday

Tsipras's request for a third bailout package for two years could trigger the following process:

* Eurogroup, which next meets by conference call this afternoon, could agree that Greece is in need of financial assistance - not a major doubt given that it is effectively bankrupt and has lost access to financial markets. However, ministers may delay any decision until after the vote on bailout terms.

Greek Prime Minister Alexis Tsipras
Greek Prime Minister Alexis Tsipras

* Once Eurogroup President Jeroen Dijsselbloem, in his role as chair of the board of governors of the European Stability Mechanism (ESM), accepts the application, he asks the European Commission, the EU's executive arm, along with the European Central Bank (ECB) to assess it.

* The assessment can be lengthy but in this case Commission and ECB officials have already spent months working intensively with the new Greek government to seek a deal to complete the previous bailout. Capital controls imposed this week ahead of the default complicate the economic health check but officials see no difficulty in producing a quick review of Greece's needs.

A closed Eurobank branch after the Greek government imposed capital controls at the country's banks in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis
A closed Eurobank branch after the Greek government imposed capital controls at the country's banks in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis

* Tsipras asked for an ESM loan only to meet debt service obligations to 2017 which he put at about €30 billion.

* If the Eurogroup decides to accept Greece's loan request, it will ask the Commission, the ECB and, probably, the IMF, which has been involved in the past two bailouts, to negotiate a Memorandum of Understanding (MOU) detailing conditions Greece must accept. Such conditions have been a bone of contention.

Pro-European Union protester demonstrate in front of the parliament in Athens
Pro-European Union protester demonstrate in front of the parliament in Athens
A man (R) reads newspaper headlines in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis

* Tsipras has indicated he is now ready to accept the terms he rejected late last week, with some exceptions. Euro zone sources said on those exceptions could hold up an agreement. However, in principle an accord appears within reach.

* German Chancellor Angela Merkel has said negotiations with Greece cannot start until after the referendum in which Tsipras has called on voters to reject the conditions offered a week ago to complete a bailout that has since expired. EU and Greek officials say the dialogue can resume whatever the result, although it may change the political climate of any talks.

Letters spelling the word 'GREECE' are reflected in a table top in this picture illustration taken in Berlin, Germany June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. But Greek government sources said the leftist premier stood by his rejection of the creditors' conditions and Greece would default on a crucial repayment due to the International Monetary Fund on Tuesday, plunging it deeper into financial crisis. REUTERS/Pawel Kopczynski
Letters spelling the word 'GREECE' are reflected in a table top in this picture illustration taken in Berlin, Germany June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. But Greek government sources said the leftist premier stood by his rejection of the creditors' conditions and Greece would default on a crucial repayment due to the International Monetary Fund on Tuesday, plunging it deeper into financial crisis. REUTERS/Pawel Kopczynski
People line up at an ATM outside a closed National Bank branch, after the Greek government imposed capital controls at the country's banks in Athens, Greece June 30, 2015. The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept a bailout deal he has rejected before a referendum on Sunday which EU partners say will be a choice of whether to stay in the euro. REUTERS/Alkis Konstantinidis

* If Greece and the Eurogroup agree terms, the countries of the euro zone must approve lending which would be guaranteed by their own treasuries. In some cases, notably in Germany, this would mean a parliamentary vote. Summer recesses for many legislatures may be a hurdle. However, EU officials have said the process can take a week but could go more quickly.

* If both sides are willing to come to terms, the whole process could be completed within three weeks, EU officials say -- in time for a crucial repayment to the ECB on July 20. If Athens missed that bond redemption, it could put an end to ECB emergency liquidity to keep Greek banks afloat.

Reuters

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