Monday 26 September 2016

A whirlwind week of negotiations seemingly led us nowhere - so what happens now?

Published 26/06/2015 | 02:30

Greek Finance Minister Yanis Varoufakis
Greek Finance Minister Yanis Varoufakis

So Taoiseach Enda Kenny has ruled out debt relief for Greece. Why is Ireland taking such a hard line? It's important to point out that Ireland is ruling out a debt write-down for Greece. The Irish Government supports debt relief, for example, through debt re-profiling. This could mean the length of time to repay the debt is extended, but the value of the debt is not being marked down. Among the reportedly unresolved issues in the Greek talks are Greek demands for debt restructuring, which several ministers have rejected. The Government says it has lent Greece more than €300m and it would like this to be repaid.

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I thought we were close to a deal on Greece at the beginning of the week. What's suddenly changed? It appeared so, but Greek debt talks have never been straightforward. After four meetings of Eurozone finance ministers in a week, and two leaders' summits, talks remain deadlocked after Greece's creditors rejected proposals put forward by Athens earlier in the week, and then, Athens subsequently rejected counter proposals put forward by its creditors.

I can't keep up. What's going on now? The Eurogroup - the 19 ministers representing the countries using the euro - were due to meet on Wednesday night to break the latest deadlock and thrash out a deal ahead of a planned summit of European leaders yesterday afternoon. The ministers had been instructed to work through the night if possible. But so little progress was made ahead of the ministers' meeting, that it only lasted one hour and was rescheduled until yesterday afternoon. Greek Prime Minister Alexis Tsipras was given an ultimatum to come up with a revised proposal by yesterday morning, or the creditors would table their own. By the time of the Eurogroup yesterday, two proposals were presented. No agreement was possible and, so, there's going to be another Eurogroup meeting tomorrow.

God, it's interminable. What are the stumbling blocks this time? Greek Finance Minister Yanis Varoufakis has played down the latest setback after Athens submitted its own proposals, based largely on increases in tax and social contributions.

But the country's lenders say this would not raise enough revenue to plug a gaping budget hole. Creditors reportedly believe Greece is not prepared to concede on key reforms around pensions, labour markets, wages and taxation, which cross Syriza's self-declared "red lines".

Greek officials say the government has already compromised by offering to raise taxes and pension deductions. They say the lenders keep revising downwards estimates of how much each measure proposed by Greece could raise, making it difficult to come up with an acceptable offer.

What are the deadlines? Greece needs to make a repayment to the IMF by Tuesday. That requires a deal to unlock much-needed bailout cash. But even if a deal is sealed in Brussels, it needs to pass the Greek parliament, and some other national parliaments. That could potentially take place on Sunday or Monday, if agreement is hammered out at Saturday's Eurogroup.

Irish Independent

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