The Greek government is engaged in feverous consultations and background talks with the institutions and European governments so that there can be a definitive solution at the Eurogroup on June 15 after the last meeting Euclid Tsakalotos held with the ECB leadership in Frankfurt.
The latest statements made in pubic clearly show the willingness of all sides to achieve a positive development in order to avoid an ultimate clash at the upcoming European Council meeting on 22 June.
As things stand, the European Commission and Emmanuel Macron are working or a deal at Thursday’s Eurogroup; however, the Greek government has not stopped working on the alternative scenario for a solution at the EU Council meeting. The visit of French Finance Minister Bruno Le Maire to Athens on Monday is no coincidence, nor is his meeting with the Greek Prime Minister.
The Le Maire visit completes the round of contacts with Jeroen Dijsselbloem, Wolfgang Schaeuble and Pier Carlo Padoan in order to effectively “lock in” the Macron initiative for a “pre-agreement” that will be finalized at the Eurogroup meeting on Thursday.
What Le Maire wants first of all, according to sources who participate in the negotiations, is to reconcile the Greek proposal for a “clean solution” here and now, with the IMF and Berlin objections over the growth of the Greek economy, as there is a discrepancy between the Fund and Berlin, combined with debt relief measures.
An old proposal by Alexis Tsipras for debt relief with a growth clause was brought back to the table, this time by the French side. This means that if the Greek economy grows the debt can be repaid as normal, but if it doesn’t “tools” could be chosen such as the extension of repayment periods.
In addition, there is the proposal (which is being discussed by Athens, Paris and the Commission which is “seen favorably” by Schaeuble) for an agreement on developmental projects with funding from the European Development Bank, the European Investment Bank or development banks of other countries with Low national participation and “packages” going beyond the EU budget, i.e. 2020. In order to improve the IMF’s adverse growth forecasts (1% currently) and bring them closer to the optimism of the European side (1.3%), thus bridging the difference.
A common feature is the allocation of earnings from Greek bonds purchased by the European Central Bank and Eurozone central banks to Greece, in order to boost investment and support for the unemployed.
As Euclid Tsakalotos outlined in Parliament on Friday, a “good solution” would be to mention the acceleration of the short-term debt measures already in place. There should be greater clarity on medium-term debt relief measures and, finally, there may be, a possible follow-up mechanism at the end of the program, beyond the medium-term measures.
According to the Greek Minister, to unblock Greece’s inclusion in the quantitative easing program of the ECB, eliminating the phrase “if needed” from the decision of the Eurogroup in May would be enough. The decision says that “if necessary, additional debt relief measures will be implemented at the end of the program”.
Officials participating in the negotiations believe that the removal of the words “if needed” could give the ECB the green light for the country’s accession to the quantitative easing scheme imminently, which is a scenario HSBC has also highlighted in a recent report. The fact that Mario Draghi has left open the possibility of extending the quantitative easing program is in fact an “open window” for Greek bonds.
At the same time, however, despite the unquestionable difficulties, the Greek government seems to remain committed to testing markets immediately after the second evaluation is finalized.
The statements Nikos Pappas made on Sunday in an interview with ANA are characteristic. He stressed that “accessing markets is one of the many ways to achieve the goal of fair growth. We will not proceeds with a premature or a rough, dummy or useless move to access bond markets like the New Democracy government did.”
In fact, the government’s planning has a strong political symbolism as its plans to access markets for the first time concern the 2014 bond issued by the Samaras government, worth 3.5 billion euros.
In this way, the financial team wants to “test” the interest rates on Greek bonds on a bond issued in 2014 with a 4.95% yield./ΙΒΝΑ