Leaders From Eurozone Work Into Morning on Greek Crisis
bssb.be nytimes.com 14.07.2015
BRUSSELS — Haggling through the night into Monday morning over a deal to calm Greece’s debt crisis, European leaders demanded that Athens make new concessions and quickly adopt a host of economic policy changes as they worked to overcome deep divisions and avert a historic fracture in the Continent’s common currency.
As testy talks dragged on past the self-imposed midnight deadline they had set without an agreement, leaders of the 19 countries that use the euro struggled to draft a compromise that would assuage some of Greece’s concerns over tough German-set terms while assuring creditors that a new bailout worth tens of billions of euros would not be money wasted.
The mood grew increasingly tense as it became clear that the leaders were weighing steps that Greece’s left-wing government, while desperate for a deal to pave the way for new funding, would find difficult to sell at home — just a week after Greek voters overwhelmingly rejected softer terms in a referendum.
The new steps under review included a temporary Greek exit from the eurozone, and placing proceeds from the privatization of Greek assets worth up to 50 billion euros, about $55 billion, in a fund in Luxembourg to help pay down Greece’s huge debt. Similar options were first put forward in a policy paper prepared by the German Finance Ministry, and have since stirred anger from some Greek officials.
Among some supporters of Prime Minister Alexis Tsipras and his left-wing Syriza party, the demands were portrayed as humiliating and a further effort to force him from office.
But there were some signs of progress as another long meeting in Brussels dragged into Monday morning, according to two people with direct knowledge of the talks who spoke on the condition of anonymity while leaders parried over the terms of a new bailout.
Mr. Tsipras, these people said, had agreed to accept the involvement of the International Monetary Fund, which had been regarded by many Greeks as uncompromising during the country’s previous two bailouts. The eurozone leaders, who had demanded that Greece’s Parliament pass a number of measures by Wednesday, also appeared to be near agreement with Mr. Tsipras’s contention that it would be impossible to pass all of them by then. Going into the meeting, some of the European leaders said the priority was to hold Europe together, and others suggested that they had so little trust in Greece to honor its commitments that a deal would be difficult, if not impossible. Failure to find some compromise could leave Greece unable to pay its bills or reopen its banks, forcing it to become the first country to leave the euro.
Such an outcome would throw into reverse a quest for ever-closer European unity stretching back more than a half-century.
With Greece’s banks all but broke, the European Central Bank was looking early on Monday for any sign of progress in the talks that would allow it to loosen up its credit line to the Greek banking system and avert a collapse that could otherwise come within hours or days.
The options being debated by the leaders amounted to demands that Greece move quickly and forcefully to re-establish trust and credibility with creditors after years of failure to follow through on promised changes and months of bitter wrangling over the country’s need for more money to keep it afloat. But they also included the possibility of what a draft assessment of options by the eurozone finance ministers called “a timeout from the euro area,” accompanied by discussions about reducing Greece’s crippling debt load.
An assessment of Greece’s situation prepared over the weekend by the finance ministers put Greece’s financing needs at €82 billion to €86 billion over the next three years. That sum is significantly larger than the €74 billion previously reported, and is around €30 billion more than the €53.5 billion request made by Greece on Thursday for what would be its third bailout package since 2010. Greece already has more than €300 billion in debt.
In a sign of the rapid pace of events, a full summit meeting of the European Union’s 28 heads of state planned for Sunday was abruptly canceled. But the separate meeting of eurozone leaders went ahead, enveloped by dark warnings from the French president and others that failing to help Greece would mean a perilous retreat from the principles that have guided Europe since the end of World War II.
Arriving in Brussels for what was billed as a last-chance meeting on Greece after months of ill-tempered and increasingly divisive debate, President François Hollande of France warned that failure to find an agreement to keep Greece in the euro would “mean a Europe that is in retreat, a Europe that no longer moves forward.” France, he added, “will do everything to find an agreement this evening.”
Mr. Hollande told reporters: “At stake is whether Greece will tomorrow be in the eurozone, and also at stake is Europe.”
Mr. Hollande’s pleas for unity — joined in by Prime Minister Matteo Renzi of Italy — contrasted with a far more skeptical and hardheaded position staked out by Germany. This exposed a rift between Paris and Berlin — a tandem that has traditionally powered European decision making — over how to deal with a Greek crisis that Donald Tusk, the president of the European Council, has called “the most critical moment in our history.”
Sunday’s meeting in Brussels followed a swirl of dramatic events that began last Sunday when Greek voters rejected further austerity measures in a referendum and then careered in the opposite direction on Thursday when Prime Minister Tsipras submitted a plan to creditors that embraced tougher measures than those rejected by voters and his own party.
The week’s whiplash-inducing twists have turned the once taboo issue of “Grexit,” as Greece’s exit from the euro — or potentially even the European Union — is widely known in Europe, into a serious possibility that has spooked ordinary Greeks and many others beyond its borders, including senior officials in the United States.
With banks in Greece closed since June 29, and cash machines running out of money, possibly as early as Monday, the outcome of the showdown in Brussels will weigh heavily on a decision in coming days by the European Central Bank on whether to increase or perhaps cut off emergency funding for Greek banks. Without an infusion of cash from the Frankfurt-based European bank, Greece’s banking sector will crumble and send the country crashing out of the euro.
Chancellor Angela Merkel of Germany, arriving for the summit meeting, acknowledged that the economic plight of Greece was “extremely difficult” but said that “there will not be an agreement at any price.” She added, “The most important currency has been lost — and that is trust.”
Noting that “nerves are stretched tight,” the German leader demanded a coolheaded review to ensure that “the advantages outweigh the disadvantages and that goes for the future of Greece as well as for the eurozone as whole, and for the principles of our cooperation.”
Germany’s stand is shared by a number of other countries, notably Finland and Slovakia.
Ms. Merkel faces strong pressure from within her party, including from her own finance minister, Wolfgang Schäuble, not to give Greece more money without ironclad conditions, stirring alarm that she has put domestic political calculations ahead of Germany’s postwar commitment to the so-called European project.
Mr. Schäuble is widely viewed in Greece as wanting the country out of the euro.
Instead of softening their demands after the July 5 Greek referendum, Germany, Greece’s biggest creditor, and its supporters in northern Europe and the former Soviet bloc have pushed for further austerity and demanded that the Greek Parliament pass legislation in the next few days to entrench Syriza’s pledges of action.
A draft assessment prepared by eurozone finance ministers after yet another round of emergency weekend meetings in Brussels called on Greece to legislate separate sets of measures by July 15 that must include “the streamlining of the VAT system and the broadening of the tax base to increase revenue” as well as “upfront measures to improve long-term sustainability of the pension system as part of a comprehensive pension reform” program.
Greece would also need to legislate to ensure the independence of its state statistical agency, overhaul its civil justice system, and adopt European rules to ensure orderly closure of failing banks. And it would have to accept “continued full involvement” of the I.M.F. in overseeing any bailout.
Gianni Pittella, the president of the second-biggest political bloc in the European Parliament, on Sunday accused Mr. Schäuble, the German finance minister, of seeking to push Greece out of the single currency. “His tricks and political games risk to lead Greece to bankruptcy and to Grexit,” Mr. Pittella, the leader of the Socialists and Democrats group, said in a statement. Mr. Tsipras, whose party won elections in Greece in January on promises to end austerity, showed up in Brussels without a tie, as he always does for meetings with fellow leaders, but also without his customary broad smile.
“We can reach an agreement tonight if all parties want it,” a grim-faced Mr. Tsipras said, adding that leaders owed this “to the people of Europe who want Europe united, not divided.”