Greek
debt crisis: Tsipras resists key bailout measures after 15 hours of
talks
Talks
stall on two points: IMF involvement in a new three-year bailout and
a German demand for Greece to give up €50bn in public assets as
collateral
Ian Traynor in Brussels and
Jennifer Rankin
Monday
13 July 2015 06.13 BST /
http://www.theguardian.com/world/2015/jul/13/greek-debt-crisis-tsipras-resists-key-bailout-measures-after-15-hours-of-talks
A marathon overnight
negotiation between Greece and its creditors remained unresolved on
Monday morning after European leaders confronted Alexis Tsipras, the
Greek prime minister, with a package of austerity measures which
entailed a surrender of fiscal sovereignty.
A weekend of high
tension that threatened to break Europe in two climaxed on Sunday at
a summit of eurozone leaders in Brussels where the German chancellor,
Angela Merkel, and the French president, François Hollande,
presented Tsipras with an ultimatum.
The ultimatum –
debated over more than 15 hours – entailed a series of draconian
measures as the price of avoiding financial collapse and being
ejected from the single currency bloc.
Tsipras acquiesced
in most of the fiscal rigour demanded of him in four pages of summary
instructions drafted by eurozone finance ministers.
But as Monday
morning broke over Brussels, he was still resisting the creditors’
demands on two key points: on having the International Monetary Fund
(IMF) involved in a proposed new three-year bailout, and on a
controversial German demand for Greece to park €50bn (£36bn) in
assets outside Greece, probably in Luxembourg, to serve as collateral
for fresh loans and to provide privatisation proceeds to be used for
debt servicing,
Greek officials
insisted that €17bn (£12.2bn) worth of assets was as far as they
could go.
The severity of the
eurozone terms being applied to a country on its last legs shocked
Greeks.
It remained to be
seen how Tsipras would be received when he returned home from the
climactic negotiations of the five-year debt crisis.
Social media sites
throbbed with outrage. The hashtag #ThisIsACoup soared to the most
trending in Europe, in Greece but also in Germany where Der Spiegel
described Berlin’s demands of Athens as a “catalogue of horrors”,
and to the second-highest trending worldwide.
In what a senior EU
official described as an “exercise in extensive mental
waterboarding” to secure Greek acquiescence to talks on a third
bailout in five years worth up to €86bn (£62bn), Merkel and
Hollande had pressed for absolute certainty from Tsipras that he
would honour what was on offer.
Under the terms set
before Tsipras, the Greek parliament has to endorse the entire
package on Monday and then pass several pieces of legislation by
Wednesday, including on pensions reform and a new VAT regime, before
the eurozone will agree to negotiate a new three-year rescue package.
The terms are much
stiffer than those imposed by the creditors over the past five years.
This, said the senior official, was payback for the emphatic no to
the creditors’ terms delivered by the snap referendum that Tsipras
staged a week ago.
“He was warned a
yes vote would get better terms, that a no vote would be much
harder,” said the senior official.
The Eurogroup
document said experts from the troika of creditors – the IMF,
European Commission and European Central Bank – would be on the
ground in Athens to monitor the proposed bailout programme. The trio
would also have a say in all relevant Greek draft legislation before
it is presented to parliament. Furthermore, the Greeks will have to
amend all legislation already passed by the Syriza government this
year that had not been agreed with the creditors.
While Greece’s
fate was being debated in Brussels, in Athens the ruling leftwing
Syriza party was showing signs of disintegration. Demands that the
reforms be approved by the Greek government and put into law by
Wednesday were described as “utter blackmail” by leading party
members and met with disbelief.
Although sources
close to Tsipras said the leader was determined to do whatever was
needed to keep Grexit at bay, political tumult also beckoned.
Insiders conceded that a cabinet reshuffle – removing ministers who
had refused to vote the austerity package through parliament early on
Saturday – could come as early as Monday.
By late Sunday night
it had become clear that Tsipras’s U-turn on measures he had once
spurned had produced a potentially far-reaching split. In addition to
17 MPs breaking ranks at the weekend – stripping his government of
a working majority – 15 other lawmakers also indicated they would
not approve the agreement in its entirety. The resistance raises the
spectre of Tsipras being forced to call fresh elections – a move
described as potentially catastrophic for the country.
“Greece can bend
up to a point,” said Aristides Hatzis, a prominent political
commentator. “But after that there is no bending, only breaking.”
Although billed as
the last chance to secure “the ultimate agreement” on the Greek
debt crisis, the prospects of a grand political bargain to keep
Greece in the eurozone are far from assured.
Entering the
leaders’ meeting, Tsipras said he was looking for compromise: “We
can reach an agreement if all parties want it.”
But France and
Germany are split on their approach to the Greek question, while
Finland could refuse outright to sign up to a third bailout for
Greece.
France’s Hollande
vowed to do everything possible to get an agreement on Sunday night,
but Merkel said there wouldn’t be an agreement at any cost.
Other eurozone
countries urged Germany to drop its objections. “Grexit has to be
prevented,” said Jean Asselborn, Luxembourg’s foreign affairs
minister. “It would be fateful for Germany’s reputation in the EU
and the world.
“Germany’s
responsibility is great. It’s about not conjuring up the ghosts of
the past,” he told German newspaper Süddeutsche Zeitung. “If
Germany goes for Grexit, it will trigger a deep conflict with France.
That would be a catastrophe for Europe.”
Italy’s prime
minister, Matteo Renzi, was expected to tell Merkel at the leaders’
meeting that “enough is enough” and the eurozone should not
humiliate Greece when it had already given up so much.
Earlier on Sunday,
eurozone finance ministers said they had made some progress after 14
hours of talks over two days and failing to reach any agreement on
Saturday. “We have come a long way, solved a lot of issues, but
some big issues still remain,” said Jeroen Dijsselbloem, who chairs
the Eurogroup of finance ministers.
Donald Tusk, the
president of the European Council, cancelled an emergency full summit
of the 28 countries that was to deal with the fallout from Greece’s
ejection, in order to give eurozone leaders a last chance to reach an
accord saving Greece and forestalling what would be a devastating
schism, sowing deep resentment and division between Europe’s
leaders.
The intractable
problem is that many governments do not trust the Greek government to
implement a €12bn (£8.6bn) programme of spending cuts and reforms
that will be delivered as part of a bailout. Eurozone governments are
seeking proof from Athens it can keep its promises, in exchange for
agreeing to start talks on a deal.
“The main obstacle
to an agreement is trust,” said Italy’s finance minister, Pier
Carlo Padoan, one of the countries most sympathetic to Greece.
The Irish taoiseach,
Enda Kenny, urged his fellow leaders to “look at the bigger
picture”. Kenny, who has been Ireland’s leader since the early
days of its own bailout programme, said in his country’s case trust
was built incrementally.
“We don’t want
to look back in 10 years’ time and think this could have been
saved, but wasn’t,” he said.
Der Spiegel called
Sunday the biggest day of Merkel’s 10-year chancellorship and
appealed to her to “show greatness” and save Europe.
If Der Spiegel was
right about the momentousness of Merkel’s day, the same could be
said for Hollande of France who, with his government and officials,
has been campaigning tirelessly in recent weeks to keep Greece in the
euro, helping Athens to draft its proposals.
A decision to go
ahead with a so-called Grexit, which has never been closer, would be
a shattering failure for Hollande and the resulting Franco-German
recrimination would be deeply damaging, say observers.
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