As time runs out for Greece and its cash-starved banks, emergency talks in Brussels were billed as the last chance for euro-zone leaders to finally solve the riddle of the country's debt crisis. Well, they didn't. Yet more talks were set in train as the leaders decided to return to the matter at another summit on Thursday.
The Greek saga has run now for close on six years, so these were not the first engagements to be beset by delay, confusion and distrust. But the situation is increasingly urgent as the country approaches a deadline next week to repay a €1.6 billion debt to the International Monetary Fund (IMF), money it cannot pay without new creditor funds.
On a damp and rainy day in Brussels, the proceedings were dominated by a meeting of finance ministers and, later, a special summit of heads of state and government. Still, it was other talks behind the scenes which set the tone.
In Frankfurt, a teleconference of European Central Bank (ECB) governors approved a third rise in emergency aid for Greek banks in four days. As Greeks withdraw deposits en masse from their banks, the latest rise brought the total of ECB aid to €87.8 billion. Only last week, it was set almost €5 billion lower at €83 billion. A person familiar with the scene said there would be another conference call this morning “if necessary”.
Brittle frailty
If this reflects the brittle frailty of the country’s banks, uncertainty over the latest Greek proposals to break the deadlock points to disarray at the heart of the Tsipras administration in Athens. The government’s circulation of a compromise plan late on Sunday had led to hopes of a breakthrough.
However, elements of the new plan appeared to have changed when Athens made further submissions to Brussels early yesterday. In the event, it seems the second version included “tracked” changes in edits of the document prepared in Athens.
"There were two versions, but that's no big problem," said Jeroen Dijsselbloem, head of the eurogroup of finance ministers. "I think one was sent late last night and one was sent early this morning, and it was, I believe, minor changes. I haven't compared them completely, but they looked very similar to me."
With Greece in the very final throes of a chaotic campaign to prevent bankruptcy, however, the episode did little for confidence.
Before the ministers met at lunchtime, the proposals were discussed at a morning meeting by finance-ministry officials from each of the countries in the euro zone. These officials, known collectively as the eurogroup working group, prepare their ministers’ work. While there was some encouragement from the Greek proposals to increase VAT, pension reform proposals were deemed to fall short. The plan tackled revenue-raising for the pension system, but not expenditure.
The downbeat mood at these talks was at odds with the sense of optimism in the outside world, which rallied financial markets. The mood at a parallel meeting elsewhere of finance ministers attached to the centre-right European People's Party group was similarly downbeat. Participants included Ireland's Minister for Finance, Michael Noonan, and Wolfgang Schäuble of Germany.
Settlement not in the offing
The clear message as they arrived for the formal ministers’ meeting was that a definitive settlement would not be in the offing this time out. Indeed, the decision to send officials from the EU Commission, the ECB and the IMF back into talks with Greece smacks of anxiety that the new Athens plan still stops short of the creditors’ requirements. If such requirements were actually met, the deal would have been done there and then.
The negotiators have been directed to conclude their talks in time for another ministers’ meeting tomorrow or on Thursday, before the next summit on Thursday night. In the interim, the ECB appears set to review its support for Greek banks on a daily basis. While this should be enough to carry them through the next days, the banks are in a greatly weakened position.
After weeks of rancour, however, the eurogroup welcomed the Greek plan as “a positive step”. We will know soon whether that represents the start of something durable or a false promise.
